UNITED STATES OF AMERICA L- +: i DEPARTMENT OF TRANSPORTATION OFFICE OF THE SECRETARY WASHINGTON, D. C. -- - - - U ;1 Issued by the Department of Transportation on the 5 h day of January, 2007 Montgomery Jet Center, Inc., Southern Skies, Inc., and Ronald E. Mays Violations of 49 U.S.C. $8 41101 and 41712, alternatively, 14 CFR Part 399 and 49 U.S.C. Q 41712 Enforcement Proceeding Docket OST 2007-2&dm I NOTICE OF ENFORCEMENT PROCEEDINGS AND PROPOSED ASSESSMENT OF CIVIL PENALTIES The attached complaint of the Office of the Assistant General Counsel for Aviation Enforcement and Proceedings (Enforcement Office) alleges that Mr. Ronald E. Mays (Mr. Mays) through Montgomery Jet Center, Inc., (Montgomery Jet) and Southern Skies, Inc., (Southern Skies) both Alabama corporations (collectively Respondents), engaged in unauthorized air carrier operations in violation of the licensing provisions of 49 U.S.C. 0 41 101 and engaged in unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. fj 41712 and the Department s regulations. Montgomery Jet is an Alabama corporation which advertises various aviation-related services including financing and leasing aircraft, management services, as well as a fractional ownership program. The company unlawfully engaged in air transportation as an air carrier on its website at www.montgomeryjet.com by referring to itself as an air carrier, by referencing aircraft as our fleet and by boasting that it carr[ies] the world s leaders. Southern Skies is also an Alabama corporation whose stated purpose is air transportation services. Southem Skies held itself out as a direct air carrier to Mr. Alex St. James and the Africa-United States Friendship and Economic Development Group (FED Group) when it contracted with them to provide charter air transportation to individually-ticketed passengers from Baltimore, Maryland to Monrovia, Liberia, on January 9,2006 (Liberian Charter).
-2- Respondents entered into a contract with the FED Group to provide this air transportation and collected $40,000 in passenger funds for the flight from the FED Group. Respondents then entered into contract negotiations with Miami Air International, Inc., (Miami Air), a properly licensed direct air carrier, to operate the charter flight. Respondents performed these actions without operating as an agent of Mr. St. James or the FED Group, or any properly licensed carrier, and without obtaining proper authority from the Department. Respondents failed to contract with Miami Air or any other carrier for the Liberian Charter flight and retained the $40,000 in consumer funds paid them toward the flight. As a result, approximately eighty passengers showed up at the Thurgood Marshall Baltimore Washington International Airport (BWI) in Baltimore, Maryland on January 9, 2006, only to find that there was no airline or aircraft to operate the flight. The passengers, many of whom had traveled to BWI from different states around the country, did not receive the transportation for which they paid, and many were in effect stranded without air service to return them to their respective points of origin. Respondents have refused to refund the $40,000 in charter participant funds they accepted to operate the flight, either to the FED Group or to virtually all of the individual charter participants. The complaint alleges, among other things, that Respondents unauthorized holding out as an air carrier on its website and to Mr. St. James and the FED Group regarding the Liberian Charter violated 49 U.S.C. Q 41 101 and constituted an unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. Q 41712. Mr. Mays is responsible personally for these violations, it is alleged in the complaint, since he was in control of Montgomery Jet and Southern Skies and the animating force behind all actions at issue in the complaint. Under 49 U.S.C. Q 46301, Montgomery Jet and Southern Skies may be assessed civil penalties of up to $25,000 for each violation of 49 U.S.C. QQ 41 101 and 41712. Under section 46301, each day that a violation continues is considered a separate offense subject to a civil penalty of up to $25,000. If either Respondent is a small business as defined under section 3 of the Small Business Act, 15 U.S.C. 9 632, a civil penalty of $2,500 may be imposed for each violation of 49 U.S.C. 5 41712 and for each day such violation continues, and a civil penalty of $1,100 may be imposed for each violation of 49 U.S.C. 0 41 101 and for each day such violation continues. In addition, Mr. Mays, personally, is subject individually to the lesser penalty limits. The Assistant General Counsel for Aviation Enforcement and Proceedings seeks an assessment of civil penalties in the enforcement proceeding instituted by this notice. Under Rule 407(d) of the Department s Rules of Practice, 14 CFR 302.407(d), 1 The complaint also alleges in the alternative that Montgomery Jet, Southern Skies and Mr. Mays, acting as ticket agents, made misrepresentations to the public, failed to contract with a direct air carrier, and failed or refused to return charter participant funds in violation of 14 CFR Part 399. These violations would also constitute unfair and deceptive practices and unfair methods of competition in violation of 49 U.S.C. fj 41712.
