Nine Continental pilots have been accused of hatching a divorce scam to take money out of their pension retirement plans. Continental alleges the pilots and their spouses got paper-only divorces while continuing to live together and concealing the change in their marital status from their children and friends. Once a state court approved the divorces, the pilots signed court-issued documents giving their new ex-spouses all rights to a pilots-only pension plan, worth up to $900,000 per individual participant. Then, the spouses presented the paperwork to the Continental pension plan administrator with a request for a lump-sum distribution.

Such pre-retirement payments to former spouses are allowed under the federal law that governs employer-sponsored retirement saving and investing plans that grow tax-free.

But Continental alleges that after getting the money, the couples remarried. It calls the divorces “subterfuges or sham transactions.”  Continental filed a lawsuit against the nine pilots and their spouses to recover the money lost in the scam. Continental suggested in the lawsuit that the pilots — seven men and two women — were afraid of losing major chunks of their pensions because of the financial difficulties the airline industry experienced in 2005. Around that time, Delta Air Lines, United Airlines and US Airways filed for bankruptcy protection, reneged on their pension promises and handed over the plans to a federal administrator to make good on a portion of the pension obligations.

The Pension Benefit Guaranty Corp.’s maximum guarantee is paid in periodic annuity payments instead of lump sums and is far less than a typical airline pilot pension. This year, for a 65-year-old person, the maximum is $54,000.

The Houston Chronicle reported the story this week. And, Good Morning America ran the story this morning as well.

In the GMA story, one of the female pilots accused of the scam insisted that her divorce was real and her reconciliation was real and none of the public’s business.  A lawyer for one of the pilots speculated that the pilots would not have been able to hatch such a "complicated scheme" because they weren’t lawyers.  (Lawyer snobbery?) 

But, the Chronicle story refers to a request by United Airllines in 1999 about some of its workers that got divorced in an alleged sham.  In that instance, 21 United maintenance workers in Indianapolis were accused of defrauding the retirement plan by following steps laid out in a pamphlet called the Retirement Liberation Handbook, which gave instructions on how to use divorce to acquire benefits prior to retirement.

This story illustrates the desperation some people fees in this difficult time.  Even though the Dallas area has fared better than other areas of the country, people get divorced for various reasons.  During my career as a Dallas Divorce Lawyer, I been aware of the occasional situation where the parties had other motives for a divorce than simply irreconcilable differences.  In each situation, the "sham" divorce backfired on the party that was trying to get away with something.  It just doesn’t pay to be dishonest.

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Photo of Michelle O'Neil Michelle O'Neil

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes…

Michelle May O’Neil has 27 years’ experience representing small business owners, professionals, and individuals in litigation related to family law matters such as divorce, child custody, and complex property division. Described by one lawyer as “a lethal combination of sweet-and-salty”, Ms. O’Neil exudes genuine compassion for her client’s difficulties, yet she can be relentless when in pursuit of a client’s goals. One judge said of Ms. O’Neil, “She cannot be out-gunned, out-briefed, or out-lawyered!”

Family Law Specialist

Ms. O’Neil became a board-certified family law specialist by the Texas Board of Legal Specialization in 1997 and has maintained her certification since that time. While representing clients in litigation before the trial court is an important part of her practice, Ms. O’Neil also handles appellate matters in the trial court, courts of appeals and Texas Supreme Court. Lawyers frequently consult with Ms. O’Neil on their litigation cases about specialized legal issues requiring particularized attention both at the trial court and appellate levels. This gives her a unique perspective and depth of perception that benefits both her litigation and appellate clients.

Top Lawyers in Texas and America

Ms. O’Neil has been named to the list of Texas SuperLawyers for many years, 2011-2018, a peer-voted honor given to only about 5% of the lawyers in the state of Texas. In 2014-2018, Ms. O’Neil received the special honor of being named by Texas SuperLawyers as one of the Top 50 Women Lawyers in Texas, Top 100 Lawyers in Texas, and Top 100 Lawyers in DFW. She was named one of the Best Lawyers in America for 2016 and received an “A-V” peer review rating by Martindale-Hubbell Legal Directories for the highest quality legal ability and ethical standards.

Author and Speaker

A noted author, Ms. O’Neil released her second book Basics of Texas Divorce Law in November 2010, with a second edition released in 2013, and a third edition expected in 2015.  Her first book, All About Texas Law and Kids, was published in September 2009 by Texas Lawyer Press. In 2012, Ms. O’Neil co-authored the booklets What You Need To Know About Common Law Marriage In Texas and Social Study Evaluations.  The State Bar of Texas and other providers of continuing education for attorneys frequently enlist Ms. O’Neil to provide instruction to attorneys on topics of her expertise in the family law arena.