ROBBIN L. ITKIN (SBN 117105) - … · ROBBIN L. ITKIN (SBN 117105) [email protected] DLA PIPER LLP (US) 2000 Avenue of the Stars ... watches, and lavish vacations, for his

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ROBBIN L. ITKIN (SBN 117105) [email protected] DLA PIPER LLP (US) 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, California 90067-4704 Tel: (310) 595-3000 Fax: (310) 595-3300 JOHN K. LYONS (Pro Hac Vice) [email protected] JEFFREY S. TOROSIAN (Pro Hac Vice) [email protected] JOSEPH A. ROSELIUS (Pro Hac Vice) [email protected] DLA PIPER LLP (US) 444 West Lake Street, Suite 900 Chicago, Illinois 60606-0089 Tel: (312) 368-4000 Fax: (312) 236-7516

Attorneys for Jonathan D. King as Chapter 7 Trustee

UNITED STATES BANKRUPTCY COURT CENTRAL DISTRICT OF CALIFORNIA

LOS ANGELES DIVISION

In re:

ZETTA JET USA, INC., a California corporation,

Debtor.

Lead Case No.: 2:17-bk-21386-SK Chapter 7 Jointly Administered With: Case No.: 2:17-bk-21387-SK Adv. Proc. No. 2:19-AP-_______-SK ADVERSARY COMPLAINT Hearing: Date: TBD Time: TBD Place: Courtroom 1575 255 East Temple Street

Los Angeles, CA 90012

In re:

ZETTA JET PTE, LTD., a Singaporean corporation,

Debtor.

JONATHAN D. KING, solely in his capacity as Chapter 7 Trustee of Zetta Jet USA, Inc. and Zetta Jet PTE, Ltd.,

Plaintiff,

v.

JETCRAFT CORPORATION, JETCRAFT GLOBAL, INC., JETCOAST 5000-5 LLC, ORION AIRCRAFT HOLDINGS LTD., FK GROUP LTD, FK PARTNERS LIMITED JAHID FAZAL-KARIM, BOMBARDIER

Case 2:17-bk-21386-SK Doc 1106 Filed 09/13/19 Entered 09/13/19 16:54:28 Desc Main Document Page 1 of 65

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AEROSPACE CORPORATION, BOMBARDIER, INC., LEARJET, INC., ECN AVIATION INC. F/K/A ELEMENT AVIATION INC., and ECN CAPITAL CORPORATION AS SUCCESSOR TO ELEMENT FINANCIAL CORPORATION,

Defendants.

Plaintiff Jonathan D. King, solely in his capacity as the Chapter 7 Trustee (and the

former Chapter 11 Trustee) (the “Trustee”) appointed in these cases (the “Chapter 7

Cases”), on behalf of the above-captioned debtors, Zetta Jet USA, Inc. (“Zetta USA”) and

Zetta Jet PTE, Ltd. (“Zetta PTE,” and together with Zetta USA and the Zetta BVI

Subsidiaries defined below, the “Debtors”), by and through his undersigned counsel, DLA

Piper LLP (US), brings this Adversary Complaint against defendants Jetcraft Corporation

(“Jetcraft Corporation”); Jetcraft Global, Inc. (“Jetcraft Global”); JetCoast 5000-5, LLC

(“Jetcoast”); Orion Aircraft Holdings Ltd. (“Orion”); Jetcraft Asia Limited (“Jetcraft Asia,”

and together with Jetcraft Corporation, Jetcraft Global, Jetcoast, and Orion, “Jetcraft”); FK

Group Ltd. (“FK Group”); FK Partners Ltd. (“FK Partners”); Jahid Fazal-Karim (“Fazal-

Karim” and together with Jetcraft, FK Group, and FK Partners, the “Fazal-Karim

Defendants”); Bombardier Aerospace Corporation (“BAC”); Bombardier, Inc. (“BI,” and

together with BAC, “Bombardier”); Learjet, Inc. (“Learjet”); ECN Aviation Inc. f/k/a

Element Aviation Inc. (“Element Aviation”); and ECN Capital Corporation, as successor to

Element Financial Corporation (“ECN” and together with Element Aviation, “Element”);

