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Thu, Sep 14, 2023

Unfortunate Events... Historic Flight Foundation Aircraft to be Sold Off

The Perils of Speculative Investment

The Historic Flight Foundation is an aviation museum on Spokane, Washington’s Felts Field (SFF). The institution’s collection comprises aircraft representative of the period between Charles Lindbergh's history-making 1927 transatlantic solo-flight and the 1957 debut of Boeing’s iconic 707—a thirty-year period during which powered aircraft evolved from simple wood-and-fabric biplanes to all-metal, pressurized, monoplane commercial jets. The museum was previously located on Everett, Washington’s Paine Field (PAE), but was relocated to Spokane in the spring of 2020.

Comes now the summer of 2023, and the Historic Flight Foundation’s collection of vintage aircraft is being sold off to pay a $20.1-million debt incurred by its founder, John Sessions.

In 2022, a jury in Williston, North Dakota found Sessions and one of his companies, Eagle Crest Apartments, had fraudulently transferred funds to other businesses owned by Sessions, including the Historic Flight Foundation. Eagle Crest had previously defaulted on a construction loan held by Kansas City-based UMB Bank, which was awarded the aforementioned $20.1-million in March 2022. Sessions appealed the verdict to the North Dakota Supreme Court—albeit unsuccessfully.

A receiver hired by UMB Bank was subsequently authorized by a King County, Washington judge to take over Sessions’s companies, as named in the lawsuit, and commence selling off the historic aircraft.

On 07 July 2023, Sessions crashed his World War II-vintage Spitfire while landing at Washington State’s Deer Park Airport (DEW). While Sessions emerged uninjured from the mishap, the $4-million Warbird was seriously damaged. The incident compelled Sessions to remark: "When you do what I do with the old warbirds, you have a certain amount of risk every time you fly.”

The receiver, however, deemed the risks to which Sessions alluded unacceptable and, according to court documents, set forth he was "under an explicit directive" to refrain from operating the vintage aircraft to which he had access.

Sessions disagreed, asserting the accident-flight was undertaken for purpose of maintaining the Spitfire’s certification. Sessions further stated he’d not informed the receiver of the fateful flight insofar as he wasn’t aware of an obligation to do so.

"I put them on notice that we had to exercise the airplanes and complete inspections," Sessions stated.

From the receiver's perspective, Sessions blatantly flouted the rules. The receiver, therefore, pursued an injunction to prevent further damage to the planes.

Aware of an injunction’s imminence, Sessions filed a 20 July motion in Spokane County Superior Court seeking to vacate the North Dakota judgment on the premise the Washington State Attorney General’s office ought to have been notified a charitable organization—the Historic Flight Foundation—was involved in the proceedings and had been adversely impacted by the court’s ruling.

"In sum, without even addressing the Historic Flight Foundation’s non-profit status, the North Dakota Supreme Court ultimately assumed, without explanation, that a Washington nonprofit can be liable for the independent business activities of one of its directors acting in another state—apparently based on one bank transfer," Sessons’s motion read.

Spokane International Airport (GEG) CEO Larry Krauter filed a letter with the court supporting Sessions and the Historic Flight Foundation.

Court records indicate the appointed receiver filed a police report on 24 July—some two-weeks after the Spitfire accident—alleging theft of property. On 25 July, Sessions agreed to an injunction prohibiting him from flying any of the aircraft cited among his (and by extension, the Historic Flight Foundation’s) assets.

The day after he agreed to the injunction, Sessions—in flagrant violation of the King County judge’s ruling—opened the museum to the public.

The locks at the Historic Flight Foundation’s museum were promptly changed and Sessions prohibited from approaching within fifty-feet of the Felts Field facility without the receiver’s expressed permission.

In an August report to the King County court, the receiver set forth Sessions manifests a "penchant for ignoring the [court’s] directives.”

On 03 August 2023, Sessions held a meeting at an alternate Felts Field location, during which he attempted to assuage the concerns of stakeholders in the Historic Flight Foundation. Sessions advised meeting attendees he’d signed over his assets in North Dakota and acknowledged his removal from the foundation had been occasioned by the Spitfire accident, conceding: "It's serious stuff, very serious stuff."

Sessions stated, also, that the Washington State Attorney General’s office was coming to the Foundation’s aid, and expressed his belief that the entire judgment against him would be thrown out.

"This is why I think rumors can be killers and the message tonight is just stay tuned," Sessions declared. "We have the best talent available doing a great job and the other side is very concerned."

Sessions noted the larger part of his liquid assets were organized into trusts not affected by the judgment, then referred jokingly to a rare Fairey Gannet aircraft he’d recently purchased.

On 10 August, a King County judge approved the sale of aircraft in the Historic Flight Foundation collection, some of which are owned directly by the foundation; others are owned by companies belonging to Sessions but considered parts of the Foundation’s collection.

The first aircraft sold was a WWII-era North American B-25D Mitchell medium-bomber dubbed Grumpy. The sale compelled Sessions to petition the court to hear his motion.

"Time is of the essence," Sessions argued in court documents. "In light of the aggressive liquidation efforts targeting historic aircraft and strict limitations on HFF's operations, every day that passes presents a threat to HFF's ability to return to normal, charitable operations."

UMB Bank disagreed, noting Sessions had agreed to the receivership in King County on behalf of the Foundation without raising the issue of notifying the attorney general.

The law pertaining to notifying the attorney general’s office, which Sessions sought to bend to his service, wasn’t in effect at the time of the litigation’s 2020 commencement. Ergo, the bank argued the North Dakota court rightfully found the Foundation ignored its non-profit legal status and was controlled, instead, by Sessions.

Such arguments should be made in North Dakota, not in Spokane, the bank contended in court filings.

To the subject of the court involving the Historic Flight Foundation in its judgment, Sessions stated: "That's the part of it that I feel is overreaching… I understand my responsibility to step up as to the underlying claim as to North Dakota assets."

Sessions admitted to being at an “impasse” with the receiver, but asserted he believes a good chance exists that the entire judgment will presently be thrown out by a Spokane judge.

Addressing the Historic Flight Foundation’s future, Foundation board-member and former Spokane County Commissioner Todd Mielkie remarked: "I think at this point we're all waiting for what happens at the hearing."

FMI: https://historicflight.org


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