Another Allegheny County Airport Authority board member has surfaced as a one-time investor in OneJet, the troubled business carrier that is being sued by the same agency for breaching its contract after receiving $1 million in incentives to fly from Pittsburgh.
David Minnotte, the authority’s board chairman, is named as a shareholder in the airline in a lawsuit filed Thursday in Allegheny County Common Pleas Court.
The lawsuit was filed on behalf of 51 people who were investors in OneJet, which has been forced into involuntary chapter 7 bankruptcy in Pittsburgh and no longer is flying. They are collectively owed $10.1 million, according to Ryan Cooney, one of their attorneys.
Defendants in the lawsuit include Mr. Minnotte and Robert Lewis, the authority board vice chairman who invested in the airline. Also named are Matthew Maguire, the airline’s CEO; Patrick Maguire, Mr. Maguire’s father; Boustead Securities; and Melvin Pirchesky and Robert Campbell, listed as agents for Boustead.
The lawsuit marks the first time that Mr. Minnotte has been identified as an investor in the beleaguered airline. He could not be reached for comment.
Airport Authority solicitor Jeffrey Letwin said Mr. Minnotte told him that he was an investor in OneJet but that he divested of his holdings sometime in the summer. He was not an investor when the board voted in September to bar authority members from holding a stake in any airline, Mr. Letwin said.
Mr. Lewis and Jan Rea, who also sits on the authority board, previously had been identified as investors. Both were forced to give up their stakes in OneJet after the board adopted a policy in September that barred investments in airlines by its members.
At the time, Mr. Minnotte voted in favor of the policy but did not indicate that he had any stake in the carrier.
Neither the airport authority nor Ms. Rea is named as a defendant in the lawsuit.
It is not known how much of an investment either Mr. Minnotte or Mr. Lewis had in the airline. Mr. Lewis also is identified as a shareholder in the lawsuit.
Ms. Rea has said that she and her husband bought a “minimum amount” of notes being offered by the carrier to potential investors so they could take advantage of charters it offered to Naples, Fla.
According to the lawsuit, investors who purchased at least $150,000 in OneJet notes could avail themselves to the flights. But the suit maintains that “members of the Naples Club were often unable to get the flights that they were promised.”
Mr. Cooney said he personally has not seen a stock certificate or note showing Mr. Minnotte’s investment but that he has been “told by a number of clients that he was an investor.”
The lawsuit accuses Matthew and Patrick Maguire of making “several misstatements of material fact” to the plaintiffs, one being that Mr. Minnotte and Mr. Lewis “had invested in OneJet and that they could secure favorable treatment of OneJet with the airport authority.”
The authority has filed its own lawsuit against OneJet seeking to recoup $763,000 of the $1 million in incentives it paid to the carrier. It claims the airline did not deliver on its promise to provide and maintain flights to 10 destinations, including seven new markets.
Nonetheless, the lawsuit by the 51 plaintiffs charges that Mr. Minnotte and Mr. Lewis “used their positions on the board of the airport authority to influence the authority’s use of grant money for the benefit of OneJet.”
“Minnotte and Lewis touted the fact that the airport authority had ‘approved’ OneJet’s operations, as a marketing tool to solicit investments in OneJet,” the lawsuit maintains.
Mr. Letwin rejected that assertion.
“I think that’s an absolute bunch of garbage,” he said.
In an earlier statement, Mr. Letwin said, “The airport authority is not named as a defendant and we have not had a chance to review the complaint. However, neither the authority board nor the authority itself took any preferential action for any carrier.”
Mr. Letwin said Mr. Minnotte did not vote on anything related to OneJet during the time he was an investor in the airline.
“I don’t see anything wrong with anything he’s done,” he said.
Neither Mr. Lewis nor Matthew Maguire could be reached for comment.
The lawsuit also alleges that the Maguires misrepresented the extent of their investment in the airline; provided inaccurate financial statements and projections to potential investors; and “continued to misrepresent the financial stability and projected profitability of OneJet through August of 2018, even though OneJet was already in serious financial trouble.”
OneJet suspended all operations Aug. 29 and has yet to resume any flights.
According to the lawsuit, Matthew Maguire advised investors in a Sept. 27 email, “All resources have been exhausted to sustain any further efforts under OneJet and have been for the past several weeks. Subject to any changes in situation, OneJet as a corporate entity will be wound up. As of Friday, all contractor and other employment agreements have been terminated due to lack of funds.”
The complaint alleged that the Maguires burned through more than $60 million in investors’ funds in less than 18 months “with little or no explanation of how the money was spent.”
Among the counts, the lawsuit accuses the Maguires of a breach of fiduciary duties, and the Maguires and the other defendants of violations of various sections of the Pennsylvania Securities Act.
Mark Belko: mbelko@post-gazette.com or 412-263-1262.
Updated at 2:20 p.m. December 6, 2018.
First Published: December 6, 2018, 5:08 p.m.
