Parts Firm Founder Enters Guilty Plea
The founder of an Orange County aircraft parts supply firm pleaded guilty to deceiving his bank and accountants and to defrauding shareholders who bought nearly $7 million worth of his company’s stock, federal prosecutors said Tuesday.
Osamah S. Bakhit of Mission Viejo admitted devising a scam first detected by Andersen, whose audits of Enron Corp. have come under fire. Andersen quit as auditor of Bakhit’s Aviation Distributors Inc. in August 1997, citing falsified documents. Federal investigations, shareholder lawsuits and Bakhit’s resignation as chief executive soon followed.
Bakhit, 52, who remains the company’s biggest shareholder, pleaded guilty Monday to 18 counts of conspiracy, securities fraud, falsifying business records and reports to regulators, evading accounting controls and lying to his bankers and auditors. He is scheduled for sentencing Aug. 19 in federal court in Santa Ana.
Bakhit’s lawyer, James R. Asperger, didn’t return a phone call seeking comment. Federal prosecutors declined to say what punishment they will ask U.S. District Judge David O. Carter to impose.
Aviation Distributors, which is based in Lake Forest, went public at $5 a share in March 1997. The shares reached $12.87 five months later on the Nasdaq SmallCap Market.
The stock, which Nasdaq delisted in October 1997, closed Tuesday at 17 cents a share, unchanged in the over-the-counter market.
Prosecutors contend the company, which supplies new and overhauled parts to airlines, would never have been able to sell stock without falsifying its records. When Aviation Distributors was forced to restate its 1996 financial statements in April 1998, a profit of $300,000 became a loss of $1.5 million.
Working with the Securities and Exchange Commission, the FBI and federal prosecutors found that Bakhit directed workers to provide forged invoices and other false information to Far East National Bank to gain access to bank credit lines, Assistant U.S. Atty. Shannon Wright said.
In addition to trying to deceive Andersen, the company also gave false information to a second accounting firm, Grant Thornton, after Andersen quit, Wright said.
Aviation Distributors and its director of quality assurance, James Goulet, pleaded guilty previously to conspiracy and securities fraud. The company was ordered to pay a $750,000 criminal fine. Goulet, 40, of Lake Forest, will be sentenced later this year.
