It appears that dozens of Boeing 737 MAX aircraft have been involved in a purported wire fraud scheme, allegedly due to a Miami-based investor obtaining millions of dollars of funds to purchase the aircraft. 777 Partners was declared bankrupt in October last year, leaving its lenders in the dark for hundreds of millions of dollars.
Joshua Wander, the co-founder of 777 Partners, a Miami-based American Investment Firm, has been more widely known for investing in European soccer (football teams), streaming platforms, and, more recently, aviation. The investment firm is behind not only Flair Airlines, Canada, but also the short-lived Bonza Airlines Australia.
Deals Signed For Over 130 MAX Aircraft
While the 777 Partners name could easily lead you to believe the firm invests in the popular Boeing 777 widebody, you would be confused. The firm has focused on low-cost carriers, being Flair and Bonza, with the co-founder having signed multiple deals that would have led to the purchase of up to 134 Boeing 737 MAX aircraft between 2021 and 2022.
The world watched as Australian carrier Bonza attempted to do what no other airline had done before, by attempting to carve a niche of new, unique routes between less popular Australian centres. The airline lasted just over a year before there were signs of cracks, with airplanes grounded and flights cancelled.
As noted in The Seattle Times, this played into the drama circling Wander, with partner carrier Flair Airlines also having planes repossessed following claims of missed repayments to debtors. U.S. Attorney Jay Clayton explains:
“Wander used his investment firm, 777 Partners, to cheat private lenders and investors out of hundreds of millions of dollars by pledging assets that his firm did not own, falsifying bank statements and making other material misrepresentations about 777’s financial condition.”
Alleged Lying To Business Partners
This October, federal prosecutors made the move to indict Wander on wire and securities and fraud charges, based on the co-founder lying to other 777 Partners, by fraudulently obtaining more than $500 million. A separate civil suit has also been filed against Wander and his business partners this month.
Federal prosecutors have accused Wander of requesting his employees to change financial records by using applications such as Microsoft Paint, in a bid to manipulate the investment firm’s financial statements. The United States Securities and Exchange Commission believes that Wander and 777 Partners fraudulently solicited investors to participate in equity offerings, which saw the firm raise $237 million.
Of that $237 million, it is believed that a portion of these funds was transferred into the personal bank accounts of Joshua Wander and co-partner Stephen Pasko. Employees of 777 Partners warned Wander multiple times that the firm did not have sufficient funds to support new ventures and airplane purchases.
Fraudulently Claiming Assets It Didn’t Own
Wander is alleged to have falsely claimed to a lender that the firm had assets which it did not actually own, which was able to artificially increase 777 Partners’ borrowing base. Those funds were then used to obtain additional Boeing aircraft. While Bonza no longer exists, Flair remains operating flights to, from, and within Canada, but remains fighting legal battles with aircraft lessors that had repossessed its aircraft, crippling its fleet.
777 Partners Chief Financial Officer, Damien Alfalla, raised concerns on multiple occasions to Wander, expressing that the firm needed to raise more than $300 million to support the company’s commitments, pointing out that the liabilities were growing at such a pace that it was not possible to have enough cash in the bank to cover its current obligations.
The Miami-based investment firm placed an order for five Boeing aircraft between March 2021 and July 2022, and had options to purchase up to 134 MAX aircraft. Only 38 of these turned into firm orders. Most of these planes were delivered in 2021 and 2022, before 777 paused deliveries in 2022 for a brief period, before six additional planes arrived in 2023.
