The former CEO of a Bend-based experimental aircraft company, Epic Air, which promised local jobs in return for public funding, has pleaded not guilty to federal charges alleging he deliberately defrauded customers of more than $14 million.
Rick Schrameck was arrested early last month in Los Angeles. On March 27, he pleaded not guilty to eight counts of wire fraud, four counts of mail fraud and six counts of money laundering in U.S. District Court in Eugene, federal court records show.
A federal indictment filed in March 2014 alleges Schrameck solicited customers to purchase and build experimental aircraft through Aircraft Investor Resources LLC and its two subsidiaries, Epic Air LLC and Aircraft Completion Services LLC.
Schrameck’s companies offered an experimental kit aircraft called the Epic LT, each of which fetched about $1.4 million to $1.8 million, and qualified as amateur-built aircraft, according to the indictment.
Amateur-built planes are not federally regulated, though the Federal Aviation Administration publishes advisory guidelines. Certified amateur-built planes must be built at least 51 percent by the builder or a representative of the builder, according to the FAA.
Though the indictment provides few details, it claims Schrameck intended to use customers’ money for other projects, to complete existing Epic LTs and to “pay for (his) lavish lifestyle.” When customers visited the Bend facility, Schrameck allegedly maintained appearances by swapping parts from one Epic LT to another.
If convicted, the indictment states, Schrameck would be required to forfeit any property resulting from the violations — including, but not limited to, about $15 million he collected through checks and wire transfers.
Schrameck reportedly told customers that his companies were profitable and had no debt. He also said customer money would be used to purchase parts and materials and to build the planes, a process that would take about eight to 10 months per plane.
In fact, the indictment alleges, Schrameck’s three LLCs together were about $5 million in debt and the companies could not complete the existing planes on the assembly line, located in Bend.
Epic Air arrived in Bend in 2004, publicly predicting it would create thousands of jobs at its manufacturing facility, according to The Bulletin archives. It quickly drew investors, including the city of Bend.
The city directly paid the company $140,000 and obtained about $1.3 million in loan and grant money from the state to make infrastructure improvements at the Bend Municipal Airport in return for the promise of about 200 jobs.
At the firm’s height, it employed 159 people, according to The Bulletin archives. All three LLCs voluntarily filed for bankruptcy in fall 2009, according to the indictment.
Schrameck is in federal custody pending court proceedings. A detention order indicated Schrameck was not eligible for conditional release due to the risk of “flight to foreign country.” Jail records indicate he has been held in the Lane County jail since March 26. Schrameck’s attorney, federal public defender Bryan Lessley, declined to comment Tuesday.
Assistant U.S. Attorney Scott Bradford, who signed the indictment, did not return a call for comment Tuesday on the alleged flight risk Schrameck posed.
In March 2010, Epic Air was purchased by a collaboration between a Chinese aircraft company and a group of former Epic customers. The customer group, LT Builders Group, told The Bulletin in 2010 that Epic’s files had been seized by the FBI. LT Builders Group dissolved in June 2014, according to records filed with the Oregon Secretary of State. State records show that an active Bend LLC, Epic Aircraft, is managed by Douglas King, who, according to Bulletin archives and state records, led LT Builders Group. King on Tuesday said LT Builders Group was sold to a Russian company and that the new and separate company, Epic Aircraft, has taken over Epic Air’s old building.
“We’ve got lots of orders and lots of opportunity,” King said.
A federal lawsuit filed against Epic Air in 2009 was dismissed in 2013, without an award of costs, disbursements or attorney’s fees to any party, federal court records show. The head of a Florida company, Blue Sky Avgroup LLC, had alleged Epic Air committed fraud for collecting money for an aircraft engine it had not delivered, according to Bulletin archives.
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