-3- are notified that they may be liable jointly and severally for civil penalties of $500,000, reflecting violations of 49 U.S.C. $5 41 101 and 41712 resulting from the activities noted above. In addition to these civil penalties, the attached complaint seeks to prohibit Montgomery Jet Center, Inc., from unlawfully engaging in air transportation as an air carrier on its website at www.montgomeryjet.com or otherwise holding itself out as an air carrier. The complaint also seeks to prohibit Southern Skies, Inc., from holding itself out as an air carrier. Further, the complaint seeks to prohibit Mr. Ronald E. Mays, personally, from participating in any U.S. or foreign air carrier or common carriage operations within or to or from the United States as an officer, principal, director, or consultant for a period of five years. 2 This notice and the attached complaint will be served on Montgomery Jet Center, Inc., Southern Skies, Inc., and Mr. Ronald E. Mays. Under Rule 408 of the Department s Rules of Practice, 14 CFR 302.408, Montgomery Jet Center, Inc., Southern Skies, Inc., and Mr. Ronald E. Mays are required to file, within 15 days, an answer to the complaint admitting or denying specifically and in detail each allegation of the complaint, and a response to the proposed assessment of civil penalties, specifically presenting any matters the respondents intend to rely on in opposition to or in mitigation of such civil penalties. - (SEAL) Samuel Podberesky Assistant General Counsel for Aviation Enforcement and Proceedings 2 The authority to order such a prohibition is encompassed within the Department s authority to issue cease and desist orders, 49 U.S.C. 5 46101, and to license air carriers and rule on the fitness of their officers, principals and directors to manage an air carrier, 49 U.S.C. 9 41101.
-4- CERTIFICATE OF SERVICE *' +-ti I certify that on the 5 day of January, 2007, I served the foregoing Notice of Enforcement Proceeding and Proposed Assessment of Civil Penalties and the related complaint in the following manner to the following: Original U.S. DOT Dockets U.S. Department of Transportation 400 Seventh Street, SW Washington, D.C. 20590 By Email and Personal Service The Honorable Ronnie A. Yoder Chief Administrative Law Judge Office of Hearings, M-20, Rm 541 U.S. Department of Transportation 400 Seventh Street, SW Washington, D.C. 20590 Bv Email and First Class Mail Ronald E. Mays Montgomery Jet Center, Inc., 4601 Richardson Road Montgomery, AL 36108 Ronald E. Mays Southern Skies, Inc., 4601 Richardson Road Montgomery, AL 36 108 William H. Turner, Esquire 449 South McDonough Street Montgomery, AL 36104
-5- Email - Ronald E. Mays [mays@montgomeryjet.com] - William H. Turner [flytwol@bellsouth.net Rosalind A. Knapp De uty General Counsel R \ &&da*k "Y:/-j7qy L a wafford-brooks (202) 366-1745 and Proceedings
BEFORE THE DEPARTMENT OF TRANSPORTATION OFFICE OF HEARINGS WASHINGTON, D. C. Montgomery Jet Center, Inc., Southern Skies, Inc., and Ronald E. Mays Violations of 49 U.S.C. $6 41101 and 41712, or alternatively, 14 CFR Part 399 and 49 U.S.C. 8 41712 Docket OST 2007- Enforcement Proceeding ENFORCEMENT COMPLAINT GENERAL ALLEGATIONS 1. Montgomery Jet Center, Inc., (Montgomery Jet) is an Alabama corporation organized by Ronald E. Mays (Mr. Mays) on June 15,2001, with its principal place of business at 4601 Richardson Road, Montgomery Alabama, 36108. Montgomery Jet advertises that it engages in various aviation-related services, including financing and leasing of aircraft, aircraft management services, as well as a fractional ownership program. 2. Southern Skies, Inc., (Southern Skies) is an Alabama corporation organized by Mr. Mays on July 22,2004, with its principal place of business at 4601 Richardson Road, Montgomery, Alabama 36108. Southern Skies stated purpose is air transportation services.
