9 Pilots Caught in Divorce Scam

Continental Airlines is suing 9 of their pilots for creating a divorce scam that would circumvent federal laws and allow them to collect pension benefits before retirement. Continental claims the pilots and their spouses acquired paper-only divorces and continued to live together, concealing their marital status change from family and friends. Once the state approved the divorces, the pilots signed court-issued documents giving their “ex-spouses” all rights to a pilot-only pension. Each plan was worth up to $900,000 per participant. The spouses then presented the paperwork to the Continental pension plan administrator and requested a lump-sum distribution.

Under federal law, the pre-retirement payments to former spouses are allowed in employer-sponsored retirement saving and investing plans that grow without taxation. However, Continental claimed that after getting the money, the couples remarried. These divorces are considered “subterfuges” or “sham transactions.”

The company filed a lawsuit against the pilots and their spouses to recover the lost money. In the lawsuit, Continental suggested the pilots were afraid of losing huge chunks of their pensions because of the financial difficulties the company was going through in 2005. Around the same time, other airlines, such as Delta, United, and U.S. Airways, filed for bankruptcy protection, went back on their pension promises, and handed over their plans to a federal administrator to try and successfully fulfill some of the pension obligations.

These pilots are also not the first group to try this scam. In 1999, the U.S. Department of Labor was asked by the parent of United Airlines whether it had to accept divorce documents it considered questionable. The company eventually accused 21 maintenance workers of defrauding the retirement plan through a similar divorce scam.

When people feel desperate, this can often lead them to commit extreme acts. Even though Dallas has fared better than other areas of the country, people get divorced for many reasons. However, in our experience as divorce attorneys, we have been aware of the rare situation in which people divorce for reasons other than irreconcilable differences. In each case, the scam backfired on the party that was attempting to get away with something. It doesn’t quite pay to be dishonest.

If you’d like assistance with a divorce, give our experienced Dallas divorce attorneys a call. We can offer more than 65 years of collective experience representing people and families throughout Texas. For more information about us, or to work on a personalized strategy for your case, contact us at (972) 852-8000 or fill out our online form today.