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Archive for Thursday, November 11, 2004

Witness: Corporate jet perks saved Westar execs millions

November 11, 2004

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— Former Westar Energy Inc. executives David Wittig and Douglas T. Lake took more than $1.8 million worth of personal flights on the company's jets between 1998 and 2002, a prosecution witness said Wednesday.

John Meara, a certified public accountant hired by prosecutors in the federal fraud case, said he came up with the figure by using the average charter rates for Cessna Citation jets like those owned by Westar.

Applying those rates to the 400 flights that prosecutors say Wittig and Lake took on corporate jets for private uses, Meara said Wittig's total costs would have been $969,055 and Lake's total would have been $851,769.

Wittig, who is Westar's former chairman and chief executive, and Lake, a former executive vice president, are accused of trying to loot the state's largest electric utility. They face more than 40 counts each and more than 10 years in prison if convicted in the trial that began Oct. 19 in U.S. District Court.

Prosecutors said the men regularly used Westar's jets for private travel without reimbursing the company and did not report the flights as taxable income.

Among the flights discussed Wednesday was a trip to Europe in May 2000 that Meara said would have cost $88,889 in charter fees. Another European trip, by Wittig and his family in July 2002, would have cost $79,184 in charter fees, Meara said. Other trips included a business meeting to Indianapolis in April 2000 that coincided with the NCAA tournament and a trip through Brainerd, Minn., where Wittig's children went to summer camp.

Lake has admitted that about 20 flights he took were personal in nature. Meara put the cost of those trips at $208,103.

But both Wittig and Lake say most flights were for business purposes. They've also argued that they considered use of corporate aircraft a perk of their jobs and weren't told the expenses had to be reported or reimbursed.

Defense attorneys argued that Meara's information was inaccurate, saying the figures were based on incorrect assumptions of what constituted personal travel and inflated the true cost of the trips to the company.

For example, during cross-examination, Wittig's attorney, Paula Junghans, pointed to a Jan. 18, 2001, flight Lake took from Topeka to New York with three contractors. There they met with Wittig, who was already in New York and who accompanied them back to Topeka the next day.

Junghans said the contractors were working on a remodeling of the Westar office in Topeka, and asked Meara if that wasn't a business purpose.

"Why would you have a facilities meeting for (Westar headquarters) in New York?" he responded.

Junghans answered: "That's something you should have considered before you completed your chart."

Later, assistant U.S. Atty. Richard Hathaway told Meara that one of the contractors also was working on Wittig's Topeka mansion.

Lake's attorney, Ed Little, said the accountant was charging both men for passengers on private flights that may or may not have included business meetings along the way. He also said Meara shouldn't have counted instances where a spouse or other family member rode along to a business meeting, saying the extra cost to the company was negligible.

Meara responded that if Wittig or Lake were responsible for the flight, they should be responsible for the full cost.

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