(collectively, the “Defendants”), reserving and not waiving any right to amend this

Complaint as appropriate and allowed, as the need may require or be presented:


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INTRODUCTION1

1. Zetta PTE was formed and run by Geoff Cassidy, a serial con artist and

fraudster. He had run unsuccessful scams before that were quickly exposed. Then he entered

the private jet charter business, and found success as a fraudster with his co-conspirators

and willing enablers, the Fazal-Karim Defendants and Bombardier. In just over two years

managing the Debtors’ private jet charter business, Cassidy, with these Defendants’ help,

lined his pockets with at least $10 million from kickbacks, bribes, and embezzlement, while

simultaneously saddling the Debtors with almost half a billion dollars in unsustainable debt

incurred in connection with the purchase of overpriced aircraft in a down market, all of

which – as Cassidy well knew and intended – was to the detriment of the Debtors and their

creditors.

2. Cassidy used the Debtors as an instrumentality to conduct his fraud

throughout the two years before the Debtors filed for bankruptcy on September 15, 2017.

From the moment he joined the Debtors, Cassidy conducted the affairs of the Debtors as if

they were his personal piggy bank, knowing full well that the Debtors and their creditors

would be left paying the bill for his fraud. Cassidy (a) embezzled at least $2.66 million out

of the proceeds of a single aircraft closing; (b) stole approximately $3.4 million to purchase

a 70-foot luxury yacht; and (c) spent millions more of the Debtors’ funds on extravagant

purchases, including luxury automobiles, a high-end apartment in Singapore, expensive

watches, and lavish vacations, for his own personal benefit.

3. In the course of his fraud, Cassidy drove the Debtors into the ground by

causing these entities to purchase nine Bombardier luxury jets and enter into purchase

agreements for at least five more. The Debtors incurred a staggering, unsustainable, and

ultimately mortal debt load of almost half a billion dollars. Even as the Debtors’ overdue

trade payables spiraled and the Debtors faced repeated cash crunches, Cassidy continued to

1 The allegations in this Adversary Complaint are based on information the Trustee received from the Debtors’ files and bank records, proofs of claims filed in this matter, and publicly available information, as well as reasonable inferences from those sources.


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acquire more aircraft and pay debt service on those aircraft at the expense of all other

creditors in a Ponzi-like effort to keep his scheme from crashing down.

4. Cassidy’s fraud would not have been possible without the Fazal-Karim

Defendants and Bombardier, who conspired with Cassidy and aided and abetted his scheme.

In return, they received massive payments from the sale of aircraft that the Debtors could

not afford, through transactions and financings designed to maximize the benefit to the

Defendants at the Debtors’ expense. Fazal-Karim, Bombardier’s agent in transactions with

the Debtors, and Jetcraft bribed Cassidy by paying him at least $1 million in kickbacks:

$500,000 in one of the initial purchases and another $500,000 in a transaction closer to the

date the Debtors filed for bankruptcy protection. Bombardier not only stood by as its agent

bribed Cassidy, but also agreed to pay additional bribes2 at Cassidy’s demand, to sell aircraft

at above-market prices and thereby prop up its struggling aircraft business and plummeting

stock price.

5. As a result of their wrongdoing, Fazal-Karim, Jetcraft, and various related

entities, received millions of dollars. Bombardier received sales and future orders that

Bombardier valued at more than half a billion dollars. These payments, sales, and future

orders occurred while the private jet industry was, in the words of Fazal-Karim, in its “most

difficult period.”

6. The Trustee now brings claims against the Fazal-Karim Defendants and

Bombardier for aiding and abetting Cassidy’s breaches of fiduciary duty, civil conspiracy,

unjust enrichment, constructive trust, violation of California Business and Professions Code

2 Bombardier announced on August 1, 2019 that it “is hiring an independent organization to review its procedures for doing business in foreign markets in the wake of allegations that company officials used corruption and collusion to win a rail contract in Azerbaijan.” Stefanie Marotta, Bombardier asks Export Development Canada to select investigator to

review overseas practices, Globe & Mail, available at https://www.theglobeandmail.com/ business/article-bombardier-reports-quarterly-loss-weighed-down-by-rail-department/. Bombardier said in its second-quarter 2019 financial statements that it will work with an “independent third-party expert selected by EDC” to review Bombardier’s “existing due diligence processes” and “compliance policies and procedures.” BI, 2019 Second Quarterly Report, available at https://ir.bombardier.com/modules/misc/documents/75/94/22/69/15/ Bombardier-Quarterly-Report-Q2-2019-en.pdf.


