Flight school owner pleads guilty to tax evasion amid bankruptcy scandal

The owner of a flight school that went bankrupt while allegedly holding hundreds of thousands of dollars in student deposits has struck a plea deal with prosecutors and pleaded guilty to tax evasion, according to the Aircraft Owners and Pilots Association (AOPA). Kevin Rylchik is facing a prison term but by pleading guilty he avoided indictment on a series of serious federal charges relating to his operation of American Aviation at Manassas Airport in Virginia and several other businesses. The charges were filed against Rylchik in May, three months before he abruptly closed the school on Aug. 1 and filed for bankruptcy for the businesses and personally.

As a result, dozens of students, some with as much as $100,000 on deposit, have little chance of recovering more than a small fraction of their money as they join about 500 other creditors named in the proceedings. The tax evasion case further complicates their situation because the IRS is always prioritized for payment in such cases. The IRS stated that Rylchik evaded taxes and withheld employee deductions without remitting them to the government for years, accumulating a debt of $3.4 million. Any assets will go toward paying that before creditors see any reimbursement.