Aviation Firm Fined $750,000 in Loan Scheme

Aviation Distributors Inc. pleaded guilty Monday to federal charges stemming from a scheme to falsify records to obtain a loan. The Lake Forest reseller of airplane parts was fined $750,000 and placed on probation for at least two years.

The company had announced in October that it planned to enter the plea.

Aviation pleaded guilty to conspiracy to commit securities fraud, filing false statements in its initial public offering registration document and falsifying its books and records.

Aviation’s auditor, Arthur Andersen LLP, resigned in August 1997 and withdrew its approval of Aviation’s financial reports between 1995 and 1997. Nasdaq delisted the stock.

In related news, Osamah. S. Bakhit, the firm’s former chief executive, pleaded not guilty Monday in the case. He was released on $250,000 bail; trial is scheduled for Jan. 30.

Bakhit is accused of masterminding an elaborate scheme to help his Lake Forest company obtain a loan and sell stock. A grand jury indicted him on several charges, including filing false registration statements and falsifying the company’s books and records. He faces up to 290 years in prison and fines of up to $16.75 million if convicted.