U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21666 / September 27, 2010
SEC v. Brian Hollnagel and BCI Aircraft leasing, Inc., Civil Action No. 1:07-cv-4538 (N.D. Ill.) (Bucklo, J.)
The Securities and Exchange Commission ("Commission") announced that on September 8, 2010, the United States Attorney's Office for the Northern District of Illinois announced a 21-count indictment of Brian Hollnagel, BCI Aircraft Leasing Inc., and five others involved in BCI's fraudulent scheme as well as obstruction of the Commission's attempts to discover and investigate that very scheme. U.S. v. Brian Hollnagel et al., Criminal Action No. 1:10-cr-0195 (N.D. Ill.) (St. Eve., J.).
As part of this indictment, Hollnagel, BCI, and Martin Collier, BCI's Chief Financial Officer, are accused of obstructing the SEC's investigation of BCI and Hollnagel. In particular, Collier is accused of perjury during an August 2007 hearing before the Honorable Elaine E. Bucklo SEC v. Hollnagel et al., 1:07-cv-4538 (N.D. Ill.), Docket No. 35 at 5. Collier is also accused of perjury during a February 2009 deposition taken by the SEC. Finally, Collier is accused of obstruction of justice in connection with the production of fraudulent court-ordered accountings to the SEC in August 2007.
In addition, Hollnagel, BCI, and Robert Carlsson, a former broker who raised money from investors for BCI's operations, are accused of obstruction of justice in connection with false representations to the SEC during two separate examinations of Carlsson's broker-dealer in 2006 and 2007 by the SEC's examination staff. In particular, Hollnagel, BCI, and Carlsson are accused of concealing from the SEC's examination staff Carlsson's activities raising money for BCI.
The indictment further alleges that Jason Hyatt, another broker who raised money from investors for BCI's operations and a defendant in a related District Court action brought by the Commission, committed obstruction of justice when he deleted data from two computers after documents had been subpoenaed by the SEC. See SEC v. Jason R. Hyatt, Jay Johnson and Hyatt Johnson Capital, LLC, Civil Action No. 1:08-cv-2224 (N.D. Ill.) (Lindberg, J.),
Finally, the indictment alleged that, beginning no later than early 2000 and continuing through at least early 2009, Defendants 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;
used bribes and other payments to obtain term loans, lines of credit, and pricing and competitive advantages, and
made and caused misrepresentations to lenders regarding the membership of various investment groups and BCI's ownership interest in collateral.
Previously, on August 13, 2007, the Commission filed a civil injunctive complaint alleging that Defendants Hollnagel and BCI, from approximately 1998 through 2007, raised at least $82 million from approximately 120 investors as part of a fraudulent scheme in which the Defendants commingled investor funds, used investor funds to pay other investors, and failed to use investor funds as represented. The Complaint alleged that, as a result of their conduct, the Defendants violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
On April 18, 2008, the Commission filed a civil injunctive complaint against alleging that Jason Hyatt and others, from approximately 2003 through 2007, while acting as unregistered broker-dealers and investment advisers, misappropriated at least $5.4 million in investor funds. SEC v. Jason R. Hyatt, Jay Johnson and Hyatt Johnson Capital, LLC, Civil Action No. 1:08-cv-2224 (N.D. Ill.) (Lindberg, J.). The Complaint alleged that, as a result of their conduct, the Defendants violated Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.