BCI Aircraft's owner indicted in $50 million fraud

BCI Aircraft Leasing Inc.'s owner was charged with more than a dozen additional crimes stemming from an alleged $50 million fraud scheme, six months after the U.S. first indicted him.

Brian Hollnagel, 37, was indicted on 12 counts of wire fraud, two counts of tax fraud, two counts of obstructing a U.S. Securities and Exchange Commission lawsuit and one count of bribery, U.S. Attorney Patrick Fitzgerald in Chicago said today in a statement. In March, the U.S. indicted Hollnagel on one count of wire fraud. The company is also accused of wrongdoing.

Acting in concert with six other defendants Hollnagel "raised or otherwise obtained more than $50 million, commingled these funds, and misappropriated some of the funds for their own use," Fitzgerald alleged, citing a 21-count superseding indictment returned today by a federal grand jury in Chicago.

Hollnagel pleaded not guilty to the initial charge on March 16. He faces as long as 30 years in prison on the wire fraud and bribery counts, according to the U.S. His lawyer, Paula Junghans of Washington's Zuckerman Spaeder LLP, said in a telephone interview that she wasn't aware of the revised indictment and couldn't immediately comment on it.

The SEC sued Chicago-based BCI Aircraft in 2007, claiming the business and Hollnagel ran a Ponzi scheme, paying early investors with funds from those who followed.

Prosecutors said that in 2004 Hollnagel and BCI sold two planes on lease to U.S. Airways Inc. for $15.4 million, realizing an almost $4 million profit which was to be split with investors. The money was allegedly "misappropriated for other purposes," according to Fitzgerald.

The case is U.S. v. Hollnagel, 10cr195, U.S. District Court, Northern District of Illinois (Chicago).