2 3. Upon information and belief, Mr. Mays used the name Montgomery Jet for internet advertising and used the name Southern Skies when negotiating charter contracts. Mr. Mays made all significant financial decisions for both Montgomery Jet and Southern Skies. 4. Since at least January 2006, and continuing at least through the date of this complaint, Montgomery Jet maintained a website, www.montgomeryj et.com, which contained references to itself as an air carrier, which referred to aircraft in terms of our fleet, and which discussed its inaugural flight and boasted that it carr[ies] the world s leaders. 5. All significant decisions regarding the Montgomery Jet website relevant to this complaint are or were made by or required the approval of Mr. Mays. 6. At no time relevant to this complaint was Mr. Mays or Montgomery Jet authorized by the U.S. Department of Transportation to hold out, sell, or operate as a direct or indirect air carrier. 7. Mr. Mays, through Southern Skies, entered into a contract, dated December 30, 2005, and signed on January 6,2006, (Charter Contract) with the Africa-US Friendship and Economic Development Group (FED Group), represented by Mr. Alex St. James, to provide air transportation to individual passengers from Baltimore, Maryland, to Monrovia, Liberia, which flight was to take place January 9,2006 (Liberian Charter). 8. Mr. Mays, through Southern Skies, represented in the Charter Contract that he would provide and operate aircraft for the transportation of passengers, baggage, and cargo for the FED Group. Mr. Mays, through Southern Skies, represented that the equipment to be provided by Southern Skies would be a Boeing 757-200 or
3 737-800 aircraft operated in accordance with the Federal Aviation Regulation Part 121 (14 CFR Part 121). 9. Neither Mr. Mays nor Southern Skies had authority from the U.S. Department of Transportation to operate any aircraft under Part 12 1 when Mr. Mays entered into the contract with Mr. St. James and the FED Group. 10. In accordance with the Charter Contract, Mr. Mays, through Southern Skies and/or Montgomery Jet, collected approximately $40,000 in consumer funds from Mr. St. James and the FED Group, which were paid to the FED Group by consumers for transportation on the Liberian Charter. 11. Upon information and belief, on or about December 2005, Mr. Mays, through Southern Skies and/or Montgomery Jet, contacted Miami Air International, Inc. (Miami Air), a properly licensed airline, in connection with their promise to Mr. St. James and the FED Group to provide air service from Washington D.C. to Monrovia, Liberia, on January 9,2006. At no time relevant to this complaint did Mr. Mays enter into these contract negotiations for air transportation as an agent of Mr. St. James or the FED Group. 12. Mr. Mays through Southern Skies and/or Montgomery Jet failed to enter into a contract with Miami Air, or any other properly licensed airline, to operate the Liberian Charter flight. Despite having no authority themselves to operate the promised charter flight and failing to arrange for a properly licensed airline to operate the Liberian Charter flight, Mr. Mays and Southern Skies and/or Montgomery Jet retained the $40,000 in consumer funds paid them toward the charter flight. 13. As a result, on January 9, 2006, approximately eighty passengers arrived at the Thurgood Marshall Baltimore Washington International Airport (BWI) for the
4 Liberian Charter flight, only to discover that there was no airline or aircraft to operate the flight. The passengers, many of whom had traveled to BWI from different states around the country, did not receive the air transportation for which they paid, and many were in effect stranded in Baltimore, Maryland, without air service to return them to their respective points of origin. 14. Upon information and belief, as of December 2006, Mr. Mays, through Montgomery Jet and/or Southern Skies, has failed to refund, either to Mr. St. James and the FED Group or to individual passengers, the $40,000 in funds paid by consumers for the charter flight. Accordingly, with the exception of a few consumers who paid for their trips by credit card and were able to obtain a chargeback of the funds through their credit card bank, virtually all consumers who paid for the Liberian Charter have yet to receive their share of the $40,000 paid to and controlled by Mr. Mays and Montgomery Jet and/or Southern Skies. 15. All significant financial decisions involving Southern Skies and Montgomery Jet as they concern the Liberian Charter are or were made by or required the approval of Mr. Mays. 16. All significant operational decisions involving Southern Skies and Montgomery Jet as they concern the Liberian Charter are or were made by or required the approval of Mr. Mays. 17. All significant contracts entered into by Southern Skies and Montgomery Jet involving those entities respective businesses as they concern the Liberian Charter are or were negotiated by or required the approval of Mr. Mays. 18. At all times relevant to this complaint, Mr. Mays was in control of Southern Skies and Montgomery Jet s respective businesses and was the animating force behind
5 Southern Skies and Montgomery Jet s respective businesses as they involved the Liberian Charter. VIOLATION: UNAUTHORIZED HOLDING OUT AND SALE OF AIR TRANSPORTATION 19. We reallege and hereby incorporate each fact set forth in Paragraphs 1 through 18 above. 20. Pursuant to 49 U.S.C. 0 41 101, no person or other entity may engage in air transportation by holding out or selling direct or indirect air carrier service without first obtaining authority to do so. 21. Engaging in air transportation without first having obtained authority to do so in violation of 49 U.S.C. 4 41 101 constitutes an unfair or deceptive practice and unfair method of competition in violation of 49 U.S.C. 0 41712. 22. By engaging in the conduct and actions described in Paragraphs 1 through 18, Montgomery Jet Center, Inc., and Mr. Ronald E. Mays, personally, engaged in air transportation without authority in violation of 49 U.S.C. 0 41 101. 23. By engaging in the conduct and actions described in Paragraphs 1 through 18 above, Montgomery Jet Center Inc., and Mr. Ronald E. Mays, personally, engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. 3 41712. 24. By engaging in the conduct and actions described in Paragraphs 1 through 18, Southern Skies, Inc., and Mr. Ronald E. Mays, personally, engaged in air transportation without authority in violation of 49 U.S.C. 0 41 101.
