Key Takeaways
- A forfeiture bill issued by the DOJ listed a Bombardier Global and Embraer Legacy jets
- Government argues that both jets are subject to forfeiture due to being purchased with proceeds from alleged fraud
In a legal saga surrounding the assets of Sam Bankman-Fried, the former CEO of bankrupt FTX, two luxury jets have become the subject of forfeiture proceedings by U.S. prosecutors. These aircraft, a Bombardier Global and an Embraer Legacy, were listed in a forfeiture bill issued by the Department of Justice, potentially to be seized as part of assets linked to Bankman-Fried.
The backdrop to this legal drama is Bankman-Fried’s ongoing criminal trial in New York. He faces charges of fraud and conspiracy related to the collapse of his cryptocurrency exchange, FTX, in November 2022. Bankman-Fried has entered a plea of not guilty to these charges.
The two aircraft, a Bombardier Global 5000 BD-700-1A11 and an Embraer Legacy EMB-135BJ, were originally purchased for substantial sums—$15.9 million and $12.5 million, respectively—according to court documents.
Paul Aranha, the founder of Trans Island Airways, a Bahamian charter flight company, played a pivotal role in operating Bankman-Fried’s planes to and from the Bahamas, as revealed in a September filing. Aranha disclosed that from around October 2021, his company provided more than $15 million worth of private charter and cargo flights, along with customized plane upgrades and other services to Bankman-Fried and other FTX executives, employees, associates, guests, family, and friends.
FTX had reportedly requested upgrades for the aircraft, including advanced Wi-Fi and entirely new interiors. However, these plans were thwarted, as the planes remained under renovation when FTX faced its downfall in November.
Ownership of these aircraft has been embroiled in a dispute between the Department of Justice and FTX. The government argues that both jets are subject to forfeiture due to being purchased with proceeds from alleged fraud, while FTX claims ownership based on purported loans used for the aircraft purchases, which lack proper documentation.
Island Air Capital (IAC), involved in the aircraft’s acquisition, has raised questions about ongoing repair and inspection costs amid the ownership dispute. In practice, none of those associated with FTX had the opportunity to utilize the planes, given the ongoing upgrades at the time of the company’s bankruptcy filing.
The Embraer Legacy was initially purchased by IAC for $12.5 million, while the Bombardier Global was acquired for $15.9 million with financing facilitated by FTX, as outlined in the filing. This financing arrangement was the result of an unsecured, no-interest loan, sealed through a “handshake deal” between Bankman-Fried and IAC’s owner, Paul Aranha.
As Bankman-Fried’s trial enters its third day, he faces a range of charges that could result in decades of imprisonment if convicted. The allegations revolve around claims that he and other FTX executives misappropriated billions of customer assets for their own unsuccessful investments, ultimately leading to FTX’s bankruptcy filing late last year.
