This is why the owner of an Atwater flight school says he may be forced to close

The future of an embattled Atwater flight school is uncertain, its owner said Friday, after a Merced County judge refused to order a former business partner convicted of fraud to give up his shares in the company.

In April, Daniel Yoon was sentenced to three years probation after pleading no contest to misdemeanor charges of forgery and falsifying documents in connection with his controversial time at the helm of Sierra Academy of Aeronautics, a commercial flight school based at the Castle Commerce Center. Judge Ronald Hansen also barred Yoon from being the officer, manager or director of any California corporation while on probation.

But, the 68-year-old businessman has refused to give up his shares in KS Aviation, the school’s parent company. School officials say Yoon’s refusal to walk away threatens the school’s existence because potential investors won’t to commit to a company with a key shareholder already convicted of business-related fraud.

Yoon’s attorneys, however, said the Friday’s hearing was a scam to force Yoon to give up his shares for nothing.

Deputy District Attorney Walter Wall argued that, by not giving up his shares in the company, Yoon was violating the terms of his probation.

About two dozen Sierra employees – including flight instructors, administration staff, and others who were laid off –packed the courtroom on Friday hoping Yoon would be forced to give up his shares. Yoon sat on the other side of the room with his attorneys.

Hansen declined to order Yoon to give up his shares but agreed to have Yoon sign a formal resignation letter.

“This one is much more complicated than a burglary or theft. This is years of business dealings,” Hansen said.

Yoon was arrested in January 2016 and accused of signing the name of his business partner and co-owner of the flight school, John Yoon, on documents supporting the loan application, prosecutors said. Daniel Yoon and John Yoon are not related, authorities said.

The school was raided two days before Yoon’s arrest during an apparently unrelated federal investigation led by the U.S. Treasury Department. Officials have declined to comment on that case.

The former business partners engaged in a legal battle in a civil case in which Daniel Yoon was accused of trying to seize control of the flight school while John Yoon recovered from injuries suffered in a 2013 motorcycle crash.

Daniel Yoon agreed to step down as CEO in exchange for John Yoon dropping the civil case, Joshua Daniel, the human resources coordinator, previously told the Sun-Star.

Daniel believes Yoon is retaliating against the company and its employees for ousting him, he told the Sun-Star. “It’s like Dan Yoon has found a way to hold us hostage until our company dies,” he said.

Yoon’s criminal defense attorney, C. Logan McKechnie, said this was John Yoon’s way of punishing Daniel Yoon for the civil suits.

“This was an attempt to use the criminal system to get an advantage in a civil lawsuit,” McKechnie said. “There’s a lot of miscommunication.”

The academy specializes in training commercial pilots from Asia, particularly from China, Korea, Taiwan and Vietnam. The company currently employes more than 30 people and has made efforts to bounce back from turmoil by hiring a chief flight instructor and refocusing on students’ education.

But if Daniel Yoon doesn’t give up his shares, an interested investor won’t pursue buying the company, John Yoon said. Without an investor, the school can only operate for a couple months, company officials said.

“I think they’re further down road to keeping the school open, which is a good thing,” Wall said. “Ultimately, keeping the school open will depend on the outcome of the civil case.”

This story was originally published August 18, 2017 at 5:39 PM with the headline "This is why the owner of an Atwater flight school says he may be forced to close."