777 Partners Accused of Fraud Amid Airline Investments
777 Partners, an investor in Flair Airlines and Bonza, has been accused of running a Ponzi scheme by British asset management firm Leadenhall Capital Partners. The lawsuit, filed in New York, alleges that 777 Partners and associated companies engaged in years-long fraud involving millions of dollars in pledged assets.
Allegations of Fraud
Leadenhall's lawsuit, filed on May 3rd, accuses 777 Partners of falsely pledging $350 million in assets to secure a credit facility in 2021. The assets were either non-existent, not owned by 777 Partners, or pledged elsewhere. The company discovered the issue after receiving an anonymous tip in 2022, leading to an investigation that revealed double-pledged assets totaling $185 million.
Potential Ponzi Scheme
The lawsuit claims that 777 Partners operates "a giant shell game at best, and an outright Ponzi scheme at worst." Leadenhall's investigation found that 777 Partners relied on A-CAP for funding, leading to concerns that the company's financial condition was misrepresented.
Impact on Airlines
Flair Airlines, partially owned by 777 Partners, faced financial troubles, nearly losing its aircraft to repossession. The Canadian airline has since separated from 777 Partners. Meanwhile, Bonza, owned by 777 Partners, entered voluntary administration, ceasing operations.
Industry Response
The lawsuit highlights the financial instability of 777 Partners and its impact on airline investments. The allegations raise questions about the future of the companies involved and the integrity of their operations.
