Baron Thomas charged with fraud

Discussion in 'Hangar Talk' started by Dave Siciliano, Jan 24, 2010.

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  1. Dave Siciliano

    Dave Siciliano Final Approach

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    From the Beechlist.

    Best,

    Dave

    Looks like they sold over $10,000,000 in investments with planes as collateral. Advertised in TAP. This won't be pretty.
    ===========================================


    http://images.edocket.azcc.gov/docketpdf/0000107510.pdf

    Jan 5, 2010. Barron Thomas Aviation is being called before the Arizona Corporation Commission Securities Division to answer the charge of selling unregistered securities:

    "An Arizona investor purchased a $50,000 12% Investment from BT and 3TA on or about March 14, 2005. On April 22, 2005, BT and BTA used the Arizona investor's money to repay the prior Texas investor. BT and BTA then caused a new FAA Lien to be effected in favor of the new Arizona investor on the N8194W Airplane.

    However, unbeknownst to either the Texas or Arizona investor, the blue and white 48194W Airplane was at all times relevant laying in pieces in an open air storage yard in a severely deteriorated state. The N8194W Airplane is comprised of a separated, dented fuselage with faded paint, no wings, no landing gear and includes other defects."
     
  2. SCCutler

    SCCutler Administrator Management Council Member PoA Supporter

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    Oh my.

    And I thought he was just a dick because he would not return my calls when I wanted to buy an airplane from him.

    Small favors ... thank you, Lord!
     
  3. nyoung

    nyoung Pre-takeoff checklist

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    I've never personally engaged with BT, but always thought his practice of redacting N-numbers from both the text and .jpgs in his advertisements was strange... it did not leave me with a good impression.


     
  4. wabower

    wabower Touchdown! Greaser!

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    Not uncommon for brokers who know their listing agreements may expire prior to the time the airplane is sold. They don't want to provide potential buyers with information that would allow them to make direct contact with the owner. Their position is that they incurred the expense of running the ad and will not be reimbursed by commission earnings unless it sells.

     
  5. N801BH

    N801BH Touchdown! Greaser!

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    For BT that is the least of their problems. :yesnod::yesnod:
     
  6. wabower

    wabower Touchdown! Greaser!

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    Agreed. He's been advertising (apparently) non-existent airplanes for many years. In fairness, airplanes similar to the ones he listed probably existed, he just didn't happen to have a listing agreement to sell them. But if you lock up all the airplane traders who employ similar tactics, the airports are going to have a glut of rental space on their hands.

    At one time a local friend owned a B-90. One day the big snake-oil broker in Florida called and tried to sell it to him.

     
  7. Dr. O

    Dr. O Pattern Altitude

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    A fella at our local airport took a fancy to one of Mr. Thomas' listings... When he called, they kept insisting that they had to have his credit card numbers to show he was serious BEFORE they could discuss the airplane with him because of wasting their time with tire kickers... He wisely hung up on them...

    And any damn fool who believes he is going to get 12% on his money, over the phone, deserves what he got...

    denny-o
     
  8. steingar

    steingar Touchdown! Greaser!

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    There was a long thread about BT eating aircraft deposits on the Red Board. Sounds like its about time.
     
  9. ScottM

    ScottM Taxi to Parking

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    BT and fraud. Wow color me surprised. NOT!
     
  10. Trapper John

    Trapper John Ejection Handle Pulled

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    That attachment starts getting pretty interesting around page 14. His previous history in Texas was an eye-opener, too...


    Trapper John
     
  11. wsuffa

    wsuffa Touchdown! Greaser!

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    There are ways to protect one's self against that as a broker.

    Many real estate agents have used the same trick for a couple of reasons:

    1) to force the prospective buyer to call and build a "relationship" - and hopefully upsell them to something more expensive,
    2) to justify the fees by leading the "great unwashed" buyer through the process, and
    3) to prevent the prospective buyer from doing due-diligence prior to presenting the property, meaning that the broker controls more of the information flow.

    It's all about "sell" and "upsell", and about forcing the buyer to make more of a commitment to the deal.

    yeah, there are risks, but it's part of the job.

    Fortunately, the internet has made a difference in information flow and the ability of brokers to pull off some of these stunts.

    Now if we can get a few of the other charlatans....
     
