Direct Air financial woes continue

The trustee handling the bankruptcy case for the now defunct Direct Air asked a judge to look deeper into the airline's finances.

Joseph Baldiga, the lawyer administering Direct Air's bankruptcy, wants to interview under oath dozens of people connected with the company in various ways and to compel the company's banks and professional services firms to turn over financial statements and other records.

Baldiga said in a motion filed in U.S. Bankruptcy Court this week that he needs authorization for that in order to look deeper into potential fraud and misappropriation of funds leading up to the company's sudden collapse in late March.

In his motion, Mr. Baldiga said he and his staff have been "investigating the many allegations of fraud raised by interested parties," during the bankruptcy case, and that he "believes that misappropriation and transfers of significant sums of money may have been made by the debtor or its agents prior to the petition date."

U.S. Department of Transportation investigators already are probing whether Direct Air, based in Myrtle Beach, S.C., complied with federal rules for public charter flights, including the handling of an escrow account designed to pay refunds to consumers in the event flights are canceled. The account contains roughly $1.1 million, about $12 million less than it should, according to court records.

A spokesman for the department said Tuesday that the investigation remains open.