Ex-Pace owner to take plea agreement, reimburse employees for insurance premiums [Winston-Salem Journal, N.C.]

April 18--After almost four years, the criminal saga of William Rodgers Sr., the former co-owner of Pace Airlines Inc., will end when he enters into an agreement in Forsyth Superior Court that allows him to reimburse Pace employees for health-insurance premiums and avoid jail time.

Under the proposed deferred prosecution agreement, Rodgers will be required to complete 200 hours of community service and comply with other conditions. If he complies with the conditions in the program, prosecutors with the N.C. Attorney General's Office will voluntarily dismiss the 27 felony charges against him after a year. He is charged with one count of willful failure to pay group health-insurance premiums to Blue Cross Blue Shield of North Carolina and 26 counts of willful failure to deliver notice to employees. He had faced a possible five to 20 months in prison on each count.

If a Forsyth County judge accepts the agreement, it will bring an end to the criminal case against Rodgers that began when he was arrested Sept. 22, 2009, just five days after Pace Airlines collapsed, leaving 423 employees -- including 300 in Winston-Salem -- without jobs.

In January 2012, a Forsyth County grand jury indicted Rodgers on the 27 charges, but the case has been continued numerous times. At the same time, Pace Airlines has gone through Chapter 7 bankruptcy.

The case was originally handled by the Forsyth County District Attorney's Office, but the N.C. Attorney General's Office took over because of a conflict of interest.

Cheryl Andrews, one of Rodgers' attorneys, said Rodgers won't be entering any guilty pleas in the hearing Thursday. Instead, he will agree to participate in the deferred prosecution program and a new court date will be set a year from now.

Noelle Talley, spokeswoman for the N.C. Attorney General's Office, confirmed Wednesday that Rodgers would be entering a deferred prosecution program that would include reimbursement for unpaid medical claims. She declined to comment further on a pending case.

Andrews referred more specific questions about reimbursement to attorney Mark Calloway, who also represents Rodgers. Calloway declined to comment Wednesday.

Last month, Calloway filed a request in U.S. Bankruptcy Court asking National Union Fire Insurance Co. to make an indemnity payment to Rodgers through his executive insurance policy. The payment would go toward the "resolution and settlement of the criminal proceeding and (N.C.) Labor Department investigation." The policy can pay up to $2 million, according to court filings. A U.S. Bankruptcy judge granted the request March 28.

In February 2012, the National Union Fire Insurance Co. agreed to make a $1 million insurance payment to the Pace estate, representing the majority of back wages that 421 former Pace employees received earlier this year.

Former Pace official Stuart Carnie said he felt the legal settlement was appropriate given Rodgers' lack of personal money for restitution and the availability of money from the officers and directors insurance policy.

Rodgers brought Carnie to Pace when he acquired the company. Carnie initially put up Rodgers' $50,000 bond in September 2009. Carnie reclaimed the bond in October 2009. Rodgers has been out on the bond since he was first arrested.

Carnie said he received about 13 percent of his owed back wages, after taxes. Unlike most claimants, who were not paid for up to six weeks, Carnie said he was not paid for 12 weeks because he remained an employee after the formal shutdown.

Pace and its predecessors had been an anchor tenant at Smith Reynolds Airport for decades until the company collapsed four months after Rodgers took over in May 2009. He signed a promissory note to pay $9 million to the estate of Bob Brooks -- founder of the Hooters restaurant chain -- for stock in Pace Airlines LLC and Pace Airlines II LLC and take over $6 million in liabilities. Rodgers never had the money, had filed for personal bankruptcy in 1999 and had gone through Chapter 13 bankruptcy in 2002 for two software companies.

The company then went into a tailspin after losing key contracts and workers were not paid for as long as six weeks. Most stayed on for fear that Pace would try to deny unemployment benefits if they quit.

Rodgers and his attorneys have blamed financial mismanagement by previous Pace executives for many of the problems facing Rodgers and the company, particularly the Blue Cross premium issues.

mhewlett@wsjournal.com

(336) 727-7326

Journal reporter Richard Craver contributed to this report.

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