A federal district court in New Jersey found Judy Tull and Kay Ellison, CEO and managing partner of the bankrupt Direct Air (D1, Myrtle Beach), guilty of stealing millions of dollars from escrow accounts between 2007 and 2012, Triangle Business Journal has reported.

The two have been accused and found guilty of orchestrating an elaborate scheme in which they have defrauded millions of dollars from their airline.

"Their brazen scheme created a multimillion-dollar shortfall that left passengers stranded at airports and banks and credit card companies scrambling to pick up the pieces,” Acting Assistant Attorney General John Cronan has said.

The pair allegedly produced fake documents and bookings for non-existent "ghost" passengers to inflate the amount they were supposedly entitled to receive from the escrow accounts. In effect, banks released more funds that the airline should have in fact received. Tull and Ellison also falsified financial statements to show that Direct Air is profitable while, in reality, it had been losing money. These fraudulent documents convinced banks and credit card companies to continue doing business with the airline.

As a result of the fraud, when the company filed for bankruptcy in spring 2012, an escrow account in a New Jersey bank only contained around USD1 million while it should have contained some USD30 million based on the future bookings made prior to the bankruptcy.

Former Direct Air CFO Robert Keilman has pleaded guilty to participating in the scheme and is now also awaiting sentencing. Tull and Ellison will be sentenced on July 17, 2018.