The US Internal Revenue Service arrested the founder of PEOPLExpress (Newport News) Michael Morisi on May 21, 2019, and charged him with a total of 18 counts of fraud and tax evasion, The Virginian-Pilot has reported.

Morisi was charged with five counts of wire fraud, eight counts of spending money obtained by fraud, three counts of filing a false income tax return, and two counts of failing to file a tax return in relation to his stint at the helm of the short-lived airline. In particular, the IRS alleged that Morisi defrauded USD448,000 from the airline's creditors by using these funds to pay salaries to himself and other senior executives after the carrier had been grounded. Meanwhile, he kept on pleading that PEOPLExpress had been bankrupt and could not repay its debt.

The IRS also arrested Newport News, VA, airport ex-manager Ken Spirito and charged him with allegedly violating federal laws by providing financing to the airline.

In July 2014, Spirito reportedly provided USD5 million in credit guarantees to PEOPLExpress on behalf of the airport after the airline failed to attract private investors. When it collapsed in September the same year, the airport had to repay a USD4.5 million debt incurred by the airline with the TowneBank.

The indictment says that at the same time, Morisi and two other airline executives opened a separate account in a different bank, where they kept the defrauded funds to avoid them being seized by the creditors. Morisi later repeated the manoeuvre and opened yet another account once the Virginia Employment Commission put a lien on the secondary account.