The co-founder and CFO of former Bonza financier 777 Partners has been charged by the US Federal Bureau of Investigation (FBI) over an alleged $500 million fraud scheme.
Joshua Wander, co-founder of the failed Miami-based investment firm, is charged with wire fraud and securities fraud, as well as conspiracy to commit both, while former chief financial officer Damien Alfalla pleaded guilty last week and is cooperating with the US government.
777 Partners was the parent company of Bonza, which was liquidated last year after its planes were abruptly repossessed. ASIC confirmed in April this year that it had informed Bonza directors in Australia and the United States that it would not pursue them over the airline’s collapse.
“As alleged, defendants, through 777 Partners, lied to lenders and investors, provided double collateral, and used restricted funds to finance risky acquisitions, putting nearly $500 million and the lifelines of structured settlement beneficiaries at risk,” said New York Homeland Security Investigations (HSI) Special Agent in Charge Ricky J. Patel.
“In reality, the defendants presented an illusion of stability that was a house of cards that lasted for years. This alleged scheme was selfish, diverted funds intended for victims, and left investors and lenders holding the bag.”
Christopher G. Raia, assistant director in charge of the FBI’s New York field office, said Wander and Alfalla “made up successful lies and manipulated financial records” to steal about $500 million (more than A$750 million) from lenders and investors.
“The alleged deception of the accused targeted the wallets of [their] relying on stakeholders to obfuscate the business’s failed tax projects,” he said.
“With our law enforcement partners and prosecutors, the FBI remains determined to disrupt any fraudulent schemes seeking to exploit victims before they are left with millions in losses.”
According to U.S. Attorney for the Southern District of New York (SDNY), Jay Clayton, Wander deceived lenders and investors “by pledging assets that his company did not possess, falsifying bank statements, and making other material misrepresentations about 777’s financial condition.”
“When financial companies lie to their lenders, they not only breach contracts. They undermine the integrity and stability of our credit markets and our financial system in general,” he said.
According to the FBI, 777 Partners, which invested heavily in sports clubs around the world including Melbourne Victory, as well as airlines such as Bonza and Canadian low-cost carrier Flair, was initially set up to underwrite and finance structured settlements, where beneficiaries of lawsuits and personal injury victims receive payments over time rather than in a lump sum.
“777 Partners funded its structured deal purchases using lines of credit with various private lenders, the terms of which Wander negotiated,” the FBI said in a statement.
“777 Partners was required to guarantee or secure its borrowing facilities with future payments under the acquired structured agreements, as well as with cash.
“777 Partners consistently made profits by purchasing, aggregating and then securitizing structured deals, and grew to become one of the largest buyers of structured deals in the secondary market.”
The FBI says that starting in 2018, Wander began investing 777 Partners’ structured liquidation capital in companies with “less secure cash flow profiles,” including airlines, sports teams and streaming platforms.
“Despite warnings from employees, including Alfalla, and against the terms of the credit lines, Wander directed that restricted funds from 777 Partners’ lenders be used to cover company acquisitions and expenses,” investigators said.
“Wander’s spending caused 777 Partners to face significant cash and collateral shortfalls. Wander sought to conceal those shortfalls and maintain access to funds by pledging more than $350 million in assets as collateral to certain lenders, knowing that 777 Partners did not own the collateral or had already pledged the collateral to other lenders.
“Wander also directed 777 Partners employees to digitally alter bank account statements to reflect millions of dollars in cash on hand that the company did not have.”
Wander and Alfalla each face one count of conspiracy to commit wire fraud, one count of wire fraud and one count of securities fraud, each of which carries a maximum sentence of 20 years in prison, as well as one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.
777 Partners, which earlier this year was found in contempt by a Delaware court over unpaid legal bills, was declared bankrupt by a London court in October 2024 and still owes hundreds of millions of dollars to its lenders.
Following the collapse of Bonza, Australian directors Tim Jordan and Lidia Valenzuela, together with Bonza administrator and liquidator Hall Chadwick, had accused 777 partners to decapitalize the low-cost airline, which would lead to its disappearance.
