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Sleazy Private Jet Charter Brokers, Revisited

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So, WordPress provides a year end summary of activity on your blogs.  This includes facts about how many posts you made (only 1 in my case), how many visitors you had, and how they found you.  For this blog, almost everyone came in via a search engine and, interestingly, WordPress also records what search terms brought them here.  Based on the search terms people are typing into Google and Bing, there are more than a few people interested in the backgrounds of some of these bad boys of charter brokerage.  To wit, here are some of the searches that people are typing in:

apollo jets ceo (number 3 overall)

al palagonia jail (this is number 5 overall)

al palagonia apollo jets

richard sitomer jail  (almost twice as many searches as “richard sitomer” alone

christian matteis arrested

al palagonia prison

millenium securities todd rome

palagonia and jail

al palagonia boiler room

al palagonia arrested

todd rome fraud

unbelievable things (I’m not sure what this is related to, but it’s an intriguing subject.  Unfortunately, I can’t see what post those searches lead to)

al palagonia wikipedia (this is just interesting because this blog is obviously not wikipedia — which should be easy to find without a search engine)

richard sitomer incarcerated

al palagonia arrest

todd rome jail

universal jet g-iv crash

richard sitomer arrested

is bluestarjets legit

who is al palagonia

al palagonia sentenced

blue star jets fraud

what prison did al palagonia go to ?

“apollo jets” fraud

“alfred palagonia”

toilet phenom 100 (unrelated to charter brokers, but I’ve seen them overflow into the cabin when flushed… not cool)

al palagonia jail time

how to be a private jet broker

todd rome first data

blue star charter jet ceo arrested

infamous stock brokers al palagonia

millenium sec todd rome

al palagonia dh blair scandal

christian matteis jail

manni scarso sec

etc…

Written by mojofinance

January 5, 2013 at 12:36 am

David Sokol goes fire and brimstone on Warren Buffett

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David Sokol tells Warren Buffett to die and go to hell

David Sokol tells Warren Buffett to die and go to hell

“I will never understand why Mr. Buffett chose to hurt my family in such a way, but given that he is rapidly approaching his judgement [sic] day I will leave his verdict to a higher power,” Mr. Sokol wrote in an emailed response to The Wall Street Journal.

That’s about as close to “die and go to hell” that you will see someone saying on record to the Journal.  Also, the fact that he blames the hurt that has befallen his family on Buffett only reinforces the image of a sociopathic narcissist that committing such a blatant lapse of judgment and ethics has already created.

WSJ: Ex-Protege Criticizes Buffett Over Exit

Written by mojofinance

January 4, 2013 at 11:25 pm

NetJets ex-CEO “paragon of rectitude” says his lawyer

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dbpix-sokol-berkshire-articleInline

“Paragon of rectitude,” NetJets ex-ceo David Sokol.

First of all, I hope that no one ever calls me a “paragon of rectitude.”  Even when meant as a compliment, it just doesn’t sound that great.

Moving on… The SEC told David Sokol’s attorney today that it will not pursue insider trading charges against the former NetJets CEO and one-time odds on favorite for Warren Buffett’s replacement as the head of Berkshire Hathaway.  I’ll leave it as an exercise for the reader to look up the actual meaning of the words “paragon” and “rectitude” and then see how that matches up to the Berkshire Hathaway board’s report on the Sokol Lubrizol insider trading  incident.  While I’m sure most people won’t have to look it up, it’s entertaining nevertheless, as the actual meanings are even farther from reality than you might guess.  Even for a lawyer who is part of a legal defense team earning $200k per month for defending Sokol (the bill for which goes to the Berkshire shareholders), the language is, to say the least, a bit rich.

It’s clear Sokol got caught with his hand in the cookie jar — it’s just that the SEC didn’t think it was a winnable case.  The most interesting thing to me about the whole affair is how could Warren Buffett, the Oracle of Omaha, have placed so much faith and trust into such a slimy nitwit.  I’m definitely not part of the Oracle’s cult, but I did have a lot of respect for him.  The fact that he had considered Sokol as a potential successor really makes me question his judgment.