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§ 17200, and fraud, for an amount of damages and restitution to be determined at trial.

7. The Trustee also seeks to avoid actually or constructively fraudulent

transfers and obligations between the Debtors and the Defendants, and to avoid preference

transfers to Element and Bombardier. The Trustee seeks recovery of all actively or

constructively fraudulent transfers and preference transfers from the Defendants. The

Trustee further brings claims against Bombardier for violating the automatic stay. Finally,

the Trustee seeks disallowance of all of the Defendants’ claims in this matter.

JURISDICTION AND VENUE

8. This Court has jurisdiction over this Adversary Proceeding under 28 U.S.C.

§§ 157 and 1334. This Adversary Proceeding is a core proceeding under 28 U.S.C.

§ 157(b)(2)(A), (B), (E), (F), and (H).

9. Venue of this Adversary Proceeding is proper under 28 U.S.C. §§ 1408 and

1409 because it arises in these Chapter 7 Cases, which are currently pending before this

Court.

10. The statutory authority for the relief sought is 11 U.S.C. §§ 105(a), 362, 502,

542, 544, 547, 548, and 550 and Rules 3007 and 7001 of the Federal Rules of Bankruptcy

Procedure.

11. The Trustee consents to the entry of final orders in connection with this

Complaint if it is determined that the Court, absent consent of the parties, cannot enter final

orders or judgments consistent with Article III of the United States Constitution.

PARTIES AND RELEVANT NON-PARTIES

A. The Trustee

12. The Trustee is the duly-appointed Chapter 7 trustee of the bankruptcy estate

of the Debtors. The Trustee has the authority and power to bring this Adversary Proceeding

on behalf of the Debtors’ estates pursuant to 11 U.S.C. § 704.

B. The Debtors and related Parties and personnel

13. Debtor Zetta PTE was organized on July 15, 2015 by Cassidy along with

James Seagrim (“Seagrim”) and Matthew Walter (“Walter”).


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14. Debtor Zetta PTE purchased Debtor Zetta USA in August 2016 and merged

with Asia Aviation Company Pte. Ltd. (“Asia Aviation”).

15. Debtor Zetta USA, known as Advanced Air Management, Inc. (“AAM”)

until it was purchased by Zetta PTE, was a private jet charter company based in California

and operated by Seagrim and Walter.

16. Asia Aviation, owned by Cassidy and his then-wife, Miranda June Tang Kim

Choo (“Tang”), operated a single jet on behalf of the jet’s owner, until it was merged into

Zetta PTE.

17. Cassidy was at all relevant times the Debtors’ Managing Director and a

Director of Zetta PTE.

18. Tang was at all relevant times the Debtors’ human resources director and a

Director of Zetta PTE.

19. Seagrim was the Debtors’ Director of Operations and a Director of Zetta

PTE and Zetta USA. Seagrim was based in Zetta USA’s California office.

20. Walter was the Debtors’ Director of Sales and a Director of Zetta PTE and

Zetta USA. Walter was based in Zetta USA’s California office.

21. Li Qi (“Li Qi”) is a wealthy businessman and investor who resides in Hong

Kong. Li Qi was a Director of Zetta PTE. Li Qi used three entities he controlled to manage

his relationship with Zetta PTE: (1) Universal Leader Investment Limited (“Universal

Leader”); (2) Truly Great Global Limited (“Truly Great”); and (3) Glove Assets Investment

Limited (“Glove Assets”).

