One of Flair Airlines’ Boeing 737 Max aircraft at Vancouver International Airport in 2024. U.S. prosecutors alleged that an investor used fraudulently obtained money to purchase Boeing aircraft for Flair.DARRYL DYCK/The Canadian Press
The planes Flair Airlines used to launch its expansion in 2021 were allegedly purchased for it by an investor in a multimillion-dollar fraud using phony financial records, according to court records filed by the U.S. Attorney of New York.
U.S. federal prosecutors in October charged Joshua Wander, head of Miami-based investor 777 Partners, with four counts of fraud related to a US$500-million plot to cheat investors. U.S. Attorney Jay Clayton alleges Mr. Wander and former chief financial officer Damien Alfalla used the money to conceal 777 Partners’ financial losses, and buy airlines, professional soccer teams, film companies and streaming platforms. Mr. Wander, 44, also faces a civil case before the U.S. Securities and Exchange Commission.
In 2018, 777 Partners bought a 25-per-cent stake in Edmonton-based Flair, and would go on to become the airline’s major creditor, provider of leased aircraft and boardroom controller. Amid mounting financial problems, 777 Partners in 2024 ended ties with Flair and was declared bankrupt.
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According to a grand jury indictment recently unsealed in a New York court, Mr. Wander allegedly used fraudulently obtained money to purchase and deploy 24 Boeing 737 Max aircraft with Flair and Bonza, an Australian airline it partly owns.
Those planes were purchased with a $10-million loan secured by a list of assets 777 Partners did not own, says the indictment. The borrowed amount would rise to US$40-million, says the indictment, which contains unproven allegations.
Mr. Wander’s lawyer, Jordan Estes, did not respond to e-mails. “This is a business dispute dressed up as a criminal case. We look forward to setting the record straight,” Ms. Estes told Bloomberg News last month.
Maciej Wilk, Flair’s chief executive officer, said the airline has no debt, equity or other connections with 777 Partners. “All of Flair’s aircraft are leased from top-tier global aircraft leasing companies and are not affected by these proceedings,” Mr. Wilk said.
Mr. Alfalla has pleaded guilty to the charges and is co-operating with prosecutors.
777 Partners Group co-founder Josh Wander in Berlin in 2023. U.S. federal prosecutors have charged Mr. Wander with four counts of fraud.Andreas Gora/The Associated Press
In January, 2021, Flair announced its expansion plans, boosting its three-plane fleet to 18 by summer and adding flights to Ottawa, Saint John and other domestic airports. The aircraft would number 50 in five years, Flair said at the time.
Flair was attempting to establish itself as a low-cost alternative to Air Canada and WestJet Airlines, flooding the market with cheap flights, said John Gradek, who teaches aviation leadership at McGill University.
Mr. Wander’s 777 Partners secured the planes from Boeing at a discount made possible by the pandemic-induced drop in travel and sold some of them to finance companies in a leaseback arrangement that is common in the airline business, Mr. Gradek said. 777 Partners retained ownership of some planes, which it leased to Flair.
“They got a good deal and then flipped them to the leasing companies at a higher rate,” he said.
Prior to becoming a buyer of airlines and soccer teams, 777 Partners’ main business was purchasing and monetizing structured settlements, which are compensation plans for personal injury victims or lawsuit winners. 777 Partners would pay the individual a lump sum of money in return for the future stream of payments.
But when this business began to slow, Mr. Wander directed employees to use restricted cash from the structured settlements business to cover payroll and debts, and to make acquisitions, the indictment alleges.
In early 2021, Mr. Wander owed Boeing US$10-million as a deposit on the 24 aircraft but did not have the cash. Instead, the document alleges, he drew on a line of credit with a lender, using as collateral a list of structured settlements he falsely claimed to have purchased.
“At Wander’s direction, those fraudulently obtained funds were used to pay for the Boeing aircraft, as well as to cover millions of dollars in expenses associated with [soccer teams] London Lions and Sevilla FC, among other expenses not authorized by the credit facility,” the indictment alleges. “In or around October, 2021, 777 Partners impermissibly used funds from the credit facilities [of three lenders] to cover millions of dollars of expenses associated with Flair Airlines.”
The indictment alleges Mr. Wander took other steps to inflate 777 Partners’ assets, including double-pledging loan collateral, falsely inflating account balances and directing an employee to use Microsoft Paint software to alter screen captures of bank statements.