Promoters of Phoenix Aviation Corp. say the company eventually could generate hundreds of production jobs in Cache County, although the firm now finds itself mired in investigations and lawsuits.
Company officials plan to produce 500 small, rear-propeller planes annually when production begins March 1. But critics contend company president Paul McShane has made similar promises before, but has only delivered nine airplanes in four years.The company reportedly has been investigated by the Securities and Exchange Commission and the San Diego County, Calif., district attorney.
In addition, McShane is being sued by the designer of the Phoenix aircraft, by the former sales manager of Phoenix Aviation and by at least one customer who allegedly paid for an aircraft he never received. McShane also has been named in a lawsuit filed by another aircraft company.
In a telephone interview with a newspaper from his home in Oceanside, Calif., McShane said he is guilty of no wrongdoing, and he warned that bad publicity could frighten potential lenders and cause him to pull his company out of Utah.
McShane also said he is the rightful owner of the Phoenix aircraft design and that he has filed a counter-suit against Michael McCarey, the former sales manager of Phoenix Aviation, for trying to steal the company from him.
The company has, however, been investigated by the SEC for stock fraud, according to anonymous sources quoted by the newspaper.
Don Hoerl, assistant regional administrator of the SEC's Salt Lake City branch, said Phoenix Aviation stock, which trades for 12.5 to 25 cents a share, was suspended for 10 days in September because of questions raised about the company. Hoerl said he could not say whether the SEC investigation was continuing.
However, Letitia Jones, a spokeswoman for Albuquerque-based Aero Limited, said SEC officials have taken sworn statements from Aero Limited employees regarding Phoenix Aviation, which previously contracted with the New Mexico firm to manufacture its aircraft.
But Charles Larsen, a professor of industrial technology at Utah State University in Logan, said he is confident the company's work is legitimate.