22. TVPX ARS Inc. (“TVPX”) acted as the owner trustee on behalf of Zetta PTE

in its aircraft transactions. In the aviation industry, it is commonplace for non-citizen U.S.

corporate trusts to be formed as an option for the registration of aircraft in the United States

with the Federal Aviation Administration (“FAA”). TVPX was a party to various trust

agreements with subsidiaries of Zetta PTE, by which TVPX agreed to hold the disguised

financing leases for aircraft in trust for the benefit of these subsidiaries. At all times, the

Debtors were the ultimate beneficial owners and obligors of legal and economic interests


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subject to the trusts.

23. Zetta Jet Global 6000-1 Limited (“Zetta Jet 6000-1”), Zetta Jet Global 6000-

4 Limited (“Zetta Jet 6000-4”), Zetta Jet Global 6000-5 Limited (“Zetta Jet 6000-5”), Zetta

Jet Global 5000-1 Limited (“Zetta Jet 5000-1”) and Zetta Jet Global 5000-2 Limited (“Zetta

Jet 5000-2”) (collectively, the “Zetta BVI Subsidiaries”) are companies formed under the

laws of the British Virgin Islands (the “BVI”) by Zetta PTE. Zetta PTE is the sole

shareholder of Zetta Jet 6000-1, Zetta Jet 6000-4, Zetta Jet 6000-5, Zetta Jet 5000-1, and

Zetta Jet 5000-2. The directors of all of the Zetta BVI Subsidiaries were Cassidy and

Seagrim.3

24. The following Zetta BVI Subsidiaries are relevant to this Complaint:

Zetta BVI Subsidiary Organization Date Corresponding Plane

Zetta Jet 6000-1 07/25/2016 Plane 10

Zetta Jet 6000-4 09/01/2016 Plane 4

Zetta Jet 6000-5 09/01/2016 Plane 5

Zetta Jet 5000-1 12/22/2015 Plane 1

Zetta Jet 5000-2 07/25/2016 Plane 11

25. The Zetta BVI Subsidiaries were formed shortly prior to each finance and

lease transaction for which they were needed. These entities served no purpose other than

their role in these transactions. They did not conduct business, had no bank account, had no

employees, did not generate any income, had no presence in the BVI, and never held a

meeting of the Board of Directors.

C. Fazal-Karim and related Parties and personnel

26. Fazal-Karim is the Owner and Chairman of the Board of Jetcraft, the

Founder of FK Group, and the Director of FK Partners. Upon information and belief, he is

a resident of Dubai in the United Arab Emirates.

3 The Debtors will seek substantive consolidation of the Zetta BVI Subsidiaries and three other similar entities (Zetta Jet Global 6000-2 Limited, Zetta Jet Global 6000-3 Limited, Zetta Jet Challenger 650-1 Limited) through a separate motion.


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27. Fazal-Karim has more than 25 years of experience in the aviation industry.

Fazal-Karim founded FK Group and acquired 50% of Jetcraft in May 2008. Prior to that,

Fazal-Karim worked at Bombardier from approximately 2001 to 2008 as the regional vice

president of sales for the Americas and then as the vice president of international sales. Prior

to that, Fazal Karim worked at Airbus as Vice President of Business Development and Asset

Management from 1996 to 2001.

28. Since no later than August 16, 2015, Fazal-Karim, through his entity FK

Group, held himself out as the exclusive representative of Bombardier in southeast Asia. In

fact, Fazal-Karim served as Bombardier’s agent in southeast Asia. During the relevant

period, Fazal-Karim represented Bombardier in sophisticated negotiations involving, upon

information and belief, billions of dollars in Bombardier aircraft and with respect to

extraordinarily complex transactions involving corporations and the world’s richest

individuals.

29. Jetcraft appears to be the brand name for both Jetcraft Corporation and

Jetcraft Global. Upon information and belief, Jetcraft Global and Jetcraft Corporation are

affiliates. Upon information and belief, Fazal-Karim is now the controlling owner of both

Jetcraft Corporation and Jetcraft Global.

30. Jetcraft provides aircraft sales, leasing, acquisition, and trade services. It

distributes new and pre-owned aircraft and provides consulting, fleet planning, and contract

services. Fazal-Karim operates Jetcraft through his “fk-group.net” e-mail account,

sometimes with a signature block that says “Jetcraft Chairman.” As described below, Fazal-

Karim negotiated on behalf of Jetcraft, ordered kickbacks to be paid on behalf of Jetcraft,

and managed Jetcraft’s relationship with the Debtors through his FK Group e-mail account.

