Jessie: Good morning and welcome back to the VIP seat. Today we have our special guest, Joe LoRusso to break down the Biffle lawsuits Sit back, buckle up, and let's take off.

Preston Holland: Well, Jessie, super excited to have an industry expert here, Joe LoRusso, who is the director of aviation at Ramos Law. So he's gonna give us the legal and and some of the legal, not opinion, but This is Joe's commentary on it. So we're excited to have you, Joe. This he's a repeat guest. I don't know what is this, your second or third time of the podcast?

Joe LoRusso: Yeah, something like that. Yeah. Second or third.

Jessie: Peace.

Preston Holland: Yeah. So super excited. So I I guess let's jump into it. So some news broke over the weekend slash end of last week, following the Biffle crash, which most people in the industry are familiar with, that Biffle's ex-wife is now has opened up four different lawsuits against four different groups. So so it's it's interesting. Jessie, I don't know if you wanna run us through some of the, you know, particulars of

Jessie: Yeah, I think one of the pieces the the big piece that came out last week was the ex-wife, you know, she lost her daughter in the crash. ⁓ and now she's going against not only, you know, the pilot of the airplane, the comp the company that the airplane was listed in, which is her ex's estate. so you know, Joe, I know you can't we have no idea where this is going, but I think you've seen cases like this before in the past. And I one of the interesting pieces of this is going after the pilot. And the company itself, you know, so what do you think could be happening in the background here?

Joe LoRusso: Yeah, there's a lot in this one. So ⁓ as Preston said, there I think there's four lawsuits right now between ⁓ the pilot's estate suing Biffle's estate, between the pilot's son's estate suing Biffle's estate, between the ex-wife suing Biffle's estate, and the LLC, and then I think even Biffle's wife's estate is suing the pilot's estate. So ⁓ so I think in total we have four different lawsuits running or four claims running at the moment and and

Jessie: Yeah.

Joe LoRusso: potentially more. I can tell you this is pretty normal. So so this is this is literally all I do is is crash litigation from ⁓ from Florida, Alaska. And I can tell you this is this is following the road work exactly as we would normally see it ⁓ played out. the lawsuits are pretty typical with the owner of the ⁓ the aircraft, the LLC, ⁓ that's a legal entity until we prove otherwise, so that needs to be named. The alter ego of the LLC or the operator of the jet, that would be the individual, Greg Biffle, that's named in every lawsuit. The only ones that I'm missing, and so pilots are are typically named as well, especially when we have a case that's leaning towards pilot error, the only ones I'm missing in here are ⁓ there's no maintenance added and there's no ⁓ added. so generally we don't know, when we're in the early stages of the investigation, you'll see like in this case, being named. you'll see a maintenance shop that that that was generally maintaining the aircraft, they would be named or a mechanic A and PIA would be named as well. But in this case we just have the aircraft operator, owner ⁓ and pilots. So part's a unique.

Preston Holland: So I I wanna start with the LLC. so why would you the LLC, my understanding, usually just a disregarded entity that holds the airplane. Like, is there anything in the LLC to really go after? I mean, ⁓ I would imagine this was a total loss. I mean, it was a fatal accident, very bad. does the LLC like it have anything left to go after, I guess?

Joe LoRusso: This is wild and this comes up a lot. This is ⁓ this is a a a deep conversation. And honestly, this could be like a full podcast where people buy an airplane and they feel like I'll just put it in an LLC because it's limited liability. I'm done. I don't have to worry about it at all. Without realizing that if you don't actually run an LLC like a business, it is a corporation, if you don't run it like a business, it's providing no liability protection to you at all. and we name it purely because it's procedural, because the airplane is owned in the LLC. ⁓ but if there are no assets in the LLC or anything like that, we've checked our procedural box by naming it and then we're pushing the LLC aside and going after the owner individually. now times that the LLC naming is good for us ⁓ when it is an actual LLC. and we have insurance through that LLC. So not only insurance for the aircraft, but also maybe a general liability policy, right? If you have an LLC that owns many airplanes or owns a hangar. You may also have a a general liability policy or an umbrella even that sits above the airplane. And in that case, we wanna stay within the LLC, get all that coverage, keep the LLC intact, get all the coverage that we possibly can out of the L C before we push the L C aside and go after the individual if we need to, if there's not enough money there. So

Jessie: But I think that's a concern in this case, you know, because we're looking at, you know, and look the case is not closed and the NTSB report is not out, you know, the assumption is here that the pilots weren't qualified and that insurance may not cover any claims because they weren't flying with a, you know, qualified crew member under the policy.