6 25. By engaging in the conduct and actions described in Paragraphs 1 through 18 above, Southern Skies, Inc., and Mr. Ronald E. Mays, personally, engaged in an unfair and deceptive practice and an unfair method of competition in violation of 49 U.S.C. $41712. ALTERNATIVE VIOLATIONS: MISREPRESENTATION TO PUBLIC, FAILURE TO CONTRACT WITH A DIRECT AIR CARIER, AND FAILURE OR REFUSAL TO RETURN CHARTER PARTICIPANT FUNDS 26. Under 49 U.S.C. $ 40102, a ticket agent is defined as a person, other than an air carrier or agent of an air carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out as selling, providing, or arranging for, air transportation. 27. Pursuant to 14 CFR 399.80 (a) a ticket agent s misrepresentation which causes the public to believe the ticket agent is an air carrier amounts to an unfair and deceptive practice or unfair method of competition. 28. In the alternative to Paragraphs 19 through 25 above, Mr. Mays, personally, and Montgomery Jet Center, Inc., acted as ticket agents by offering for sale, negotiating for, or holding themselves out as selling, providing or arranging for air transportation on the internet. 29. By engaging in the conduct and actions described in Paragraphs 1 through 18 above, Mr. Mays, personally, and Montgomery Jet Center, Inc., have engaged in an unfair and deceptive practice and unfair method of competition in violation of 14 CFR 399.80 (a) and 49 U.S.C. 3 41712. 30. In the alternative to Paragraphs 19 through 25 above, Mr. Mays personally, and Montgomery Jet Center, Inc., and/or Southern Skies, Inc., acted as ticket agents by
7 offering for sale, negotiating for, or holding themselves out as selling, providing, or arranging for charter air transportation to Mr. St. James and the FED Group for the Liberian Charter. 31. Pursuant to 14 CFR 399.80(j), it is an unfair and deceptive practice for a ticket agent to sell air transportation to persons on a reservation or charter basis for a specified flight without a binding commitment with an air carrier for the furnishing of such definite reservation or charter as represented or sold. 32. Pursuant to 14 CFR 399.80(1) it is an unfair and deceptive practice for a ticket agent to fail or refuse to make proper refunds promptly when service cannot be performed as contracted or representing that such refunds are obtainable only at some other point. 33. By engaging in the conduct and actions described in Paragraphs 1 through 18 above, Mr. Ronald E. Mays, personally, and Montgomery Jet Center, Inc., and/or Southern Skies, Inc., engaged in an unfair and deceptive practice or unfair method of competition in violation of 14 CFR 399.80(j), 399.80(1) and 49 U.S.C. 4 41712. JURISDICTION AND VENUE 34. This complaint is authorized pursuant to 49 U.S.C. 0 46101(a)(2), and Subpart D of the Department s Rules of Practice in Proceedings, 14 CFR Part 302, Subpart D. 35. Under 49 U.S.C. 0 46301 and 14 CFR Part 383, the Department may assess civil penalties of up to $25,000 for each violation and for each day of a continuing violation of 49 U.S.C. 0 41 101 and 49 U.S.C. 0 41712. If the Respondent is an individual or a small business as defined under 15 U.S.C. 9 632, a civil penalty of $2,500 may be imposed for each violation and each day of a continuing violation of
8 49 U.S.C. $ 41712, and $1,100 may be imposed for each violation and each day of a continuing violation of 49 U.S.C. 0 41 101; and 36. Under 49 U.S.C. 0 46101(a)(4), the Department may issue an order compelling compliance with provisions of Part A, Subtitle VI1 of Title 49 U.S.C. (49 U.S.C. $ 40101-$46507) and rules prescribed under that Part. PRAYER FOR RELIEF WHEREFORE, the Office of the Assistant General Counsel for Aviation Enforcement and Proceedings requests the Department of Transportation to: A. Find that Montgomery Jet Center, Inc., and Mr. Ronald E. Mays, personally, have violated 49 U.S.C. $ 41 101 by holding Montgomery Jet Center, Inc. out as an air carrier and thereby engaging in air transportation without authority; B. Find that Montgomery Jet Center, Inc., and Mr. Ronald E. Mays, personally, engaged in an unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. 