31. Anne Behrend (“Behrend”) was at all relevant times Jetcraft’s Chief

Financial Officer.

32. Jetcraft Asia is, upon information and belief, a subsidiary of Jetcraft

Corporation.

33. Jetcoast is, upon information and belief, a subsidiary of Jetcraft Corporation.


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34. Upon information and belief, Orion is a holding company owned by Jetcraft

Global.

35. FK Group is an entity that is, upon information and belief, wholly owned by

Fazal-Karim.

36. FK Partners is a UK entity. Fazal-Karim became the director of FK Partners

in June 2018. Fazal-Karim is the sole director and person with significant control in FK

Partners. An entity using the name of “FK Partners” was used by Fazal-Karim as the initial

corporate vehicle related to a yacht charter venture Fazal-Karim and Cassidy began to

develop in approximately early 2017.

D. Fazal-Karim used his companies as alter egos of one another

37. Fazal-Karim used his various companies, including Jetcraft, FK Group, and

FK Partners, interchangeably and as alter egos of one another.

38. During the relevant period, Fazal-Karim treated the other Fazal-Karim

Defendants, including Jetcraft Corporation, Jetcraft Global, Jetcoast, Orion, Jetcraft Asia,

FK Group, and FK Partners, as a single entity such that the individuality and separateness

between them ceased.

39. Upon information and belief, the Fazal-Karim Defendants commingled

funds and assets and failed to segregate the assets of the separate entities. For example,

Zetta PTE did not pay Jetcoast but rather made payments to Jetcraft Corporation.

40. Upon information and belief, Fazal-Karim treated the assets of the Fazal-

Karim Defendants as his own.

41. Fazal-Karim owned, dominated, and controlled the Fazal-Karim

Defendants. Upon information and belief, Fazal-Karim is the controlling owner of both

Jetcraft Corporation and Jetcraft Global. Fazal-Karim is the Chairman of the Board of

Jetcraft and FK Group. Fazal-Karim is the sole director and person with significant control

of FK Partners. The other Fazal-Karim Defendants purport to be subsidiaries or affiliates of

these entities.


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42. Fazal-Karim controlled the business of the Fazal-Karim Defendants.

Although the Fazal-Karim Defendants purport to have separate existence, Fazal-Karim is

the nerve center for all of the Fazal-Karim Defendants.

43. Fazal-Karim controlled all of his business for the various Fazal-Karim

Defendants from his FK Group e-mail address.

44. Fazal-Karim routinely used the employees of one of the Fazal-Karim

Defendants for the business of another. These included Joanna Kwong, Sales Director of

FK Group. Kwong holds herself out as an employee of both Jetcraft and FK Group. Fazal-

Karim directed Kwong to conduct business on his behalf with no distinction as to whether

the work was for FK Group or for Jetcraft.

45. Fazal-Karim treated the Fazal-Karim Defendants as a single combined

business.

46. Because Fazal-Karim conducted all of his business using the same e-mail

address, it was not clear to third parties which of the Fazal-Karim Defendants he was

conducting business on behalf of, or whether he was acting for his own personal business.

47. Upon information and belief, there may be additional entities that are alter

egos of Fazal-Karim and the Fazal-Karim Defendants.

48. Adhering to the fiction of separate existence of the Fazal-Karim Defendants

would sanction fraud and promote injustice to the Debtors and their creditors.

E. Element entities and related personnel

49. ECN is an Ontario company with its principal place of business in Toronto,

Ontario.

50. Element Aviation is an Ontario company with its principal place of business

in Toronto, Ontario. At all relevant times, Element Aviation was a wholly-owned subsidiary

of ECN.

51. Michael O’Keefe (“O’Keefe”) was at all relevant times the Vice President

of Capital Markets in ECN’s Aviation Finance Division.


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F. Bombardier Parties and related personnel

52. Bombardier Inc. (“BI”) is one of the world’s leading manufacturers of

commercial aircraft and business jets. Most of the aircraft owned by the Debtors were

Bombardier aircraft, either purchased directly from Bombardier or through Jetcraft.