Preston Holland: So

Joe LoRusso: Yeah, a lot of people think when you pay money to insurance, that insurance is going to be got your back, right? They're always going to pay when something happens. I can tell you, in doing this over a decade, that's not true. Insurance will try very, very hard to get out of paying money. That their sole goal is how do we not pay money on the claim? So when you look at this, Jessie, like you were saying, that that Mr. Dutton may not have had a single pilot type rating to fly the five fifty single pilot. Obviously he had his son in the right seat. His son was a private pilot, single engine, didn't even have a multi-engine add-on to the private, let alone a type rating. pretty big ⁓ door for the insurance company to step through and say, no, not providing any coverage on this at all. It's to the estates, we're bowing out. See you later.

Jessie: Yeah, thus everyone's gonna follow the money at this point, which is going to the famous NASDAQ driver's estate.

Joe LoRusso: Exactly right. Exactly right.

Preston Holland: So so walk me through operational control here, Joe, because if the owner of the aircraft is Biffle and he under operational control, who makes the call for the pilot? Like if you're gonna go after the pilot, obviously whoever is under operational control obvious has to bless that, right? So I guess why go after the pilot's estate if they didn't hold operational control? It was a bad choice. I think we can all agree that to put a non-type rate if you if all of those things are true and you don't have a single pilot type rating that was a bad But is it not the operational control of the owner of the aircraft? Like walk us through how maybe how you would frame that.

Joe LoRusso: Yeah, it really depends on the flight time. So and what I mean by that is are we talking about an in-flight cockpit decision that is made by the PIC or the SIC and the crew? And that's a lawsuit that we would start focusing more on that crew individually. or is it a operational control based lawsuit? And and specifically in that is who hired the pilot? Right? So did Greg Biffle through his LLC contract Mr. Dutton And in that case, did he make knowingly the decision to put Mr. Dutton in in charge of that aircraft, knowing that he could not operate single pilot, right? Was that a hiring decision? And in that case, we start getting into vicarious liability, right? Is does Mr. Dutton actually work for Biffles LLC? And then of course, is Mr. is Biffles LLC actually an LLC, right? ⁓ or is it just an LLC in name but not in function? So Those are the decisions that you have to make when you're filing a lawsuit like this. And unfortunately, we don't have a lot of the information when we file a lawsuit like this. So you're to some degree, you are taking a very educated guess on how you think that structure is, whether there was a cockpit decision or an operational decision or a combination of both. In this case, I would say a combination of both. I would have named them both. but then you also got to look at like, okay. Do I also have the potential for a products case? Do I also have the potential for a maintenance case without yet seeing the logs? I bet you the NTSB is holding the logs right now. so you have to make an educated guess on the maintenance based on the crash of right, what is this indicative of an engine failure? Is this indicative of a products failure based on the ADS B track and the information available to you? And then as the lawsuit develops, you can drop claims out. But people always say to me, Joe, why Why don't you file first? Or why do you file so quick? Why don't you wait for the NTSB, right? Two things. One, I have to file quick because shocking, evidence disappears. Right? So when I file quickly, now I have the benefit of legal protection and spoilation the the evidence that's there, right? You have every party has a legal duty to preserve all possible evidence that could be relevant to the crash. So I get that protection immediately when I file, which is huge. Two, I get subpoena power. So when people don't want to give me stuff, which in the aviation industry happens a lot, I get it. if they don't want to produce logs or anything like that, I now have subpoena power to go out and get that stuff. the last thing is, and this is gonna be a shocker, is I'll be honest with you, I don't care about the NTSB report. one, it normally comes out after the statute of limitations. So if I were to wait for the NTSB, I lose my ability to bring a lawsuit on behalf of the family anyway. Two, ⁓ I can't actually use the NTSB's opinions in court. That is codified law from Congress. I cannot introduce the NTSB's evidence and their report and their causal findings as evidence to negligence, causation, or liability. So at the end of the day, the NTSB report is not legally helpful to me or effective. so that's why you see these lawsuits coming real fast, especially when this this case only ⁓ you know the crash happened in December. Here we are sitting in in late May, start to June, and we got lawsuits on file. That's the reason why.

Jessie: Gonna I was gonna ask too, so NTSB, you know, and I think the their ultimate goal is safety, but let's be honest, it's a government organization, it's prone to political whims and influence. And I think, you know, what is the difference between an NTSB investigation and their motives and goals versus people seeking legal liability for things? Like how do those two different?

Joe LoRusso: That's a great question. so it's purse strings, right? So the NTSB answers to Congress. Congress answers to their constituents. So you see cases like Biffle's case, I bet you the report is gonna come out much quicker than you would see like your run of the mill, like you know, ⁓ a a typical CJ runoff or a crash that that happened. I mean, crashes happen every day. Last year in 2025, there was a crash every day. But you will see the NTSB produce reports more robust. I mean, look at this. This prelim is unbelievable, right? This is more robust of a prelim than you will ever see on a crash. the reason is is because he's a public figure. Constituents love him. They love NASCAR, right? In that area. So that goes up to Congress. Congress turns to the NTSB and goes, You better find answers now. Like I need to I need to go back to my constituents now. So yeah, this one is definitely it's politically motivated, it's politically charged. And that's a good thing in the fact that they will do a more thorough investigation on this one. Not that they don't do a thorough investigation on the other ones, but be honest with you, time, resource, money, this one's gonna get more of that than an than a ⁓ a ⁓ a wreck. So yeah, it's it does influence it a lot. And and that is helpful, especially when you're thinking about when you're gonna file suit because you're you constantly as an attorney you gotta think, when am I gonna get this airplane? Right? When can I put experts on it? And if it's a big crash like this with a lot of notoriety, you can file quicker because you know you're gonna get the airplane.

