Kay Ellison, former Vice President and Managing Partner of South Carolina's Direct Air (D1, Myrtle Beach) was sentenced to 94 months in federal prison on eight counts of conspiracy to commit fraud, wire fraud, and bank fraud.

The US District Court in New Jersey also ordered Ellison to return USD19.7 million in restitution to the defrauded passengers.

In March 2018, a federal jury in the District of New Jersey found Ellison and former CEO of Direct Air, Judy Tull, guilty of stealing millions of dollars from passengers by defrauding money from the escrow account for future travel.

Tull, as well as CFO Robert Keilman, who previously pleaded guilty, both still await sentencing.

The defendants 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 was 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.