Former Aviation Distributors CEO Indicted
The former chief executive of Aviation Distributors Inc., accused of masterminding an elaborate scheme to help his Lake Forest company obtain a loan and sell stock, has been indicted by a federal grand jury in Los Angeles, authorities said Wednesday.
The 21-count indictment, handed up Tuesday against Osamah S. Bakhit, included charges of filing false registration statements and falsifying the company’s books and records.
If convicted, the 51-year-old Mission Viejo resident, who is the company’s largest shareholder, faces up to 290 years in prison and fines up to $16.75 million. He declined to comment Wednesday.
Bakhit has a 55% stake in Aviation, a reseller of airplane parts, and continues to serve as a company consultant, Assistant U.S. Atty. Randall Lee said.
Criminal complaints also were filed against the company and its director of quality control, James J. Goulet. Both have agreed to enter guilty pleas. Two weeks ago, the company said it agreed to plead guilty to criminal charges and pay a $750,000 fine.
Goulet, 39, has agreed to plead guilty to securities fraud and falsifying company books, the U.S. Attorney’s Office said in a statement. As part of his plea, he will admit to carrying out fraudulent practices at the behest of Bakhit, the statement said.
Goulet faces up to 15 years in prison and fines of $1.25 million. He declined to comment.
In a related matter, the Securities and Exchange Commission filed a lawsuit accusing the company, Bakhit and Goulet of securities violations.
The company and Goulet have agreed to settle the SEC allegations, promising not to violate securities laws in the future, the agency said. Both admitted no wrongdoing in the SEC case.
Bakhit’s attorney, James R. Asperger, said he would vigorously defend Bakhit against the charges.
Authorities contend that the company, under Bakhit’s direction, illegally inflated its financial performance by prematurely recording sales and, in some cases, creating false invoices for transactions that never took place.
In late 1996, for example, Aviation recorded a fictitious sale worth $225,000 to Hani Trading, a Jordanian company run by Bakhit’s brother, the agencies alleged.
The alleged financial shenanigans helped Aviation obtain critical loans and helped make the company more attractive to investors when it issued shares to the public in March 1997, Lee said.
In April 1998, Aviation and other defendants agreed to settle shareholder lawsuits over alleged securities violations, setting up a pool of $740,000 in cash and 210,000 shares of stock to be divided among shareholders.
Aviation’s stock closed Wednesday at $2.31, down 6 cents a share, in Nasdaq trading. The initial stock offering was priced at $5 a share.
