People Express Executive Gets 2 Years to Serve in Federal Fraud Case
The founder of a failed start-up airline that operated briefly out of Newport News/Williamsburg International Airport five years ago was sentenced Thursday to two years in prison on federal fraud charges.
Michael Morisi, 59, of Suffolk — who founded People Express Airlines — got two years behind bars for wire fraud and filing a false income tax return.
U.S. District Judge Arenda L. Wright Allen ordered the sentences be served together, and allowed Morisi to report for prison later. She also ordered him to pay $500,312 in restitution — to the W.M. Jordan Co., the Newport News airport, the IRS and others.
Morisi was arrested in May 2019, a day after former Newport News airport executive director Ken Spirito was arrested on charges stemming largely from a $5 million airport loan guarantee to People Express.
The commission signed a deal in June 2014 in which TowneBank issued the loan, but the commission agreed to cover the debt if the airline defaulted.
The airline collapsed in September 2014, less than three months into service, due to plane maintenance issues and an accident between a plane and a truck. The commission quietly used $4.5 million in taxpayer money to pay the debt.
Morisi was charged in May 2019 with defrauding creditors, including telling vendors in early 2015 that he had no cash — even as the company had just gotten proceeds from the accident and he was still paying himself and other executives.
While Sprito’s case appears headed for trial, Morisi pleaded guilty to two fraud charges in July — 16 other charges were dropped as part of a plea agreement.
Advisory federal sentencing guidelines called for him to get between 27 and 33 months in prison.
“The defendant played a key role in continuously promoting a start-up airline (and paying himself a large salary to do so) that was never in a stable position to succeed,” federal prosecutors wrote in a sentencing paper.
After the airline’s collapse, prosecutors said, “the defendant’s priority was, regrettably, to make certain that he and his colleagues collected funds for their own use, rather than that of the various creditors.”
Still, prosecutors asked the judge for a sentence at the low end of the guidelines, noting that Morisi spoke with federal agents even before being indicted, pleaded guilty, “and appears to have expressed remorse for his conduct."
Morisi’s attorney, Assistant Federal Public Defender Kirsten Kmet, asked that Morisi get three years probation with 27 months of home electronic monitoring.
“He has demonstrated acceptance of responsibility for his conduct, and he is extremely remorseful,” Kmet wrote, also submitting the judge 13 letters in support of Morisi from family, friends and community members.
“Michael always gives of himself, his time and his connections, without every asking anything in return,” said a letter from Danette J. Crawford of Joy Ministries, a Virginia Beach organization that helps the poor and fatherless.
The judge came down with a sentence of two years to serve on the charges.
Peter Dujardin, 757-247-4749, [email protected]
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