8 41712 by holding Montgomery Jet Center, Inc., out as an air carrier and thereby engaging in air transportation without authority; C. Find that Southern Skies, Inc., and Mr. Ronald E. Mays, personally, have violated 49 U.S.C. $ 41 101 by holding Southern Skies, Inc., out as an air carrier and thereby engaging in air transportation without authority; D. Find that Southern Skies, Inc., and Mr. Ronald E. Mays, personally, engaged in an unfair and deceptive practice and unfair method of competition in violation of 49 U.S.C. 0 41712 by holding Southern Skies, Inc., out as an air carrier and therebv engaging in air tranmortation without authoritv:
9 E. Order Montgomery Jet Center, Inc., Southern Skies, Inc., and Mr. Ronald E. Mays, personally, to cease and desist from the violations described in paragraphs A through D. F. Assess civil penalties against Mr. Ronald E. Mays, personally, Montgomery Jet Center, Inc., and Southern Skies, Inc., jointly and severally, of $500,000 for the violations described in Paragraphs 1 through 25, and A through D above, and $2,500 for each additional similar violation revealed in the course of this investigation pursuant to 42 U.S.C. 0 46301; G. Proscribe any participation as an officer, principal, or director by Mr. Ronald E. Mays, personally, or by Montgomery Jet Center, Inc., or Southern Skies, Inc. in any U.S. or foreign air carrier or U.S. Public Charter program operating within or to or from the United States for a period of five years; and H. Grant such other relief as may be just and appropriate. ALTERNATIVE PRAYER FOR RELIEF WHEREFORE, the Office of the Assistant General Counsel for Aviation Enforcement and Proceedings requests the Department of Transportation to: I. Find that Montgomery Jet Center, Inc., and Mr. Ronald E. Mays, personally, have violated 14 CFR 399.80(a) and 49 U.S.C. 0 41712 by holding Montgomery Jet Center, Inc., out on the internet and by their own misrepresentations, causing the public to believe Montgomery Jet Center, Inc., is an air carrier; J. Find that Montgomery Jet Center, Inc., and/or Southern Skies, Inc., and Mr. Ronald E. Mays, personally, have violated 14 CFR 399.80@, 399.80(1) and 49
10 U.S.C. tj 41712 by selling air transportation on a reservation or charter basis for a specified flight without a binding commitment with a lawful carrier and by refbsing to make proper refunds to passengers when the contracted service could not be performed; K. Order Montgomery Jet Center, Inc., Southern Skies, Inc., and Mr. Ronald E. Mays, personally, to cease and desist from the violations described in paragraphs I and J. L. Assess civil penalties against Mr. Ronald E. Mays, personally, Montgomery Jet Center, Inc., and Southern Skies, Inc., jointly and severally, of $500,000 for the violations described in Paragraphs 1 through 18,26 through 33, and I through J above, and $2,500 per day for each additional similar violation revealed in the course of this investigation pursuant to 42 U.S.C. 5 46301. M. Proscribe any participation as an officer, principal, or director by Mr. Ronald E. Mays, personally, Montgomery Jet Center, Inc., or Southern Skies, Inc., in any U.S. or foreign air carrier or U.S. Public Charter program operating within or to or from the United States for a period of five years; and N. Grant such other relief as may be just and appropriate. Respectfully submitted, -Samuel Podberesky Assistant General Counsel for Aviation Enforcement and Proceedings
11 Lisa Swafford-Brooks Senior Trial Attorney Casey Symington Trial Attorney Office of Aviation Enforcement and Proceedings 400 Seventh Street, SW (C-70), Room 4116 Washington, DC 20590 Telephone: (202) 366-9352 Fax: (202) 366-7152