Preston Holland: Interesting. Two things from the news article that came out about this ⁓ is that Nicole Biffle is seeking twenty five thousand dollars in compensatory damages. It why that that seems really low. I d maybe that's, you know, silly, but is it okay?

Jessie: I think it's ten million is the w well, it's b between the two cases. Maybe Joe can explain how that works exactly.

Joe LoRusso: That's a good question.

Preston Holland: Yeah. So like like why is why is that number low and then there's a ten million and there's a fifteen million and they're all kind of flying around. Like what's how how do you strategize how much you're suing for and things like that?

Joe LoRusso: That's a great question. So that is a threshold to get into the certain court that you are filing. So some states will require a certification or at least detailed in the pleadings that you are seeking an amount greater than blank in order to be in the court that you're in. So for example, like traditionally in most states, small claims courts has a limit of 5,000, right? So if you're seeking under 5,000, you have to be in small claims, right? ⁓ or you should be in small claims. And then you have like county courts that are a little bit higher than district courts that are higher. So when you see that 25,000 in compensatory damages, that's them checking a statutory box, a black and white box, saying our damages exceed that, which is why we are in the court that we're in. So they don't get kicked out of that court for not meeting the the dollar amount threshold. So that's why that's in there. And you'll see a lot of lawsuits. like example, in all mine, I will say at the bottom that I'm seeking damages greater than 75,000. ⁓

Preston Holland: Huh.

Joe LoRusso: Because 75,000 is the limit to get into federal court. So when you talk about having diversity jurisdiction, you need at least 75,000 to get into federal court. So I I just announce it and say, Yeah, I got more than 75,000. If you want to put me in federal, put me in federal. That's what we'll fight. I don't care. So so that's ⁓ that's what that is, the twenty-five. Now the 10 million, 10 and 15 million, I am not ⁓ I'm I'm not licensed in North Carolina and I'm ⁓ I'm sure there is

Preston Holland: Yeah. Interesting.

Jessie: So

Joe LoRusso: No procedural requirement for them to say ten million is a threshold. The twenty five thousand makes sense to be in the jurisdiction. Ten million, fifteen million. I don't a kind of a a tell to the ⁓ to the estate, whoever's defending the estate, or if insurance is at play, which I don't think there is in this case, but basically throwing out they're signaling that, hey, this'll ⁓ you could be done with this at 10 million types it's like ⁓ trying to negotiate or or throwing out a settlement ⁓ between the lines. So I bet you is a signaling.

Jessie: Settlement.

Preston Holland: Interesting. The other question that I have is that and this is according I I haven't read the full lawsuit. I've I've read the summary, talking about the IFR clearance basically for like pop-up clearance and did not contact like is that does that have merit or that just, you know, grasp like what's the you know what the rules there?

Jessie: Good running.

Joe LoRusso: anybody who's left thermal knows this. so I read that as well, and that is in the estate for the ex-wife's daughter in that lawsuit. And they detailed that and they said that this was an IFR flight plan. It needed to be an IFR flight plan 'cause it was filed greater than eighteen thousand in class A, and they the pilot was required to pick up the IFR before departing, and that is simply not true. ⁓

Jessie: Mm-hmm.

Joe LoRusso: We pop up all the time. And this is taking the attorney hat off and putting the pilot hat on. I mean, you're coming out of places like, you know, where you're you're in a hot ⁓ environment with ⁓ it's really hard to get a controller on the ⁓ on the ground, right? You're low priority when you're on the ground. When you're in the air, you're a problem, right? And now they got to talk to you because you're a problem. we pop-ups all the time. I'm I'm not saying it's the greatest thing to do in the world. But it gets ATC's attention a little bit quicker, gets you a squat code quicker, gets you into the system faster, than sitting there calling on the ground and them saying aircraft calling at blank on the ground standby. And you're just spinning engines that time. So

Jessie: I mean, could some of these be legal tactics and that, you know, how many juries are gonna truly understand the difference between VFR clearances and IFR? Yeah. Yeah.

Joe LoRusso: A hundred percent, right? A hundred percent. Yeah, you frame it in a way, and it's nicely framed in this lawsuit, you frame it in a way that just builds and compounds the negligence. And that's what you're looking for as a pile or as an attorney, is you're looking to just build on that hill, right? Build that negligence, build that negligence. Cause the jury's eventually gonna knock things off the hill. But you want a big enough hill that when they knock things off, you're still high in damages. So, so yeah, that's just a hundred percent right, Jessie. That's just feeding that hill, getting the negligence rolling.

