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Port Authority Sues ADI for Fraud, Seeks $361,714

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YOUNGSTOWN, Ohio – The Western Reserve Port Authority today approved moving forward with a lawsuit against Aerodynamics Inc. and three of its related entities, including Great Lakes Jet Express, which last year briefly offered passenger service from Youngstown-Warren Regional Airport to Chicago.

The litigation, filed April 20 in Trumbull County Common Pleas Court by the port authority’s attorney, Dan Keating, charges ADI with breach of contract, fraudulent inducement, negligent misrepresentation and fraud. It seeks $361,714 in damages as well as legal fees.

At its meeting this morning, the port authority board of directors ratified the court action and voted to engage attorney Peter Grinstein of Brouse McDowell to serve as co-counsel with Keating at a rate of $250 per hour.

This afternoon, ADI’s senior vice president and chief operating officer, Mickey Bowman, said it was the company’s policy not to comment on pending litigation. “However, the company is aware of the lawsuit and it is evaluating litigation strategy,” he continued.

ADI, which operated as Great Lakes Jet Express, launched daily service to Chicago beginning July 1 and stopped in mid-August after the port authority voted to discontinue subsidizing the flights based on low passenger counts. At the time, port authority officials said ADI had failed to secure interline connectivity agreements with United Airlines and American Airlines, the major operators at O’Hare International Airport.

The lawsuit claims that the port authority was “fraudulently induced by ADI” to enter into the subsidy agreement based on the company’s claim of interline agreements. Without such agreements, passengers from Youngstown could not easily transfer to flights leaving O’Hare, which resulted in major inconvenience and ultimately poor ticket sales.

When ADI ceased the flights, the company claimed that the port authority owed it a subsidy for the month of August, around $300,000, Keating said today.

“We made a claim back on then for a refund of everything that we’ve paid to them, which was $261,000,” he continued. That represents the total it was paid from the $1.2 million Small Community Air Service Development grant from the U.S. Department of Transportation.

“We want to bring this to a conclusion and move on, and maybe still have SCAD grant money available for another airline,” Keating said. “The Department of Transportation hasn’t put it in so many words that we had to close one out before moving onto another, but it’s best if possible if we do that.”

The port authority has not heard from ADI representatives or legal counsel since November 2016, Keating said.

“The attorney quit returning calls. He didn’t respond to emails, didn’t respond to letter sent through the U.S. Postal Service,” he said.

Published by The Business Journal, Youngstown, Ohio.