BCI Aircrafts owner convicted in $50 million fraud

The owner of an aircraft leasing company formerly based in Naperville has been convicted on fraud and obstruction of justice charges stemming from a $50 million scheme. A Winfield man and a Kildeer man also pleaded guilty in the case, which involved bribes to influence purchases of planes.

Brian Hollnagel, 38, of Chicago was indicted on 12 counts of wire fraud in March 2011, along with two counts of obstructing a U.S. Securities and Exchange Commission lawsuit, and was found guilty on six wire fraud counts and one count of obstruction of justice.

The SEC sued Chicago-based BCI Aircraft Leasing in 2007 claiming Hollnagel, the owner, president and CEO, ran a Ponzi scheme, paying early investors with funds from later while misappropriating funds for his own use.

Hollnagel and BCI raised more than $50 million from investors and concealed the scheme by providing false accounting records, according to the U.S. Department of Justice.

In 2004 Hollnagel and BCI sold two planes on lease to US Airways Inc. to AAR Corp. of Wood Dale, resulting in an almost $4 million profit. The transaction was pushed through by a high-ranking executive at AAR Corp. who accepted a $250,000 bribe from Hollnagel, according to prosecutors. Brian Olds, 69, formerly of Kildeer, was the vice president of AAR Corp. and pleaded guilty in the case.

Hollnagel and BCI had acquired one of the planes a few months before the sale and the second only two weeks before selling them to AAR for $15.4 million.

The $4 million profit was to be split with investors but was “misappropriated for other purposes,” according to U.S. Attorney Patrick Fitzgerald.

A jury deliberated for nine days following the seven-week federal trial but was deadlocked on three wire fraud counts against co-defendant Craig Papayanis, 51, of California who held various positions at BCI.

Jason R. Hyatt, 38, of Winfield pleaded guilty in the case for his role in selling investments totaling more than $20 million in BCI aircraft financing deals.

Robert Carlsson, 43, of Chicago raised more than $20 million for BCI from investors and pleaded guilty.

For each of the six counts of wire fraud, Hollnagel faces a maximum of 30 years in prison and a $1 million fine. He faces a maximum of 20 years in prison and a $250,000 fine for obstructing the SEC lawsuit.