53. Bombardier Aerospace Corporation (“BAC”) is a wholly-owned subsidiary

of BI.

54. Bombardier Business Aircraft is a division of Bombardier that is, upon

information and belief, coextensive across both BI and BAC.

55. Learjet, Inc. (“Learjet”) is, upon information and belief, a subsidiary of

BAC.

56. Khader Mattar (“Mattar”) is the Vice President of Sales for the Middle East,

Africa, Asia Pacific and China for Bombardier Business Aircraft. In that capacity, he is

responsible for overseeing Bombardier’s sales in Asia and was Bombardier’s primary point

of contact for Bombardier’s relationship with the Debtors. Upon information and belief, he

is based in Bombardier’s Dubai sales office.

57. David Coleal (“Coleal”) was at all relevant times the President of

Bombardier Business Aircraft. Coleal oversaw Mattar and Fazal-Karim’s work, at least with

the Debtors.

ALLEGATIONS COMMON TO ALL COUNTS

A. Cassidy’s evolution as a con artist

58. Cassidy began his career as a con artist and fraudster at a young age. In 2008,

at the approximate age of 19, Cassidy made headlines in Australia when he attempted to

buy two yachts worth more than $27 million by claiming that he was the chief executive of

an aviation company. He was exposed when he claimed that he could not use his credit card

because he had recently purchased a $300,000 piano and misspelled the name of his alleged

hometown. The yacht seller called Cassidy’s purported bank and discovered the bank had

never even heard of Cassidy.

59. Undaunted, Cassidy moved on to other scams. Later in 2008, he tried to buy


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an Australian professional basketball team by peddling the same fraudulent story, but this

ploy failed as well.

60. Cassidy re-emerged in Singapore in 2012, at the approximate age of 24, and

resumed his fraudulent scheming in the Asian private luxury jet market. It was a perfect fit

for Cassidy. With customers consisting of ultra-high net worth individuals and celebrities

who could afford a $200,000-plus price tag for a roundtrip international flight on a private

luxury jet, the luxury jet market provided Cassidy with an opportunity to succeed with a

new and more ambitious fraud scheme than he had attempted in the past.

61. By 2014, Cassidy and Tang were the owners of Asia Aviation, which

managed a Bombardier jet for a wealthy Singaporean for private use.

62. But Asia Aviation did not have an Air Carrier and Operator Certificate issued

under 14 C.F.R. Part 135 (a “Part 135 Certificate”), which is required to operate certain

commercial charter flights for paying customers. Part 135 Certificates are tightly regulated

and difficult to obtain and maintain. Part 135 Certificates also impose significant, complex,

and ongoing operational and safety requirements. Without a Part 135 Certificate, Cassidy

was stuck managing a single plane for a single person.

B. Cassidy approaches Seagrim and Walter to form Zetta PTE

63. AAM was a private jet charter business based in California, operated by

Seagrim and Walter. By 2014, AAM was a successful business with a fleet of nine aircraft,

which were a mix of managed and leased aircraft. AAM catered primarily to high net worth

individuals, celebrities, and corporate clients in the United States and Europe.

64. Unlike Cassidy’s Asia Aviation, Seagrim and Walter’s AAM had a Part 135

Certificate. Equally important, Seagrim and Walter had significant operational experience

running a charter airline to service a number of customers, unlike Cassidy, who was

managing one aircraft on behalf of a single owner.

65. In approximately March 2014, Seagrim and Walter were approached by a

representative of Cassidy, who was seeking a Part 135 Certificate so Cassidy could operate

charters on the jet that Asia Aviation managed. AAM ultimately agreed to, and did, execute


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a Tri-Party Charter Management Agreement with Asia Aviation and the Singaporean owner

of the jet.

66. In early 2015, Cassidy began pressing Seagrim and Walter to expand their

business dramatically through a business venture with him. Cassidy claimed that he had

access to large amounts of capital in China to purchase brand new aircraft. Cassidy also told

Seagrim and Walter that he was independently wealthy due to a recent inheritance, and had

experience in his family’s business operating charter services in Asia. Cassidy further

represented that he had access to wealthy Chinese clientele who wanted to fly on brand new

Bombardier Global 5000s and 6000s. Cassidy told Seagrim and Walter that they could

combine AAM’s financials and past successes with Cassidy’s access to financing and

wealthy Asian clientele and launch a new company together.

