Airline: Pilots Divorced to Defraud Pension Plan
Continental claims nine couples split to get lump-sum payout of pensions.
May 24, 2009— -- Some people may marry for money, but recently several airline pilots have been accused of divorcing for cash.
Continental Airlines claims nine pilots divorced their spouses, who were named as the benficiary for their pensions, and then remarried the same spouse after the payouts began. It's essentially a form of alimony in reverse.
According to the suit, filed in U.S. District Court in Houston, the pilots and their spouses divorced so that they could take advantage of a provision in federal pension law that allows an ex-spouse who was named as a beneficiary in a pension to receive all or a portion of the funds in case of divorce.
The suit alleges that even if the divorces were legal by the letter of the law, they were "subterfuges or sham transactions in that the Defendant-pilots and their respective Defendant-spouses had no intention of disassociating as marital partners but obtained the divorce decrees ... for the purpose of providing the Defendant-pilots access to lump sum distributions of their pensions without having to retire or otherwise separate from active employment."
The suit seeks to have the pensions that were paid out returned to airline, as well as any interest that might have been earned on the money that was paid out.
All of the pilots named in the suit have either been fired or resigned, Continental said, except for one, who agreed to repay the money.
"The one exception ... recanted his fraud and signed an agreement to make restitution to the plan and consequently was reinstated to active employment," Continental said in the suit.
ABC News Aviation expert John Nance says this isn't the first time something like this has happened.
"Some of the shenanigans that have been pulled with airline pensions in the past, you can see how people would be anxious, but it certainly doesn't justify this kind of action," Nance said.
Pilots at United, Delta and US Airways lost most of their pensions when those airlines filed for bankruptcy, which Nance said sent ripples of anxiety across the industry.