Also, the inability of the SEC to bring any charges in this case further cements their reputation as  a bunch of incompetent porn-watching boobs.  Kudos to them.

WSJ: Case Ends Against Buffett’s Ex-Aide

NYT: S.E.C. Ends Scrutiny of Former Top Aide to Buffett

Written by mojofinance

January 4, 2013 at 1:32 am

Google execs propose paying for renovations to Moffett Field’s Hangar One in return for space for their private jets

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Future home of Google founders' jets

Future private hangar of Google founders

Larry Page, Sergey Brinn, and Eric Schmidt have proposed to NASA that they will pay for renovations to the historic Hangar One at Moffett Field in exchange for use of some the hangar space for their own private jet fleet.   The bill for that renovation would come to $33 million.  Right now, the government is in the process of removing the old “skin” from the hangar, as it is made of some ill-conceived mix of asbestos, lead paint and PCBs.

The Google excecs’ jets are operated by an llc called H211.  According the San Jose Mercury News article on the proposal, H211  is proposing to house 8 jets in the hangar, using 2/3 of the available space.  Given that 2/3 of Hangar One is the equivalent of four football fields, that seems like a lot of space per plane — so I’m not sure exactly what they have in mind.  From what I can gather the Google execs own one Boeing 767-200, one Boeing 757, two Gulfstream G-V s, some sort of fighter jet, and who knows what the other 3 are.   At any rate, Hangar One will no doubt be the coolest private hangar this side of Saudi Arabia once the work is complete — should NASA decide to take them up on their offer.

The Google trio already enjoys special treatment at Moffett Field.  In exchange for $1.3MM / year and allowing NASA a certain amount of “scientific” use of their planes, they’ve had landing and parking rights on the field for some time.   Just what sort of experiments NASA is running on the Google boys’ flying pleasure dome is anyone’s guess, but it’s probably fun.

If you’ve never seen Hangar One, you should.  It’s an absolutely  unbelievable building.  It was built during the Depression to house the Navy’s fleet of airships.  It is immense.  There’s a good Wikipedia article on it here.  The San Jose Mercury news story on the proposal also has a very nice photo gallery of the hangar here.  The scale of the building is preposterously huge.  To give you an idea, it’s doors weigh 200 tons each.  It is big.  It’s also a remarkable feat of engineering and a great piece of design.  I’m personally very glad to see them offering to refurbish it, as it would really be a shame to lose such a remarkable landmark and a fascinating piece of aviation history.

Of course, reactions appear to be mixed.  A lot of Bay Area Hangar One enthusiasts are excited by the plan and glad to see someone offering to pay to restore the landmark.  A lot of people are getting hung up on why those guys have 8 planes and enough money to drop $33MM on a place to park them.  Probably a lot are, like me, more than a little jealous.

Google Founders' 767

Here are some links about the story:

Google founders offer ‘100 percent’ funding to save Hangar One

Hangar One (on Wikipedia)

Save Hangar One (.org)

Google’s 3 Top Executives Have 8 Private Jets

Wait A Minute — The Top 3 Google Execs Have HOW MANY Jets?

Lawsuits Fly Over Google Founders’ Big Private Plane

Google Founders’ Ultimate Perk: A NASA Runway

Written by mojofinance

December 15, 2011 at 7:31 pm

Blue Star Jets featured on Bloomberg

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Bloomberg has a 20 minute video featuring interviews with Blue Star Jets founders Todd Rome and Richard Sitomer.  They discuss the private aviation world in general and their business in particular.   They mention that their revenue is over $100MM / year, and are targeting $1B + over the next 5-7 years on the back of international expansion.  There’s nothing particularly revelatory here, but it’s interesting if you’re curious about Blue Star.

“What makes private aviation expensive is one guy usually gets caught footing  the bill,” says Todd Rome.  I can certainly relate to that.  By the way, How rich is stinking rich?  I guess it’s one of those things — if you have to ask…

Bloomberg: So, the stinking rich can be very particular?

Sitomer: Very particular.

