The last of 10 defendants charged in an alleged scheme to defraud Polar Air Cargo has been handed a two-year prison sentence.
Skye Xu was sentenced to two years in prison for his part in a scheme to defraud Polar of more than $32m in revenue, said the US Attorney's Office, Southern District of New York in a press release on May 15.
Xu originally pleaded not guilty and was scheduled for trial on 28 October last year, but changed his plea to guilty of conspiracy to commit wire fraud and honest services wire fraud, wire fraud, and conspiracy to commit money laundering.
Jay Clayton, United States Attorney for the Southern District of New York, said: "During the COVID-19 pandemic, Skye Xu paid approximately $4.4m in kickbacks to Polar executives to obtain highly lucrative business from Polar.
"The Polar executives concealed the kickbacks from Polar using shell companies. Corruption of this type has costs that extend way beyond Polar’s or any one company’s bottom line."
He added that the sentence "should be a reminder that commercial bribery has no place in America".
From at least in, or about, November 2020 through to in, or about, July 2021, Xu operated Sky X Airlines, a cargo airline based in California.
During those nine months, and without Polar’s knowledge, Xu paid approximately $4.4m in kickbacks to shell companies controlled by three senior executives of Polar in exchange for two lucrative business contracts with Polar, court evidence showed.
The attorney's office said the fraudulently obtained contracts earned Xu and Sky X Airlines approximately $46m in gross revenue and nearly $10m in net revenue based on the sales of unused space on passenger airlines to transport cargo during the COVID-19 pandemic.
The approximately $4.4m in kickbacks that Xu paid to the executive defendants in a nine-month span was part of more than $20m in kickbacks and other financial benefits that the executive defendants and other co-conspirators received from certain Polar customers and vendors from at least 2009 to at least 2021 in exchange for ensuring that those vendors and customers received favourable business arrangements with Polar, according to the attorney's office press release.
In addition to the prison term, Xu was sentenced to three years of supervised release. He was also ordered to forfeit over $4.4m and to make a restitution payment of $1.39m to Polar.
Five of the 10 defendants have previously been sentenced, including former chief operating officer Lars Winkelbauer, who in May last year was sentenced to four years in prison.
In February, Atlas Air Worldwide and DHL announced they would close their joint venture Polar after 17 years of operations as it was no longer deemed a strategic business interest. The precise date of closure was not confirmed.
Last April, Kersti Krepp, senior vice president and chief management officer at Polar, told Air Cargo News that the business had moved on and had a robust company culture in place.