  12. TangoWhiskey

    TangoWhiskey Administrator Management Council Member PoA Supporter

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    Question for the business lawyers: When does soliciting business investments / operating capital from private investors cross the line to "offering securities"? If I solicit and obtain venture capital, or investments from friends and relatives, is that illegal? Or is it the scope of what BT did, the "holding out" (in aviation parlance) in TAP advertisements, that crossed a line?
     
  13. TangoWhiskey

    TangoWhiskey Administrator Management Council Member PoA Supporter

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    The documents describe paying off one investor's principal using the funds from new incoming investors... can you spell p - o - n - z - i ?
     
  14. Lawreston

    Lawreston En-Route

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    Put him in to room with Bernie so they can compare notes.

    HR
     
  15. wabower

    wabower Touchdown! Greaser!

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    Certain exemptions are available, depending on whether you're making a private or a public offering. If you advertise publicly (as Thomas did with his trade-a-plane ads) you obviously face more scrutiny and must jump through more hoops.

    If you only sell privately and only to "accredited" investors (generally defined as financially sohpisticated folks with tangible net worth--excluding their home--in excess of a mil, high income, etc you can have offer to as many as you want, and admit quite a few. There are also exemptions if you don't get compensated for the sale, don't publicly advertise for investors, blah.

    By definition, almost any activity for which you provide common management to a group of others who provide the money involves the sale of a security, and the term is almosta s broad as some FAR's. Beaver pelts, for example, have been deemed a security by the regulators.

    My "real" career in investment banking and syndication was mostly with privately offered securities. The rules are somewhat tricky. Most people simply don't know what they need to know.

     
  16. TangoWhiskey

    TangoWhiskey Administrator Management Council Member PoA Supporter

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    And that's why there are attorneys to advise us... of course, that presumes you're trying to play by the rules. ;-)

    I think reading this one paragraph from his offering, which labeled only one risk to the investment and was laden with grammatical errors, and the use of the word "part" instead of "par", would have been sufficient to raise flags in my mind. If this doesn't scream "I wrote this myself without the help of an attorney", nothing does.

     
  17. wabower

    wabower Touchdown! Greaser!

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    Even a simple private placement offering memorandum can easily be 50-60 pages. I usually start by reading the first page of the proposed business plan, then the sections on risk factors and management compensation. If those make any sense, I might read more.

     
  18. murphey

    murphey Final Approach PoA Supporter

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    BT did not always have the contract to sell an airplane he was advertising.

    I did attempt to purchase an airplane from him once. At the time, my father (a retired used car salesman) lived in Phoenix and was negotiating for me. Dad called me one afternoon and told me to stay far away from BT. Dad called to set up an appointment to see the airplane. BT responded that he'd just sent the plane out for a new paint job.

    Now, both in the airplane biz and the car biz, the only reason you'd paint the vehicle before letting someone see it was due to damage. Or worse.

    The cockles of my heart are warming...BT deserves being tossed in the county lockup (Sheriff A, have fun!) with a couple guys from the deep south named Bubba.....
     
  19. timwinters

    timwinters Touchdown! Greaser! PoA Supporter

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    :rofl::rofl::rofl::rofl::rofl:

    I really love that part. Other defects? Like the ones listed aren't enough?
     
    Last edited: Jan 25, 2010
  20. John Baker

    John Baker Final Approach

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    That exact same thing happened to me. Then he sends me cards wanting to buy my airplane. I called him about it, in essence saying why should I sell him my plane when he refused to sell me one. He said "I simply did not work hard enough, in my efforts to buy from him." I could not believe he was saying that to me. I told him to take me off his mailing list, never happened, I still get the cards.

    John
     
  21. Trapper John

    Trapper John Ejection Handle Pulled

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    LOL, I guess you'll know when he goes to the can after the return address changes to, "Federal Bureau of Prisons".


    Trapper John
     
  22. Dr. O

    Dr. O Pattern Altitude

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    *My "real" career in investment banking and syndication*

    My real career from puberty on has been deflowering virgins, drinking beer with various young ladies in the back seat of a 51 Ford (with fogged windows), working on my tan and looking studly...
    Unfortunately, it didn't pay enough and I was forced to get an education and take a job (bummer)...
    OTOH, I should have gone to Hollywood, taken a job wiping tables and been discovered so I could have been a Shawn Penn, etc. making 10-20 mil a flick., banging Pretty Woman, jumping on couches, etc...
    Damn, the regrets I have...

    denny-o
     
  23. TangoWhiskey

    TangoWhiskey Administrator Management Council Member PoA Supporter

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    From what I read of the complaint documents linked at the top of this thread, they weren't pursuing prison time; just "cease and desist" and "make good on the investments already made".
     