Jessie: Yeah. I I like you know, this is just all a great reminder for any owners or people out there that are listening that if fly privately, have professional management. You know, this is not a DIY business. you know for forbid that something like this tragic happens to you and then your family is left with this mess ⁓ and this infighting. ⁓ I don't wish it on anyone. That's that's rough.

Joe LoRusso: Mm-hmm. Yeah. You know what's crazy too along those lines is is I tell pilots all the time, our industry is woefully underinsured. Like the standard policy for a single engine piston, I know we're not talking about that right here, but the standard policy for a single engine piston is a hundred thousand per seat a million total ag. A hundred thousand per seat. So put this on like a Cessna two ten, right? That would have that that policy, and you got six seats in a two ten. you think a family's gonna take a hundred thousand?

Jessie: Mm-hmm. Yeah, that's

Joe LoRusso: Right. Do you think do you think Biffle's ex-wife is going to take a hundred thousand for the loss of her daughter? There's no way, right? There's no way. That policy's getting rolled through and they're going right to the to the to the owner. ⁓

Jessie: Yeah. Yeah. Well, don't even get me started on helicopter tours and what their coverage limits are 'cause that's another big problem.

Joe LoRusso: Exact Yeah, exactly. Like it takes an industry to turn to the ⁓ to the insurance industry, right? It takes the aviation industry to turn to the insurance industry and say, We're not buying those policies anymore. You gotta adequately insure us if we're paying all this money, you gotta adequately stand in front of a claim and a hundred thousand is not standing in a claim.

Jessie: Now, one the questions I asked before the show, and I want your opinion on this because I have my own on it, is should people comment crashes or speculate before the accident the accident report comes out, given all the things that we've talked about and the different motives and politics of NTSB? Is some healthy? ⁓

Joe LoRusso: Yeah. So so yes. So I'm gonna say yes. ⁓ like I'm I'm guilty of it, right? Like on YouTube I jump in and I talk about crashes as they're happening as well. and I think that is healthy. I think that's that's good to process, especially since the NTSB takes their average turnaround on a final right now is like 34, 36 months. So by that time right, so by that time it's gone, right? Like it is healthy for the industry to talk about it. now where that goes.

Jessie: Yeah. Yeah, it's years. Yeah.

Joe LoRusso: over the line when we start having comments that are not constructive trying to break it down, but when we have accusatory comments or saying you know, like really, really attacking people, or wild speculations altogether that really are not based on anything. I can tell you that when I represent the families that I represent in crashes, I tell them stay offline. ⁓ because it's bad. It's bad.

Jessie: Yeah. Yeah. Don't read anything. Yeah. Totally.

Joe LoRusso: Even if you're a passenger, it's bad, right? The passenger could have done this, this, this, and this, right? Like it's it's wild. But as an industry, like those of us that are in it, I do think it's healthy to talk about because it it's in the moment. And if it's something that could be solved, that's good. And I'll I'll give you a great example of that. So early on, I don't know if you guys remember, early on in this one, that the running theory was the right nose cone clam door came off and went through the right nacelle. And then the right motor was ⁓ quit, the left motor was running, and they put too much flaps down coming into final, because the 550 is ⁓ is flap limited when you're single engine. that conversation came out. I don't know if you guys remember that at the very start of this whole thing. And obviously, when you look at the prelim, that's not in here. But that conversation was super healthy. ⁓ So ⁓ I tell you like.

Jessie: Right.

Joe LoRusso: Flying a phenom that has doors up in the front there. after that conversation, even though that's not what happened in this crash, I made sure to always lock those doors after that conversation. So Jessie, do to to your point, yeah, I do think some of that conversation is healthy and it does promote a safer industry.

Jessie: Yeah. Yeah, I just I know I'm I'm not the only one. You know, I sometimes I've made some comments and again trying to be respectful, careful with the family, careful with the details. I think sometimes people jump and say, ⁓ you can't possibly say anything till the NTSB report is out. That's like even when the report comes out, there's things we're still not gonna know. Some discussion, as long as it's contributing to safety and the discussion of safety, I think is a good thing. We're gonna get comments on here that say that it's a terrible thing, but it is what it is.

Joe LoRusso: Yeah.

Preston Holland: Well, and then and then you look at like after the Hoppajet report comes out, you have a lot of people that are like, bull, I don't believe it. And it's like, so like if you're gonna say you can't comment before it comes out and then you're gonna call bull when it does, like, ⁓ sorry, you pick a side. I I the problem that I have with that whole I would call it like the crash commentary comp complex. I'm creating a new term, ⁓ is that you have people who are monetizing

Jessie: Right.

Joe LoRusso: Ha ha ha.

Jessie: Yeah, no. ⁓

Joe LoRusso: Love it.

