Texas Jet-Engine Lessor Gets 11-Year Prison Sentence for Fraud
Texas Jet-Engine Lessor Gets 11-Year Prison Sentence for Fraud
(Bloomberg) -- A former Texas bond salesman who started a jet-engine leasing company financed in part with municipal debt was sentenced to more than 11 years in jail for running what prosecutors called a Ponzi scheme.
Victor Farias, a former broker at Advisors Asset Management in San Antonio, was sentenced Wednesday after pleading guilty earlier this year to defrauding investors of more than $7 million. Farias used his company Integrity Aviation & Leasing LLC to solicit money from investors, promising to purchase engines and other aircraft parts for leasing to major airlines. Farias was ordered to pay $7.4 million in restitution.
Federal prosecutors said Integrity ultimately purchased only one engine and sold it shortly after, generating little or no profit. Farias instead diverted much of the money he raised into his own bank account and a friend’s convenience store.
Integrity Aviation also borrowed $11 million in the U.S. municipal-bond market through a Wisconsin-based agency to help finance the venture. The Madison, Wisconsin-based Public Finance Authority issued the bonds despite Farias’s lack of experience in the aviation industry and without reviewing his company’s financial statements, according to a Bloomberg News article. The bonds, which are due in November, traded Sept. 22 at about 1.25 cents on the dollar.
Farias wasn’t charged with fraud related to the municipal bonds.
Farias and Integrity still face a lawsuit filed by the U.S. Securities and Exchange Commission that accuses Faris of diverting more than $11.6 million of $14 million he raised from the sale of promissory notes to investors. According to the SEC, he used some of the money for travel, jewelry, and golf and country club expenses.
The case is U.S. v. Farias, 20-cr-00540, U.S. District Court, Western District of Texas (San Antonio).
©2021 Bloomberg L.P.