  24. Trapper John

    Trapper John Ejection Handle Pulled

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    That's because it's a state Securities Commission complaint. Start reading around page 14, and it doesn't take much imagination to see a prosecutor investigating and eventually filing fraud charges.


    Trapper John
     
  25. mauricefrompolo

    mauricefrompolo Filing Flight Plan

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    If you will check out the ads that Barron Thomas has right now (Feb 2010) he has a 1963 Mooney "C" for $28500. The first time I called he answered me right back and said that he had a deposit on it from a buyer and would keep me posted on what transpired. Two weeks later I called him to see what the tail number of the plane was. No response. I called every day for a week. Finally he answered the phone and replied, "if you want to send a deposit I will show you the tail numbers when you arrive on site". What kind of idiot does he think people are anyway?
     
  26. ScottM

    ScottM Taxi to Parking

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    The kind that will give him money frankly. Obviously someone is using his services. While his selling styles do not mesh with my buying styles he is not out of business. So he must be meeting someone's expectations enough that he is able to make a living.
     
  27. mauricefrompolo

    mauricefrompolo Filing Flight Plan

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    Here is a copy of the reply that Barron Thomas sent me after the one on making a deposit: We don't give out N numbers over the Internet or phone, that's why you have not received an answer
    Do you want to come fly it?
    Barron



    I don't think so buddy! :nonod:
     
  28. rpadula

    rpadula En-Route

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    It took decades to put Bernie Madoff out of business. ;)
     
  29. weilke

    weilke Final Approach

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    Looking at the corporation commission filing, I suspect that brokering aircraft is not his main line of business. He seems to be in the business of 'taking deposits' and 'accepting investments'.

    A colleague of mine just came back from federal jury duty last week. They found a guy from Vegas with a remarkably similar business model guilty of multiple counts of wire-fraud, conspiracy to commit money laundering, money laundering and tax evasion.
     
  30. gismo

    gismo Touchdown! Greaser!

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    I think what it took was a major downturn in the markets that he couldn't cover up.
     
  31. Dave Siciliano

    Dave Siciliano Final Approach

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    No one can tell whose swimming without a suit until the tide goes out <g>

    Best,

    Dave
     
  32. ArizonaAvenger

    ArizonaAvenger Filing Flight Plan

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    Barron Thomas engaged in a fraudulent scheme involving his aircraft sales business? No! Say it's not so! Perish the thought!

    On the other hand, if he does wind up in jail he will be able to engage in his other favorite hobby with wild abandon.

    I guess this means I have no chance of getting any of the tie down money he owes me for that junk Piper that's been sitting on my ramp for three years. :mad2:
     
    Last edited: Mar 6, 2010
  33. flyersfan31

    flyersfan31 Touchdown! Greaser!

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    You might think about editing that last post. It was a little over the line for Hangar Talk.
     
  34. flyersfan31

    flyersfan31 Touchdown! Greaser!

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    I used to see those ads in TAP for "Earn 12% Guaranteed" on Barron's short-term investments and all I could think was -- impossible. It had to be a scam. I just can't believe it was out in the open and so frickin' obvious.
     
  35. Trapper John

    Trapper John Ejection Handle Pulled

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    Yeah, I saw those, too. Made me think of Tom Vu every time I saw one...


    Trapper John
     
  36. flyersfan31

    flyersfan31 Touchdown! Greaser!

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    Tom Vu without the babes...

    Reading the complaint, it's hard not to wonder just how incredibly stupid some people are. One guy invested $700,000! :mad2:
     
  37. Trapper John

    Trapper John Ejection Handle Pulled

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    Receivables management isn't one of your strong suits, eh?


    Trapper John
     
  38. ScottM

    ScottM Taxi to Parking

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    Maybe it is worth your while to place a lien on that aircraft.
     
  39. Trapper John

    Trapper John Ejection Handle Pulled

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    Depends on the location. In some places the airport authority can sell the abandoned plane to pay the tiedown bill.


    Trapper John
     
  40. ScottM

    ScottM Taxi to Parking

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    Even better!!!

    He should post some pics. I may be looking to trade down.
     
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