That comes up in a discussion of some of the more extreme demands that customers can make — specific examples being asking for 4000 thread count sheets, perfect pencil thin asparagus, and ice cubes made from Fiji water.

Blue Star Jets Interview on Bloomberg Enterprise

(thanks to Brad Lee for pointing out this interview)

Written by mojofinance

October 2, 2011 at 9:52 am

JetSuite private jet charter — mini review

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In case you haven’t heard, JetSuiteis a fairly young private jet charter company that exclusively flies Embraer Phenom 100 very light jets.

JetSuite plane

The company was founded by an ex Jet Blue exec, and more recently was purchased by Jet Blue founder, David Neeleman.  Right now, they only serve the Western US, but I imagine they will spread Eastward as they build their business.  I’ve now flown 2 round trips with JetSuite and figured I’d share my experience.

First, I like big jets and I cannot lie.  The little planes tend to make me claustrophobic and I don’t care for the way they seem to get tossed around more than bigger planes.  That said, for a trip with just a few people over a relatively short distance, the cost savings of a light jet are just too big to ignore.   Luckily, the Embraer Phenom 100’s are very comfortable for this class.  They’ve only got 4 passenger seats, but the cabin height and width is really good for the size — the same as a Lear 40 or 45, and slightly bigger than most other true light jets and very light jets.  The personal space is fine with 4 passengers and great with just 2.  The planes are pretty much brand new at this point, so the interior is in great shape, and the seats are comfortable.  I’d still rather be in a bigger jet, but the Phenom 100 is not too bad ride and comfort wise.

There’s a decent snack center, with some cold drinks and ice in a little cooler and plenty of little mini-liquors — really a better set up than I expected in such a small plane.  There’s a handful of different snack items — nothing fancy, but given the limited range of the planes, plenty enough to get you through the flight.  Additional catering really is not a viable option, given the limited interior space to store it.  There are a few power outlets — at least 2, maybe 4, I didn’t really count.  Also, there is a flushing toilet, though you’ll have to be flying  with close friends  or really need to go to use it, as the lav is only separated from the cabin by a curtain.  I have not flown with more than a brief case, but the external baggage compartment looks pretty decent — at least the size of normal car trunk.

JetSuite advertises some $999 one way rates for certain trips.  None of my legs qualified for these rates as there are a number of restrictions on how you qualify for them.  That said, they were pretty cheap.  My longer trip came in under $2k / hr — which is hard to beat, especially in a new plane.  If I understand their pricing scheme, that worked out to renting the plane for a whole day for $3750, then paying around $1200 / hr for actual time flown.  The quote and invoice didn’t really explain where the price came from, just listed a price for each leg, so I had to reverse engineer it to find out where that rate came from — and even then, what they charged me was a few hundred less than what I got with that formula, so I may not have it completely right.  I think it works out that for single day travel over 1.6 hours, you get a price that’s below that $3500 / hr level.  A same day roundtrip of 2 hours each way works out to $2138 / hr.  I think the max range is probably around 3 hours or so. [Yes, I know that’s still a lot of money.  Compared to other private jet options, however, it’s pretty cheap. ]

One trip required a different crew for the return (because of the FAA’s 14 hour duty day restriction), and there was no extra charge for that (depsite the fact that the crew had to fly commercial from who knows where to the nearest commercial airport and rent a car to drive to the private airport we were flying from.   The three crews we flew with were all professional, with the captains clearly being very experienced, long time pilots.  The FO on each trip was clearly junior, but came across as professional nonetheless.

The fact that JetSuite is a single operator, with one plane type, standardized pilot training and maintenance is also important to me.  I have had good luck with general charter, where you don’t really know where the plane is coming from — outside of assurance from the broker that it’s a quality operator — but it’s not my preference.  In this case you don’t really give up anything on the cost side to get a single, known operator.

Overall, I was very satisfied with my JetSuite travel and expect to use them more in the future.  Hopefully their business model proves successful.  In both of my JetSuite trips, I would not have flown privately if there wasn’t an option like JetSuite available.  For one trip, we would have flown commercial, and the other we probably just wouldn’t have gone.  I think that’s the niche in the market they are hoping to target, and it looks to me like they’ve hit it.