Preston Holland: And like making a ton of money and getting a lot of clicks. And the the approach varies pretty greatly in the of the analysis and the respectful nature that comes of it. ⁓ And when getting ⁓ hundreds and and millions of views on YouTube because you comment on crashes, like you have this weird, like you're making money on

Jessie: Yeah.

Preston Holland: It feels like you're making money on tragedy and like that's not good. Right. Like I I I ha you know, totally hate that part of the industry. So I I think that it comes with and there's just not many responsible people on the internet, frankly.

Jessie: Yeah, there are some though. I mean, there's some pilot captains out there that are, you know, long term airline pilots that come out, they they dig into the ADSB data, they do full reconstructions of the flight manuals and everything. And I have great respect for for those folks. Not the ones that put the splashy pictures of fire and brimstone on their YouTube clips.

Joe LoRusso: That's great one. Agreed.

Preston Holland: And those people usually get kicked out of going to places. I'm gonna leave that part there. but some of those people aren't allowed on grounds some places. Well, speaking the internet and places where crazy things happen, it is for our favorite segment, which is Mile High Madness, which is where Jessie and I, and possibly Joe, I don't know, he might have brought one, he might not have. Go to the and we find the best business and private aviation And I

Jessie: Interesting.

Joe LoRusso: Ha ha ha.

Preston Holland: I'm gonna be honest, I did not have one at the beginning of this show. And then I went to Instagram and my friend Ryan Rudolph sent me an absolutely video that am now going to share with you because you also need to see this. So if remember this guy, ⁓ he did a when we flew our VIP Seat podcast with A B Jets, ⁓ he did read of ours. This Aaron, ⁓ Aaron Rains guy who records videos. Well, the ⁓

Jessie: Yeah.

Preston Holland: One of the pilots that Mr. Beast gave a airplane to has been arrested.

Jessie: Yeah.

Preston Holland: So I don't know who's I don't know whose duffel bags those are full of marijuana, but well to mine. I swear I was borrowing I was borrowing my cousin's car. Yeah, ⁓ So but no apparently I apparently didn't do it. But yeah, pretty crazy.

Jessie: It's not mine. That wasn't mad to put that there.

Joe LoRusso: Yeah. Yeah. weird. ⁓

Jessie: Yeah, my friend put it there. I didn't even know. ⁓ no.

Joe LoRusso: Yeah, exactly.

Jessie: Yeah, well so it was it the plane that Mr. Beast gave him that they flew with it?

Preston Holland: No, cause Mr. Beast gave them like a Hawker 800B or s like it was old 800A. no, it was just it happened to be one the pilots that was a part of that craziness. but ⁓ but he is a is according to this report innocent, not guilty of anything. He was released, he didn't know it was happening. So, you know, to clear, to you know, we have our attorney on here. He's not actually our attorney, but he's our attorney friend.

Jessie: All right. All right.

Joe LoRusso: That's wild.

Jessie: Yeah.

Preston Holland: I am not alleging that he actually did it, but pretty crazy.

Jessie: ⁓ my god, that's literally. This is like our legal show today. We actually have another story coming up about FlexJet suit as well. So Joe, you're you're in for it today on the legal side. All so mine today is not a video, it's actually just an image. I have discovered my dream hanger. ⁓ this is beautiful. I've never seen a timber-built airplane hanger before, but apparently ⁓ there's an account called the Barnyard that you can follow. They built this gorgeous farmhouse style with like the restoration hardware.

Joe LoRusso: Yeah.

Jessie: wagon wheel lights too to house their PC twelve and look at this beautiful hanger. Why aren't we making more hangars beautiful like this? This is exceptional.

Joe LoRusso: ⁓ my god. I agree. That's gorgeous.

Preston Holland: You could get married there. I mean, look, you can ⁓ you could make money by charging Instagram girlies, you know, twenty thousand dollars to get married in your hanger 'cause it's gorgeous.

Joe LoRusso: Yeah.

Jessie: Well, we had like the planes and like yoga one day too. I mean you can do yoga there. You could have goat yoga and airplane yoga and everything all in one place. I love it.

Joe LoRusso: I know we get called all the time for wedding venues where ⁓ you know, wedding planners will call us and say, Hey, can we use the hangar? It's a wide open space. So I mean in in in the hangar we've had commercials, GMC truck commercials, ⁓ just 'cause they're looking for just that wide open space that doesn't exist expect ⁓ except at an airport. So

Jessie: Mm-hmm. ⁓ yeah. There we are. Yeah. Well, whoever owns this PC twelve and this hanger, I envy you. It's gorgeous.

Joe LoRusso: Yeah.

Preston Holland: well speaking of absolutely beautiful interiors like the interior that hanger a ⁓ b jet's challenger 3500 is absolutely gorgeous and really has that restoration feel ⁓ which is why we love partnering with them. We did fly on it. We got to experience it firsthand, and it is absolutely gorgeous.

