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By Jim Douglas |
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September 8, 2010 - The
owner of an aircraft leasing company, who was indicted earlier this year
on commercial bribery charges, his corporation, and five new individual
defendants are facing an expanded federal indictment alleging that they
engaged in a fraudulent financing scheme that raised more than $50
million. Several defendants, including one additional defendant not charged in the fraud scheme, were charged with obstructing a Securities and Exchange Commission (SEC) lawsuit against the leasing company and its owner based on the allegedly fraudulent aircraft investment deals. |
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In all, seven
defendants and a corporation were charged in a 21-count superseding
indictment returned today by a federal grand jury. An eighth man, who is
cooperating with the government, pleaded guilty last month to fraud and
tax evasion, admitting that he accepted more than $400,000 in bribes as
part of the scheme.
The charges were
announced by Patrick J. Fitzgerald, United States Attorney for the
Northern District of Illinois; Robert D. Grant, Special Agent-in-Charge
of the Chicago Office of the Federal Bureau of Investigation, and Alvin
Patton, Special Agent-in-Charge of the Internal Revenue Service,
Criminal Investigation Division in Chicago. The SEC cooperated with the
investigation, which falls under the umbrella of the Financial Fraud
Enforcement Task Force.
The lead
defendant, Brian Hollnagel, 37, of Chicago, the owner, president and
chief executive officer of the defendant corporation, BCI Aircraft
Leasing, Inc., was charged with 12 counts of wire fraud, two counts each
of tax fraud and obstruction of the SEC lawsuit, and one count of
bribery. Hollnagel has remained free on a $1.7 million secured bond
since he was arrested last March on one count of wire fraud in
connection with the commercial bribery scheme alone.
BCI Aircraft
Leasing, Inc., which buys, sells and leases commercial airplanes and
operated first in |
Also indicted
were:
- Craig Papayanis,
49, of
- Jason R. Hyatt,
37, of Winfield, Ill., an owner of Hyatt Johnson Capital, LLC., an
investment company that offered and sold to its customers investments
totaling more than $20 million in BCI aircraft financing deals; two
counts of wire fraud and one count of obstructing the SEC lawsuit;
- William Hatamyar,
55, of Edmond, Okla., president of AirBanker, a division of
Chicago-based Bridgeview Bank Group, where he acted as the loan officer
on bank loans and a credit line to BCI totaling more than $30 million;
two counts of wire fraud, and one count each of false statements to a
financial institution and bribery;
- Jeffrey Meyer,
52, formerly of suburban
- Martin Collier,
64, of Chicago and Woodland Hills, Calif., who was the chief financial
officer, among other positions, at BCI; two counts of wire fraud and one
count each of obstructing the SEC lawsuit and perjury; and
- Robert Carlsson,
41, of Chicago, a licensed securities broker who raised money for BCI
from outside investors. At various times, he was a managing director for
BCI, was chief executive officer of BCI Capital Management, and owned 21
Capital Group, Inc., a registered securities broker-dealer; two counts
of obstructing two separate SEC examinations of him and his company, 21
Capital Group.
The defendants
will be arraigned at a later date before
According to the
indictment, beginning no later than early 2000 and continuing through at
least early 2009, Hollnagel, BCI, Papayanis, Hyatt, Hatamyar, Meyer,
Collier, and others fraudulently obtained and retained financing and
other funds for BCI and enriched themselves to the detriment of
investors, lenders and others. Specifically, they allegedly: Made
and caused misrepresentations to be made to investors and prospective
investors about the expected returns on the investments, the source of
funds used to pay returns to investors, the use of funds raised from
investors, the status of investments, and the ownership interest that
certain investment groups had in particular aircraft;
As a result, the
defendants allegedly raised or otherwise obtained more than $50 million,
commingled these funds, and misappropriated some of the funds for their
own use. They also concealed the scheme by providing false testimony and
information in connection with the SEC?s lawsuit, misleading and
attempting to mislead BCI?s investors and independent auditors, and
creating phony accounting records.
For example, the
indictment alleges that Hollnagel, BCI, Papayanis and others falsely
represented to prospective investors and actual investors in two
BCI-managed investment groups, as well as to Hyatt Johnson Capital and
its customers, that their combined funds of more than $5 million would
be, and had been, used to acquire an ownership interest in one or more
aircraft on lease to US Airways that BCI had acquired in the spring of
2005. The defendants allegedly knew, however, that the lender that had
financed the acquisition of the aircraft had prohibited any ownership
interests by outside investors without the lender?s approval, which was
never sought nor granted.
As a further
example, in December 2004, Hollnagel and BCI sold two aircraft on lease
to US Airways for a combined total of $15.4 million, resulting in a
profit of almost $4 million, which was supposed to be split with
investors, but was misappropriated for other purposes, the indictment
alleges.
Both the initial
and superseding indictments alleged that those two aircraft were the
subject of a bribe, with Hollnagel paying $250,000 to Olds?formerly vice
president of a competing commercial aircraft sale and leasing company,
AAR Corp., of suburban Wood Dale?to ensure AAR?s purchase of the
aircraft for $15.4 million from BCI, providing BCI with a $4 million
profit just a few months after BCI acquired one airplane and only two
weeks after it acquired the second aircraft. Hollnagel, BCI, Papayanis
and Meyer then allegedly concealed from investors that both aircraft had
been sold.
After the SEC
filed its civil enforcement action against Hollnagel and others in 2007,
SEC v. Hollnagel, et al., 07 CV 4538 (N.D. Ill.), Hollnagel, BCI and
Collier allegedly fraudulently created documents and provided them to
the SEC, and Hyatt allegedly deleted data from two computers that had
been subpoenaed in the SEC civil litigation. Collier also allegedly
committed perjury by providing contradictory sworn testimony on two
separate occasions.
Hollnagel was also
charged with two counts of filing false federal income tax returns. One
count charges that in 2009 he filed a false amended return for 2005 that
failed to disclose on Schedule C gross income that he received from the
sale of a Lear35A aircraft by BCI Jet Sales and Leasing, LLC, which BCI
Jets had purchased for approximately $1 million and sold a few months
later for approximately $2.35 million, minus about $260,000 in
maintenance expenses.
The second tax
count alleges that Hollnagel filed a false tax return for 2006, stating
that his gross income was $75,488, knowing that he failed to disclose
more than $3 million he received from BCI Jets and which he used to
purchase a home in
The Financial
Fraud Enforcement Task Force includes representatives from a broad range
of federal agencies, regulatory authorities, inspectors general, and
state and local law enforcement who, working together, bring to bear a
powerful array of criminal and civil enforcement resources.
The task force is
working to improve efforts across the federal executive branch, and with
state and local partners, to investigate and prosecute significant
financial crimes, ensure just and effective punishment for those who
perpetrate financial crimes, combat discrimination in the lending and
financial markets, and recover proceeds for victims of financial crimes.
The maximum
penalties for the crimes charged in the indictment are as follows: wire
fraud and making false statements to a financial institution: 30 years
in prison and a $1 million fine, or a fine totaling twice the loss to
any victim or twice the gain to the defendant, whichever is greater;
bribery: 30 years in prison and a $1 million fine, or a fine totaling
three times the value of the amount given or twice the loss to any
victim or twice the gain to the defendant, whichever is greater;
obstructing the SEC lawsuit: 20 years in prison and a $250,000 fine;
perjury: five years in prison and a $250,000 fine; filing a false
federal income tax return: three years in prison and a $250,000 fine. |
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