JetSuite website

Written by mojofinance

July 21, 2011 at 12:14 am

Why are private jet charter brokers so sleazy?

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Al Palagonia with Apollo Jets customer Shaquille O'Neal

Al Palagonia with Apollo Jets customer Shaquille O’Neal

Several years ago when a salesman from Blue Star Jets cold called me for the first time, I didn’t know what to make of it.  For one, I thought it was weird that a private jet company was named after the fictional airline in the movie “Wall Street.”  Also, the tone of the call was unusual for that type of sales spiel — fairly hard sell, wrapped in an easy going, personable, sort of bro-to-bro conversational style.  Of course, once I found out more, that all made sense.  For one, the name is not a coincidence, but an intentional nod to the movie by Blue Star founders Todd Rome and Richard Sitomer.  Their background was in the bucket shop / boiler room underbelly of Wall Street (the place), where they had been booted from the industry after some questionable goings on at their firm, Millennium Securities.  The pushy sales tactics were right out of the boiler room business, too.

This seems like a common trajectory for jet charter brokers.  Jets.com co-founders Manny Scarso and Edgar Alacan had similarly been asked to leave the securities business.  Private jet broker to the stars Al Palagonia took it one step further — instead of merely being asked to cough up ill-gotten gains and promise to stay away from the securities industry, he actually had to spend a few years in jail for some securities fraud he described like this: “Let’s just say I took a short cut and it came back to bite me in the ass.”  It’s claimed that Palagonia’s work at infamous brokerage DH Blair served as the inspiration for Ben Affleck’s character in the movie “Boiler Room.”

Palagonia was accused by a competitor of being the “secret ceo” of Halcyon Jets, a charter brokerage that traded as a penny stock and underwent a particularly interesting self-imolation.  Halcyon COO Christian Matteis, along with two others,  was accused of attempting to sabotage the company and steal the client list, and was arrested by the Miami police (see mug shot above).  With the Halcyon stock virtually worthless, the remainder of Halcyon merged with Apollo Jets, where Palagonia can be found today.  Matteis is now CEO of Universal Jet Charter.

What does any of this matter?  I’m not sure.  It certainly doesn’t mean that the flights chartered through these brokers are unsafe.  It doesn’t mean that these guys are ripping customers off.  It just feels, well, dirty.  Blue Star certainly seems to have achieved a level of considerable success.  Al Palagonia appears to have A-list client roster.  Clearly, most people are not bothered by the checkered history of many of the big charter brokers — and, judging from the number of Blue Star hats visible in the Hamptons, they may even embrace it.

Bloomberg has a good article from a few years ago that touches on some of these issues and its definitely worth a read if you fly privately via charter.  It discusses the 2005 crash of a Challenger 600 at Teterboro  (chartered through Blue Star), that highlighted the difficulty of knowing the provenance of the aircraft and crew with which one is flying.    It also talks about the 2004 crash in Colorado injuring NBC’s Dick Ebersol and killing his son.

The NTSB report on the Teterboro crash pointed out the lack of transparency in the charter broker business as problematic.  Here is an excerpt (from NTSB board member Kathryn O. Higgins) that seems particularly apt and is worth considering when chartering a flight:

But how much do these brokers really know about the operators they do business with? How much do they know about the planes these operators fly? How old are they, when were they last inspected? How well trained are the crews, what experience does a particular crew have with the route the customer wants to fly? Have they flown into that airport before? Does this operator have a dispatch function or just flight following? What safety equipment is on the plane? Who will make the decision about de-icing? Does the operator have a safety management program? Are the crews trained in crew resource management? What does the FAA know about this operator?


Business Jet Crashes Expose Rule-Breaking Brokers

Apollo Jets’ founder Al Palagonia  SEC finding

Al Palagonia: The Man Who Never Sleeps

Jets.com co-founders Edgar Alacan and Manny Scarso SEC finding

Halcyon Jets Exec Accused of Sabotaging Company

Christian Matteis, now of Universal Jet Charter

Halcyon’s Christian Matteis, now CEO of Universal Jet Charter