Litigation Release No. 21530 / May 21, 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 April 26, 2010, the Honorable Elaine E. Bucklo granted a motion to stay the Commission’s above captioned litigation “pending the outcome of related criminal proceedings against defendant Hollnagel.” Previously, on March 10, 2010, the Special September 2008 Grand Jury for the Northern District of Illinois returned an indictment for Brian Hollnagel, a defendant in the Commission’s above captioned litigation. U.S. v. Brian Hollnagel and Brian Olds, Criminal Action No. 1:10-cr-0195 (N.D. Ill.) (St. Eve., J.). In particular, this indictment includes a count of wire fraud (18 USC 1343) against Hollnagel in connection with his scheme to pay bribes to Brian Olds, an officer at a public company, AAR Corp. These bribes were paid in exchange for Olds using his position at AAR to ensure that AAR purchased from, or sold aircraft to, BCI at prices favorable to BCI.

In addition, in October 2009, the Commission filed a Motion for Sanctions against the Defendants and their attorneys, Rothgerber Johnson & Lyons, for alleged improper destruction of evidence. The Court subsequently found, in an order on April 7, 2010, that “Rothgerber, Johnson & Lyons had acted improperly in destroying emails.” However, the Court declined to assess specific sanctions until the Commission later reports on the full extent of prejudice it has suffered from this improper destruction of evidence.

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. 


Last modified: 5/21/2010