Former Pace Owner Seeks Insurance Policy Funds

March 28--Approval of a second insurance payment may help bring restitution -- and potential final resolution -- to the criminal case facing William Rodgers Sr., former co-owner of defunct Pace Airlines Inc.

A bankruptcy filing made Wednesday by Rodgers' attorney, Mark Calloway, requests permission from a U.S. Bankruptcy Court judge for National Union Fire Insurance Co. to make an indemnity payment to Rodgers regarding his executive insurance policy.

The payment from the policy's fiduciary liability coverage would go toward the "resolution and settlement of the criminal proceeding and (N.C.) Labor Department investigation." Calloway could not be reached for comment Thursday. The filing said that trustee Edwin Allman III has consented to the request.

Rodgers was arrested by state insurance officers Sept. 22, 2009Winston-Salem, were eliminated.

In January 2012, a Forsyth grand jury indicted Rodgers on 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. Each count is a Class H felony, which could carry a sentence of five to 20 months in prison.

Such a payment by the insurer requires the judge to grant relief from an absolute stay related to potential payments on Rodgers' behalf.

The insurer agreed in February 2012 to make a $1 million insurance payment to the Pace estate. That payment represented the majority of back wages that 421 former Pace employees received earlier this year.

There has been speculation that Rodgers and his attorney are trying to reach a plea agreement with the N.C. Attorney General's Office, which took over the case in September 2010.

Such an agreement may consist of Rodgers providing restitution to employees affected by the cancellation of the health-insurance premiums in exchange for probation instead of active jail time. Noelle Talley, a spokeswoman for the attorney general's office, said she could not comment on a continuing investigation.

Rodgers has been out of jail on a $50,000 bond since September 2009. The company has been in Chapter 7 bankruptcy protection since January 2010.

Rodgers received a continuance of his case Feb. 18, with the hearing now set for April 18. It was at least the seventh time there has been a continuance in the case. Talley said the reason for the latest continuance is related to the pending closing of the Chapter 7 bankruptcy case involving Pace.

Pace and its predecessors had been an anchor tenant at Smith Reynolds Airport in Winston-Salem for decades until the company collapsed four months after Rodgers took ownership 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.

As the company stumbled after losing key contracts, many of the employees were not paid for as long as their last six weeks of work. Most stayed on because of fears that Pace would try to deny them 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.

But Mark Hunt, an insurance official with Employee Benefit Solutions of Asheboro, said in a letter to former Pace management officials that Pace was current on premiums to Blue Cross when Rodgers took over the company. Officials with Blue Cross have declined to comment on the case.

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