Delta Air Lines has paid $8.1 million to settle a lawsuit by the U.S. Department of Justice, alleging the company broke federal coronavirus relief fund rules by overpaying executives.
In a Tuesday news release, the department said it alleged Delta had violated the executive compensation caps that Congress imposed on companies that accepted COVID-19 relief funds and “falsely certified that it had abided by them.”
The settlement made no determination of liability, the DOJ noted, and a Delta spokesperson said the company “strongly believes” it did not violate any pandemic relief rules.
The Atlanta-based carrier received nearly $12 billion in federal relief funds, including at least $8.2 billion in grants that did not have to be repaid, according to the DOJ.
In a statement, a Delta spokesperson told The Atlanta Journal-Constitution that the issue “is a disagreement about a technical matter involving the time periods used to measure executive compensation during the pandemic.”
The company has “consistently maintained the claim is without merit and settled to avoid the expense and distraction of litigation. Delta remains grateful for the Treasury Department’s efforts that kept essential airline employees operating our nation’s air travel system.”
The government said its investigation began after a third-party financial researcher filed a whistleblower lawsuit alleging that Delta violated the terms of the Payroll Support Program, which was created in 2020 as part of the CARES Act to help bail out an airline industry in free fall.
“When companies accept federal assistance, especially generous pandemic-relief funds like those at issue here, they owe a duty to the American people to respect the conditions placed on those funds,” said Northern District of Georgia U.S. Attorney Theodore S. Hertzberg in a statement Tuesday.
“We will continue to enforce all available laws to punish the misuse of taxpayers’ money.”
Businesses were required to cap executive compensation for those who had made more than $425,000 in 2019, the DOJ noted.
But according to the whistleblower, between March 2020 and April 2023, Delta exceeded those caps for some executives and “allegedly falsely certified its compliance with the caps” to the Treasury Department.
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