United Airlines Chief Resigns Over Corruption Investigation

During the early stages of the saga of my Norfolk friends who had their luggage sabotaged by United/Continental Airlines personnel, I had occasion to write a letter to Jeff Smisek, the CEO of United/Continental Airlines.  To say that the response I received from Mr. Smisek's minions was haughty and, in my opinion, full of BS, would be an understatement.  Well, Karma can really be a bitch.  Today, Smisek resigned in the fallout from a corruption investigation surrounding the New York Port Authority Chris Christie BridgeGate scandal.  The New York Times looks at Smisek's resignation and the growing corruption scandal.  Here are excepts:

United Airlines said on Tuesday that its chief executive, Jeff Smisek, and two other senior officials had stepped down amid a federal corruption investigation.

The airline is under investigation by the United States attorney in New Jersey over whether it had improperly sought to influence senior officials at the Port Authority of New York and New Jersey.

“The departures announced today are in connection with the company’s previously disclosed internal investigation related to the federal investigation associated with the Port Authority of New York and New Jersey,” the company said in a statement. “The investigations are ongoing and the company continues to cooperate with the government.”

United’s executive vice president for communications and government affairs, Nene Foxhall, and the senior vice president for corporate and government affairs, Mark R. Anderson, also resigned, the company said.

In February, federal prosecutors issued subpoenas focused on whether the former chairman of the Port Authority, David Samson, had pushed United to reinstate flights that he used to travel to and from his weekend home in South Carolina.

Ms. Foxhall and Mr. Anderson were among the United officials whose communications with the Port Authority had been subpoenaed.

The resignations also complicate the fortunes of Mr. Christie as he tries to resurrect his once-promising presidential bid, by underscoring the accusations of cronyism that have dogged his administration since the bridge scandal broke in early 2014. The governor has distanced himself from other figures implicated in the scandal, saying that they deceived him. But Mr. Samson, despite his resignation, has remained one of the governor’s closest advisers.

 Good riddance!!!

Chris Christie Faces a New "Bridge Gate" Scandal - And Possible Criminal Charges

Recently, New Jersey Governor Chris Christie has boasted that he has almost put "Bridge Gate"  - the scandal surrounding the George Washington Bridge between New Jersey and New York - behind him and that he is a viable 2016 presidential contender.  Now, as the New York Times is reporting, Christie may have an even more serious bridge related scandal facing him - along with securities laws penalties and criminal penalties.  As a former bond law attorney myself, if there is anything one NEVER does, it is lying in securities offering statements.  Yet it looks like that is precisely what may have occurred.  Here are highlights from the New York Times:

Investigations into the Christie administration and the Port Authority of New York and New Jersey have zeroed in on possible securities law violations stemming from a $1.8 billion road repair agreement in 2011, according to people briefed on the matter.

While the inquiries were prompted by the apparently politically motivated lane closings at the George Washington Bridge last year, these investigations center on another crossing: the Pulaski Skyway, the crumbling elevated roadway connecting Newark and Jersey City. They are being conducted by the Manhattan district attorney and the Securities and Exchange Commission.

The inquiries into securities law violations focus on a period of 2010 and 2011 when Gov. Chris Christie’s administration pressed the Port Authority to pay for extensive repairs to the Skyway and related road projects, diverting money that was to be used on a new Hudson River rail tunnel that Mr. Christie canceled in October 2010.

Again and again, Port Authority lawyers warned against the move: The Pulaski Skyway, they noted, is owned and operated by the state, putting it outside the agency’s purview, according to dozens of memos and emails reviewed by investigators and obtained by The New York Times.

But the Christie administration relentlessly lobbied to use the money for the Skyway, with Mr. Christie announcing publicly that the state planned to rely on Port Authority funds even before an agreement was reached. Eventually, the authority justified the Skyway repairs by casting the bridge as an access road to the Lincoln Tunnel, even though they are not directly connected.

In bond documents describing the Skyway reconstruction and other repairs, the Port Authority has called the projects “Lincoln Tunnel Access Infrastructure Improvements.”

The accuracy of this characterization is now a major focus of the investigations, according to several people briefed on the matter. Under a New York State law known as the Martin Act, prosecutors can bring felony charges for intentionally deceiving bond holders, without having to prove any intent to defraud or even establish that any fraud occurred.

Two veteran prosecutors in the Manhattan district attorney’s office public corruption unit are working with two S.E.C. lawyers who are experts in such bond issues, one person briefed on the matter said, and another noted that while the agencies were each conducting separate parallel inquiries, they were working together.

In addition to criminal charges under the Martin Act, the investigations could result in civil action under the Martin Act or by the S.E.C., under federal securities laws.

One person briefed on the matter said the funds had been used to fill a hole in the New Jersey state budget, noting that the inquiries seek to determine whether the fiscal contortions were creative politics or criminal maneuvers.

Bondholder covenants, the lawyers explained, limited the kinds of projects the agency could spend money on, and previous court decisions had found that the Port Authority had “no authority” to build roads that were not on the property of airports or marine terminals controlled by the agency.

The memo sent to Ms. Gramiccioni recommended other projects on which the money could be spent. Mr. Christie was undeterred.

 At times I wonder if Christie is stupid or incredibly arrogant and contemptuous of the laws that govern others