BCI Aircraft Leasing Owner Guilty in $50 Million Fraud Case

BCI Aircraft Leasing Inc. and its principal, Brian Hollnagel, were found guilty by a federal court jury of engaging in a fraudulent $50 million financing scheme, Chicago U.S. Attorney Patrick Fitzgerald said.

The jury returned its verdict today following nine days of deliberations after a seven-week trial, the prosecutor said in a statement. Hollnagel and his business were found guilty of six wire fraud counts and one count of obstructing a U.S. Securities and Exchange Commission probe. Jurors deadlocked on a second obstruction count.

“Hollnagel and BCI raised or otherwise obtained more than $50 million, commingled those funds and misappropriated some of the funds for their own use,” Fitzgerald said. They also provided false information in connection with an SEC lawsuit, he said.

BCI had been a provider of aircraft to U.S. Airways Group Inc. and Southwest Airlines Co. The SEC sued in 2007, alleging the business was a Ponzi scheme in which early investors were repaid with money taken from those who followed.

Hollnagel was indicted in March 2010. The company and other defendants were added in a revised charging document in September of that year.

He faces as long as 30 years imprisonment on each wire-fraud count, plus a $1 million fine and as long as 20 years in prison for obstruction.

Three co-defendants pleaded guilty, two of whom testified against Hollnagel at trial, Fitzgerald said. Jurors failed to reach a verdict on any of three wire-fraud counts against another individual defendant who had worked at the company.

Paula Junghans, an attorney at Washington-based Zuckerman Spaeder LLP, represented Hollnagel and the company. She didn’t immediately return voice-mail and e-mail messages seeking comment on the verdicts.

The case is U.S. v. Hollnagel, 10-cr-00195, U.S. District Court, Northern District of Illinois (Chicago).

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