In 1981 a small flight school based at Flying Cloud Airport outside Minneapolis morphed into Flight Transportation Corp., a charter airline specializing in package tours to the Cayman Islands. The company's founder was 49 year old Russell Lund Jr. When Flight Transportation Corp. was chartered Russ was heir-apparent to the CEO position at Lund's Corp., the Minneapolis-based food, oil and real estate company, but he'd never displayed any interest in the business and a few years later his son became chief executive. Russ's skill as a pilot (he'd flown fighter planes in the Korean War) and his access to capital might have made him the CEO of Flight Transportation as well, but that title was claimed by a flamboyant loudmouth and incorrigible chiseler named William Rubin. Russ settled for the title of vice president, one rung beneath Rubin's lover, Janet Karki, a whiz with numbers and the executive vice president.
Russ's failure to thrive at Flight Transportation mirrored his inability to find a niche in his family's business empire, but for different reasons. He was a Soldier of Fortune magazine-type personality, who spent his time tinkering with engines, guns and ham radios. Lund's Corp. bored him. He loved aviation, and the charter airline initially intrigued him, but the company's business plan obviated any need for capital and his pilot's license wasn't much use either. The airline never flew anywhere. It was a paper facade that fabricated revenue to lure investors.
As financial scams go, Flight Transportation was pretty unsophisticated. Nevertheless, for awhile it was a spectacular success. Bankers gave the company loans that were never paid, to buy airplanes that were never purchased. Law firms were stiffed for their fees after wracking up hundreds of billable hours midwifing transactions that were never completed. Three stock offerings backed by phony revenues yielded more than $30 million.
Rubin and Karki lived together in an upscale Minneapolis suburb, spending money that they were supposed to be using to operate the business. Rubin assembled an exotic car collection that included a Lamborghini, a Ferrari and four custom-designed Cadillacs. He gave Karki diamonds worth $100,000, which she kept in a drawer amongst other gems she acquired.
Eventually bilked investors got the attention of the U.S. Attorney's office. In 1983 the Feds closed Flight Transportation and seized its relatively meager assets. About five hundred thousand in cash disappeared shortly before Rubin and Karki were arrested. Karki's jewels went missing before plaintiffs' attorneys could find them, but Rubin's cars were located, seized and forfeited in a civil suit. The two were indicted on multiple counts of fraud in 1985. They made bail, and continued living together while they planned their defense. In 1986 they were convicted in what was portrayed as Minnesota's biggest fraud trial ever.
As they languished in separate cells awaiting sentencing, a U.S. Attorney visited Karki and told her about the double life her rap partner had been living.
Rubin had wooed and wed another woman on the sly while he was out on bail, a manicurist named Crystal Pladson. According to Pladson's neighbors, Rubin arrived for courtship in a variety of flashy cars, the same ones he'd lost earlier in a civil suit (no one ever figured out how he got his hands on them again). He gave Pladson thousands of dollars worth of jewels, among them pieces he'd pilfered from Karki. Shortly before the trial began, Rubin and Pladson had eloped to South Dakota for a surreptitious wedding.
Karki was enraged by her co-defendant's duplicity, and agreed to provide prosecutors hitherto unknown details of Flight Transportation Corp.'s affairs. She had been acquitted on 16 of 28 counts of fraud, but now she confessed to committing many of those crimes in the course of implicating Rubin in acts on which he had escaped conviction as well.
Karki was the first to be sentenced. She received 25 years. It was the longest term ever meted out to a white collar criminal in Minnesota, but her record didn't stand for long. One month later Rubin got 35 years. The judge acknowledged the severity of the sentence, but said he'd taken into account the new information Karki gave prosecutors after she learned of her lover's marriage.
Flight Transportation Corp. was a veritable tar baby of corruption. Just about every one who touched it came to grief. The company's attorney and five other employees besides Rubin and Karki were either convicted or pleaded guilty to crimes related to the scam. The court-appointed receiver admitted to stealing some of the assets he was supposed to distribute.
Russell Lund Jr. was one of the few who came out unscathed. His name on the company's letterhead was integral to the hoax, but prosecutors and investigators agreed that he was a pawn and a dupe, and such a dunce when it came to business that he couldn't have been culpable. Nevertheless, for years after the trial he figured strongly in rumors that Flight Transportation Corp. flew cash to offshore banks for wealthy Twin Citians, so they could evade taxes.
Russ left a packet of information about the Flight Transportation Inc. affair with a local television station the day before he murdered his estranged wife and her lover, in 1992. The killings short-circuited plans the station had to follow up. The contents of the packet have never been publicly disclosed.
The above is an excerpt from The Difference, one of 10 stories in Greed, Rage and Love Gone Wrong, By Bruce Rubenstein. http://amzn.to/17TIVi1