FBI Indicts Investor For Fraudulently Buying Dozens Of Boeing 737 MAXs

Wait, you’re telling me a Miami-based investment firm was running a shady operation?! No way. In all honesty, it’s nice to see justice every once in a while…

777 Partners charged with $500 million fraud scheme

In 2023 I first wrote about 777 Partners, a Miami-based investment firm that owned stakes in both Canada’s Flair Airlines and Australia’s Bonza Airlines (despite the company’s name, it has no direct connection to Boeing or the 777). There was always something mighty suspicious about the company, as the two airlines constantly fell behind on their lease payments, all while 777 Partners kept investing massive amounts of money in other ventures, including sports teams.

In 2024, I covered how the company was facing a lawsuit from a London-based asset management company, which described 777 Partners as “operating a giant shell game at best, and an outright Ponzi scheme at worst.”

Well, justice is now being served. The FBI has charged the founder and CFO of 777 Partners with a $500 million fraud scheme. Charges include conspiracy to commit wire fraud, wire fraud, conspiracy to commit securities fraud, and securities fraud. Here’s how HSI Special Agent in Charge, Ricky Patel, described this:

“As alleged, the defendants, through 777 Partners, lied to lenders and investors, double-pledged collateral, and used restricted funds to bankroll risky acquisitions—putting nearly $500 million and the lifelines of structured-settlement beneficiaries at risk. In actuality, the defendants put forth an illusion of stability that was a years-long house of cards. This alleged scheme was self-serving, siphoning funds meant for victims and leaving investors and lenders holding the bag.”

 
777 Partners’ initial and primary business was to underwrite and finance structured settlements. Then in 2018, they began investing capital from the structured settlement business into new sectors with less certain cash flow, including streaming platforms, airlines, and professional sports teams. Per the FBI:

Despite warnings from employees, including Alfalla, and contrary to the terms of the credit facilities, Wander directed that restricted funds from 777 Partners’ lenders be used to cover the firm’s acquisitions and expenses. Wander’s spending caused 777 Partners to face significant cash and collateral shortfalls. Wander sought to conceal those shortfalls and maintain access to funds by pledging more than $350 million in assets as collateral to certain lenders, knowing that 777 Partners either did not own the collateral or had already pledged the collateral to other lenders. Wander also directed employees of 777 Partners to digitally alter bank account statements to reflects millions of dollars in cash on hand that the firm did not have.

In 2021 and 2022, as 777 Partners faced major liquidity constraints, Wander solicited more than $100 million in outside investments in 777 Partners through the sale of cumulative preferred equity membership interests in 777 Partners and an affiliated entity. Wander, Alfalla, and other employees of 777 Partners misrepresented the financial condition of the firm in soliciting these investments.

By March 2023, Wander’s scheme began to unravel. One of the firm’s lenders confronted Wander about allegations of double-pledged assets, and Wander falsely claimed there had been an error caused by 777 Partners’ antiquated computer system. A few days later, Wander again falsely assured the lender, among other things, that the double-pledging had been inadvertent. In October 2024, the High Court in London issued a winding-up order, formally declaring 777 Partners bankrupt. 777 Partners still owes its lenders hundreds of millions of dollars.

How the Boeing 737 MAX fits into this fraud scheme

Obviously this fraud goes way beyond airlines, but that’s probably what’s going to be most interesting to the OMAAT community. As mentioned above, 777 Partners had investments in both Bonza Airlines and Flair Airlines, and 777 Partners was the company that ordered the Boeing 737 MAXs that these airlines used for growth.

Now, Flair’s former Chief Commercial Officer had accused 777 Partners of making money from the airlines it owns stakes in by overcharging them for aircraft. He claimed that 777 Partners purchased 737 MAXs for $42 million each, and then sold them to its own airlines for $52 million each, realizing a $10 million profit per plane at the time of delivery. But that’s not even the core of the fraud here.

What we know is that in 2021, 777 Partners fraudulently obtained $40 million to pay for expenses, including the purchase of 24 Boeing 737 MAXs. At the time, the company owed Boeing $10 million, but around the same time, profits dipped, due to rising interest rates and increased competition in its primary markets.

So court documents show that the founder had been warned that the company didn’t have sufficient funding to cover “new ventures.” That’s when the company falsely claimed to have assets it didn’t own, to increase its borrowing base. Those funds were then used to pay for Boeing aircraft.

Just months later, the company’s CFO texted business partners to express concern about their financial situation, claiming the company needed to raise more than $300 million, and seeing no way to do so. As was written in the texts, “it is going to be difficult for me to continue working here if at year-end the situation does not dramatically improve,” and “today alone we need several millions that we don’t have.”

He went on to explain that “liabilities are growing at an astronomical pace due to our aviation sector not providing sufficient cash to cover its obligations.”

Bottom line

Executives at 777 Partners are finally getting justice, after years of alleged fraud. For a long time it had been clear that something wasn’t quite right with Bonza and Flair, and in particular, regarding 777 Partners’ involvement in the companies.

We had reason to believe the whole thing was a shell game and ponzi scheme, and the FBI’s investigation confirms this. It’s always amazing to see what people think they can get away with… greed simply knows no bounds.

Lastly, I just have to say, if you’re trying to run a fraudulent scheme like this, it’s really bizarre to invest in airlines. Talk about high capital businesses with a low chance of success. Or perhaps that was just motivated by taking an immediate profit on the sale of 737 MAXs to subsidiaries.

What do you make of this FBI indictment?