Lawsuit accuses school board member of embezzlement

Fairfax County at-large school board member Kyle McDaniel has been sued for embezzling tens of thousands of dollars from the aviation company he worked for.

In a story first reported by Fox 5 DC, Blue Label Aviation Inc. accuses McDaniel of using a company credit card for $175,000 worth of personal expenses. The lawsuit says the funds were used for family vacations, meals, groceries, household expenses, and charges at a local strip club and a strip club in New Orleans.

McDaniel was elected to the school board in November 2023 and currently chairs the board’s Budget Committee.

The Fox 5 story includes the following quote from a spokesperson for McDaniel on his behalf: “This is an ongoing business dispute between my former business partner and myself. I’m going to let this play out in the courts where I intend to prevail, and not in the press. My focus has been and will remain on fully funding and supporting a public education system that’s responsive to the needs of our kids and community. I will not let this situation distract me from that.”

Fairfax County Public Schools issued this statement: “We have been made aware of a civil lawsuit filed against School Board Member Kyle McDaniel. We understand that this is an ongoing business and legal dispute. We respect the legal process and will refrain from commenting further at this time.”

The lawsuit, filed in the Loudoun County Circuit Court on March 13, says McDaniel had previously been the managing member and majority interest holder of Commonwealth Aviation Services, a flight school based in Manassas.

In March 2023, Commonwealth merged with Aero Elite, a flight school based in Leesburg. Blue Label was then created as the parent company and sole owner of Aero Elite and Commonwealth.

As part of the merger, McDaniel was appointed secretary and treasurer of Blue Label and given 3,200 shares of common stock in the company.

According to the suit, Blue Label Aviation President Timothy Fisher confronted McDaniel last July about the misuse of credit cards and bank accounts and accused him of embezzling $120,000. McDaniel confessed and agreed to repay the misappropriated funds. He repaid the company $50,000.

Then in December, Fisher discovered that McDaniel continued using the company’s credit cards and bank accounts for personal expenses. An audit found he had misappropriated approximately $160,000.

At another meeting in January, the suit alleges, Fisher offered McDaniel a chance to resign without having to pay back the funds if he turned over all credit cards and access to company accounts and transferred his shares back to the company. Instead, additional non-business-related charges were made on the company’s credit cards.

Blue Label’s shareholders adopted a resolution on Feb. 13 to accept McDaniel’s resignation and approve the redemption of his shares, the lawsuit states. But then, it alleges, the company wasn’t able to access the credit cards and bank accounts without McDaniel’s cooperation. McDaniel ignored a message from the corporate general counsel instructing him to meet with Fisher to complete the transfer.

The lawsuit seeks a $175,000 judgment against McDaniel to recover the cost of the misappropriated funds plus punitive damages of $350,000.