U.S. Department
of Justice
Purported Aircraft Leasing Business Pays $700,000 To Resolve Alleged Violations of FAA Safety Regulations
The settlement resolves allegations, which are more fully laid out in the Complaint, that beginning at least as early as April 2017 and through March 2019, the defendants operated more than 150 paid, passenger-carrying flights in violation of Federal Aviation Administration safety regulations.
Federal law recognizes two types of aircraft leases: “wet leases,” in which an aircraft lessor also provides crew and other services, and “dry leases,” in which an aircraft lessor provides only the aircraft. The Federal Aviation Administration requires that lessors who make aircraft available pursuant to wet leases satisfy heightened safety and certification requirements. Pilots who conduct flights pursuant to wet leases also must satisfy heightened requirements for training, testing, and competency. Federal law further requires “commercial operators”—individuals or entities that hold themselves out as willing to transport person or property for compensation—to comply with those same heightened certification and safety standards.
The settlement resolves allegations that Campbell Oil and EAS entered into “sham” dry lease agreements, which purported to lease aircraft without any pilot or other services. However, according to the Complaint, the leases were, in substance, wet leases because Campbell Oil and EAS, through their President Brian Campbell, allegedly made the aircraft available to their customers in conjunction with pilot services offered by David Stephens and other pilots with whom Defendants had relationships, all without complying with the heightened safety and certification standards mandated by law for wet leases and commercial operators. Defendants allegedly also held themselves out to the public as offering air charter services, including by paying commissions to Stephens for soliciting customers for the air charter business.
Under the terms of the settlement agreement, Defendants agreed to pay a $700,000 civil penalty. Defendants are no longer operating the aircraft leasing business that is the subject of the allegations resolved in the settlement.
The resolution obtained in this matter was the result of a coordinated effort between the United States Attorney’s Office for the Eastern District of North Carolina and the Federal Aviation Administration. Assistant United States Attorney Andrew Kasper represented the United States.
The United States’ factual and legal assertions are allegations only, and there has been no admission or judicial determination of liability. The civil settlement agreement is not an admission of any liability by Defendants, nor a concession by the United States that its potential claims were not well-founded.
Related court documents and information from the civil lawsuit are available on PACER by searching for Case No. 7:23-CV-265.