Jessie: Absolutely. All right, so talking about our next legal case that's up today, Flexjet has had another win. they have been in a battle with the IRS over management fees being subject to federal excise tax or not ⁓ many, many years now. ⁓ they have finally won that case. And I think Joe, this is not the first case like this either.

Joe LoRusso: Yeah, this has come up before. If I remember right, this came up first with ⁓ with ExecJet. And I think they won as well against the IRS, ⁓ trying to claim FET tax on segments ⁓ for a management company.

Jessie: Yeah. Yeah, this was I believe thirty-nine million dollars. Yeah, thirty nine yeah, thirty-nine million dollars was the amount that the IRS wanted in back taxes. but again, you know, the IRS keeps trying to do this with the fractional platforms. They're not having success, but it seems like they still keep going after them. but good on FlexJet, maybe this will help others. I don't know, listeners out there who are managers, if you've already been paying management fees, maybe you can get some of that FET back. We'll see.

Joe LoRusso: Small enough.

Preston Holland: Yeah, Kenn Kenn Ricci on an absolute barn burner this year. ⁓ he is, you know, he does is win, apparently. you know, be beats Honeywell, beats the who's next? but yeah, no, it's he I I think that the the overreach of the government trying to collect fees is, you know, pretty standard, right? And so there's an entire Joe does a lot of litigation.

Jessie: What's the thing?

Joe LoRusso: Yeah.

Jessie: Yeah.

Preston Holland: There's a whole nother industry of aviation attorneys that just basically make sure that the IRS can't do this, And like that's basically what they hang their entire hat on. so I I think it's it's interesting to have, you know, case law from an operator. The thing I want to know is is I and and I'm ⁓ as educated on as I should be, but is it on 135 internal charter, or was it straight up on the management fees they were going to collect the federal excise tax? ⁓

Jessie: Yeah.

Preston Holland: Like on like the monthly fees.

Jessie: This was the monthly the monthly fractional management fee, which ⁓ know and ⁓ this is the whole point of the case. And I think that's been the problem is there's multiple cases and they all deal with like how the fees are charged. But the argument has been ⁓ functionally the operator side, if this is not an active flight hour or you know, someone on the airplane moving things, including the catering, it has to be associated with a specific flight for you to have to pay those fees and the management fees themselves. are kind of meaningless in terms of a flight. They just enable a user to fly. so I think that was the the crux of the case here. And maybe the the one before was a little bit different. but yeah, it's the it's the monthly management fee was the thing at play here.

Preston Holland: So we'll call it Kenn Ricci versus the eat the rich crowd and Kenn wins. ⁓ you know, pretty solid. No, I'm I'm reading here that it was basically, yeah. What don't understand is like why did it stop? Why why was the lawsuit only two thousand nine through two thousand twelve? Like, does that leave them open to try and retest it? Like a prejudice, Joe? Like, is what are we missing like from a legal standpoint here?

Jessie: Ha ha ha.

Joe LoRusso: Ha ha ha. I have no idea. My first thought was statute of limitations on it, but I I have no idea of why they would just pick a segment on it. I guess that was one that they just thought was or maybe the whole system changed, right? Maybe Flexjet changed their stuff in two thousand thirteen and started billing a different way. I don't know. It it seems so obvious though. You know, a segment tax involves a segment. I mean that's you know, and and that is a non-tax attorney, and you're a hundred percent right, Preston. There are Attorneys in the aviation space, like everybody thinks an aviation attorney does everything that that involves an airplane. There are attorneys that have dedicated careers just to aviation tax. so as a not not a aviation tax attorney, it seems like a segment tax would involve a segment. And a management fee is not segment based. So I I don't know. Unless there was a management fee fee per segment. I don't know, maybe that was the IRS. But I I don't know their contracts. ⁓

Jessie: Yeah, yeah. Some of that ⁓ I don't know if we'll ever see the details of everything, but loves a a fight over over the tax man and and winning that fight. So that's a good story. ⁓

Joe LoRusso: Yeah, for sure. I love that.

Preston Holland: so GAO, you affectionately to the Gao, ⁓ which is just a you know, lovely rolls off the tongue, has done a report on the hurdles that we have for eVTOLs So as everybody who listens to this show knows, Jessie and I are like, We'll believe it when see it. And apparently we are not alone.

Jessie: Assuming. Yeah, so this was ⁓ the government accountability office works for Congress. This was part of the 2024 reauthorization bill, is that ⁓ was supposed to order this report ⁓ figure out, you know, what are the hurdles that keep the electric EVTOL industry from thriving in the United States. and one of the big things that they found in this report, very extensive report, but a big problem here that I see it's the A, the current certification status. Nothing anyone can really do about that. but the big thing that they've also identified is the lack of charging stations. Duh, there's no vehicles yet, how are we gonna charge them? ⁓ but also the electrical grid capacity. And I think this is timely with a whole bunch of other topics that we're dealing with in terms of electricity and battery power. ⁓ As all this new technology comes to fruition from your Teslas, your data centers, EVTOLs, everything else, it is a whole new requirement in terms of the amount of power that we deliver to places and the amount of power we have on our electric grids. And one of the things they're saying is that a lot of these airports, their infrastructure is so old already, they barely can sustain the power needs they have now and have outages. How are we gonna make this all work from the airport side? really interesting report. And again, it's believe it when we see it, because we have some years of infrastructure work on top of the certification and everything else for these vehicles to really get going.

