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The co-founder and chief financial officer of former Bonza financier 777 Partners have been charged by the US Federal Bureau of Investigation (FBI) over an alleged US$500 million fraud scheme.
Joshua Wander, co-founder of the collapsed Miami-based investment firm, is accused of wire fraud and securities fraud as well as conspiracy to commit both, while former CFO Damien Alfalla last week pleaded guilty and is cooperating with the US government.
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777 Partners was the parent company of Bonza, which was liquidated last year after having its aircraft abruptly repossessed. ASIC confirmed in April this year it had informed Bonza’s Australian and US-based directors it would not pursue them over the downfall of the carrier.
“As alleged, the defendants, through 777 Partners, lied to lenders and investors, double-pledged collateral, and used restricted funds to bankroll risky acquisitions – putting nearly $500 million and the lifelines of structured-settlement beneficiaries at risk,” said Special Agent in Charge of the New York Field Office of Homeland Security Investigations (HSI), Ricky J. Patel.
“In actuality, the defendants put forth an illusion of stability that was a years-long house of cards. This alleged scheme was self-serving, siphoning funds meant for victims and leaving investors and lenders holding the bag.”
Christopher G. Raia, Assistant Director in Charge of the New York Field Office of the FBI, said Wander and Alfalla “fabricated lies of success and doctored financial records” to steal around half a billion dollars (more than AU$750 million) from lenders and investors.
“The defendants’ alleged deceit targeted the wallets of [their] trusting stakeholders to obfuscate the failing fiscal ventures of the business,” he said.
“With our law enforcement and prosecutorial partners, the FBI maintains its steadfast determination to disrupt any fraudulent scheme seeking to exploit victims before they’re left with millions in losses.”
According to United States Attorney for the Southern District of New York (SDNY) Jay Clayton, Wander cheated lenders and investors by “pledging assets that his firm did not own, falsifying bank statements, and making other material misrepresentations about 777’s financial condition”.
“When financial firms lie to their lenders, they do not merely breach contracts. They undermine the integrity and stability of our credit markets and our financial system more broadly,” he said.
According to the FBI, 777 Partners, which invested heavily in sporting 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 lawsuit beneficiaries and personal injury victims receive payouts over time rather than in a lump sum.
“777 Partners financed its purchases of structured settlements by using credit facilities with various private lenders, the terms of which Wander negotiated,” the FBI said in a statement.
“777 Partners was required to collateralize, or secure, its borrowing from the credit facilities with the future payments under the purchased structured settlements, as well as cash.
777 Partners consistently made profits by purchasing, aggregating, and then securitising structured settlements, and grew to one of the largest buyers of structured settlements in the secondary market.”
The FBI says that, starting in 2018, Wander began investing 777 Partners’ structured settlement capital into businesses with “less certain cash-flow profiles” including airlines, sports teams, and streaming platforms.
“Despite warnings from employees, including Alfalla, and contrary to the terms of the credit facilities, Wander directed that restricted funds from 777 Partners’ lenders be used to cover the firm’s 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 either did not own the collateral or had already pledged the collateral to other lenders.
“Wander also directed employees of 777 Partners to digitally alter bank account statements to reflect millions of dollars in cash on hand that the firm did not have.”
Wander and Alfalla are each facing 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 was earlier this year held in contempt by a Delaware court over unpaid legal bills, had been declared bankrupt by a London court in October 2024, and still owes hundreds of millions of dollars to its lenders.
Following Bonza’s collapse, Australian directors Tim Jordan and Lidia Valenzuela, alongside Bonza’s administrator and liquidator, Hall Chadwick, had accused 777 Partners of undercapitalising the low-cost carrier, leading to its demise.