Preston Holland: I think too the framework, like we still don't have a hundred percent of the framework together for airspace. don't have the infrastructure. We have hangars. We don't have hangars to put the world's most fragile flying machines. Like they're of pretty lightweight, I imagine of you know, material. What happens when it hails? Is entire EV eVTOL fleet going to be grounded for six months when it hails in New York?

Jessie: Height to charge everything. Mm.

Preston Holland: So I I think that there's there's a lot that people have not all the way thought through. think too, this is another headwind for the eVTOL industry in general because they've been these massive returns. There's been SPACs there's been, you know, it's be huge. And I can totally see how it's gonna be huge. I mean, I talked about it last week. I flew on Blade for the first time I said, I get it. I I think I see it now. I can see why this would be really attractive. ⁓ but the reality is is like the infrastructure's not there. The New York helipad had three places to land. Like that's not that's not enough spaces for darken the sky with EV at all.

Jessie: Mm-hmm. Yeah, and the other piece of this, so I don't know how many listeners are are boaters out there, but I think you can if you're a boater, you understand electricity a lot more than most people do, to depending on the kind of hookups that you need when you get to locations. But I can tell you New York City specifically, I have stayed there on a boat before and they do not have the power infrastructure to deliver to boats, much less to these big EVTOLs. So the boat that I was on needed 240 volts to power the system. Maybe we got, you know, 200 out of it. And by no means am I electrical expert. Please don't quote me if I'm wrong here because this is not my area. you the the New York City power grid can barely handle 240. These things need like 480, three-phase electric. There is no way New York City is gonna be able to build that infrastructure anytime soon. I'm not saying never, anytime soon to power these things because the I I mean you're for one power station, you're talking about like hundreds of homes needed in terms of electrical capacity. That's a big lift for airports that are kind of living in the fifties still.

Joe LoRusso: hon that that whole industry blows my mind. Like it takes me back in the day when we were doing 333 exemptions for drones a long time ago and then then part one ⁓ seven came out. So from my mind, I'm just thinking about it on the regulatory standpoint. And it's crazy to hear this whole other side. I'm like, ⁓ my God, even if like the regulatory side gets sorted out, what do we do with the actual logistics of getting these things in the air? That's nuts. That's that's definitely eye opening.

Jessie: Yeah, you need a megawatt of power for, you know, most of these airports is what they're calling for in this GAO report, which is just a tremendous amount of electricity. You just don't even realize I mean, like a like a mega yacht. You know, imagine a hundred and fifty-footer mega yacht needs four eighty power. Just one, just one mega yacht. Now imagine, you know, 20 of these EV talls needing to be charged all at the same time. You're looking at, you know, a fleet of mega yachts trying to plug into little spot in New York City. I mean, maybe they'll have like

Joe LoRusso: ⁓ my god.

Jessie: charging stations in New Jersey and they bring them over. I don't know, but the report is showing, look, there's obviously an infrastructure problem here that's gonna have to get solved. They are allowing ⁓ grant funding to come from the government to fund these projects, which comes from currently fuel. So how that's all gonna work is gonna be complicated too. and who produced for what. ⁓

Preston Holland: But you're also you're also fighting you're fighting with a power capacity of data centers that has never been seen before. Like you're talking about we cannot create enough power to power data centers and AI, and you need the AI to fly these things. where's where's the power going to come from? That's very renewable, ⁓ right? whole point of being electric was being renewable. It's not, it's gonna become not very renewable pretty quickly. So it's like, ⁓ I know, there it feels like there's just constantly all these

Jessie: Yeah.

Preston Holland: Maybe in my lifetime, I will fly on an E V eVTOL. That's that's the position in which I'm at currently.

Jessie: I think we'll fly on it. Will it be a commercially viable, you know, across the country in our lifetime? Mm I'm not quite convinced yet.

Joe LoRusso: Yeah, and what do we do with the water too, right? Isn't that a big deal with the data centers is having to cool it all? Where's that water coming from? It's not only you got an electricity problem, you got a water problem.

Jessie: That that's you know, there right. There's all this, you know, technology that we would love to see happen. It's like the the logistical underfooting that people fail to kind of see take place sometimes. Yeah.

Joe LoRusso: Right. Right.

Preston Holland: Yep. it is time, my friends, to ring the M&A gong, which has made its way back into my office because daughter had it in her playroom. It was her musical instruments, in case you were wondering, the last time we were ringing it. But it's time ring the M&A gong for charter broker V two Jets, who has acquired corporate aviation, which was on Monday.

Jessie: Okay.

Joe LoRusso: good for them. That's huge.

Jessie: Yeah.

Preston Holland: Yeah, M&A. So my take is that M&A in the jet, you know, charter brokerage space, they're acquiring basically seven employees. and know, V2 has a couple of unique, you know, quote unquote unique jet card membership type things, and they're bringing more demand. You know, you bring in seven people, it's a relationship angle. Here's what I want know: how much did you pay? 'Cause I can't imagine that you're getting you're you're not getting a ten times multiple on a charter burgerage. I just don't think it's happening.

Jessie: Yeah, no, I don't think so either. That's like the the question that I get asked a lot, ⁓ you know, because are always like the question that's out there. It's tough because you can't underwrite relationships necessarily. those those are ours are tough ones. But at the same time, you know, to put two small brokerages together or large brokerages together, it's all creative, it's all good for the business. So I'm sure whatever it was worth to them is what they paid. ⁓ Right.

Joe LoRusso: It's a great answer.

Preston Holland: It's always it's always good to have liquidity. It's always good to have liquidity in the market. And speaking of a very liquid market, ultra long range market is incredibly liquid, ⁓ ⁓ by the alleged marketing Ice Gulfstream G seven hundreds after she has left. So apparently, allegedly, they may potentially be for sale. That is as much news as we have that they may, the two G seven may possibly, potentially be for sale.

Jessie: Yeah, I yeah, we'll see. I think new leadership is considering this to raise funds. ⁓ there's been a lot of conflict as we know with ICE and funding and everything else in the government. they are beautiful planes, but ⁓ I know how the argument was made that those were going to be helping with deportations because they are very, very VIP interiors.

Preston Holland: They're long. I mean, it's the longest gulf stream, so you can fit in theory the most people in there, but you probably could do the same on a G five. Like was a Yeah, was a there was a G five contract that was floating around for a of months, probably about a year ago this time, and it was like, hey, you can get this deportation contract if you have a bunch of G4 SPs and G fives. Like, okay, I could see

Jessie: I just

Joe LoRusso: Falking bed. Falking bed.

Preston Holland: A seventy eight million dollar G seven hundred? Hmm, not so sure. I will say if the government bought it for less and then they turn around and flip them for a profit, honestly, I you know what? Good job to the government. You may that was an efficient use of my tax dollars, and I think I'm actually okay with it, funny enough.

Jessie: I'm Maybe that's why. Maybe they're like, ⁓ wait a second, this market is super hot. We can actually like sell it for more than we bought it for. So let's go ahead and and do a w make a win out of it.

Joe LoRusso: I hope so. I that was yeah, I hope so. That would that would put a lot of logic to that to that purchase.

Jessie: We'll see.

Preston Holland: Honestly, it would be the most anti-government thing that I've ever heard of, which is like, let's make money when the money is there to be made, as opposed to let's just spend a whole bunch of it. So maybe it's a fiscally conservative move. They said, you know what, all these rich people can't get their G700s. We've got a couple, can downgrade to a 450 or a 550. You know, we're you know, ⁓ fine. The new administration get a quick win. So yeah, good for them. If it is for sale, if you're out there and you know How much they're gonna sell it for, you are welcome to come on the pod and talk about it. You need proof if they actually did flip it for a profit, but that is how you get on the podcast is you come on and bring valuable information, just like what Joe did today. Everybody who's how do I get on your podcast? So the number one question that I get is how do get on your podcast? It's bring useful ⁓ perspective and information Joe did today. So personally, I want to say thank you, Joe. For coming on the podcast. It has been awesome to have you on as a guest.

Joe LoRusso: ⁓ thank you both. Yeah, thank you both. This is an amazing podcast, and I'm happy to come on anytime. You guys do an job.

Jessie: Well, we try to keep it real here, and we're also excited to that our sponsor, RealJet, is coming back. we also have a new episode coming out soon with Kenny Dichter and Robert Withers, which you guys will not believe. I think it's the most candid conversation. ⁓ I've heard from the two of them and their journey together from Marquis to Wheels Up to what they're doing now. so thank you to RealJet as well for coming on as a new sponsor. We cannot wait for this episode to come out and share it with you guys.

Preston Holland: Yeah, no kidding. Well, that has brought us to the end of our episode. are so thankful for you who listen, tune in every week. The number one way you can help us is by sharing it with a friend. So it to your favorite aviation attorney, insurance person, person, broker. Send it to charter broker and say, Hey, look, they talk about charter brokerage M&A. Send it to your G700 owner and talk about how they can probably make millions of dollars by flipping it. So we that is the way to grow the show. Hit the like button, the follow button, the subscribe button, leave us a positive comment, all the good stuff that you do to help your favorite podcasts grow. for Jessie Naor and our special guest, Joe LoRusso, thank you to A B Jets and RealJet for sponsoring this week's episode of the podcast. And will see you all next week.