67. On July 15, 2015, Cassidy, Seagrim, and Walter incorporated Zetta PTE in

Singapore to conduct a private luxury jet charter business. To conduct revenue-generating

chartered flights, Zetta PTE relied on AAM’s Part 135 Certificate in connection with the

operation of Zetta PTE’s new Bombardier aircraft. In July 2015, AAM filed with the FAA

to conduct authorized operations under another business name, “Zetta Jet.” This name was

the logo name on all new Bombardier aircraft that were delivered to Zetta PTE.

68. With Zetta PTE formed and his Part 135 Certificate in hand, Cassidy began

to take control of the company. Zetta PTE’s finance department was located in Singapore

and reported to Cassidy and his wife, Tang. Cassidy and Tang had approval rights for

transfers of funds with respect to Zetta PTE at all relevant times before their termination

and removal in August 2017. In addition, in late 2016, Zetta USA sent all of its financial

records to Singapore at Cassidy’s request.

69. Shortly after becoming a director of Zetta PTE and the Managing Director

of Zetta PTE, Cassidy also embarked on a plan to rapidly expand the Debtors through the

purchase of high-priced Bombardier aircraft. Over the little more than two years that Zetta

PTE existed, Cassidy caused the Debtors to purchase at least nine Bombardier luxury jets

and enter into purchase agreements or options for more. Through these transactions, Cassidy


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saddled the Debtors with almost half of a billion dollars in debt when the Debtors were, at

the same time, regularly failing even to pay their other creditors on time.

70. Among his other breaches of his fiduciary duties to the Debtors, Cassidy did

not take any meaningful steps to negotiate lower prices for the purchases of these aircraft,

much less implement a competitive procurement process, or request proposals from

Bombardier’s competitors such as Gulfstream. Instead, Cassidy paid at or very close to the

asking price for these aircraft to the severe detriment of the Debtors and their estates.

Although he picked one of the worst luxury jet markets in recent history to begin his buying

spree, Cassidy ended up saddling Zetta with an insurmountable debt achieved, incredibly,

by over-paying for aircraft – that the Debtors could not afford – in a market flush with

aircraft sellers desperate to make sales.

C. Bombardier and the Asian private luxury jet market were in crisis

71. At the time Cassidy formed Zetta PTE, the Asian private jet industry was

experiencing difficulty, driven by economic downturns in China, Asia’s largest private jet

market. Fazal-Karim and Mattar publicly commented on the troubles in the Asian private

jet market. In a YouTube video posted by BAC on April 2016, Mattar indicated that that

the private jet industry in Asia was suffering, driven by a slow global market and slow

market in China. Mattar thought that until the market turned around, sales in China would

continue to be stagnant.4 Mattar acknowledged that due to the economic downturn, for the

years 2016 and 2017, Bombardier expected to see softening in the Chinese market, and did

not expect to see growth again until 2018 and 2019.5 In a February 20, 2018 interview with

Bloomberg, Fazal-Karim indicated that China had been slow for the previous five years.6

In an October 11, 2018 report, after conditions began to improve, Fazal-Karim stated that

the previous year had represented a “real turning point” for the industry, and the private

4 Available at https://www.youtube.com/watch?v=_rB0h5j3rUY. 5 Matt Thurber, Bombardier Preparing for Further Growth in China, AINonline, Apr. 11, 2016, available at https://www.ainonline.com/aviation-news/business-aviation/2016-04-11/bombardier-preparing-further-growth-china. 6 Available at https://www.youtube.com/watch?v=kzMxAbmAxbU.


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aircraft industry had just survived its “most difficult period.”7

72. Competitors in the industry, including an executive for business

development in China, agreed in April 2016 that “the economy is weak and . . . [i]t’s

impacted jet sales, there’s no question about that.”8 Some competitors indicated that the

Chinese market was further stifled by a Chinese government “crackdown” on bribery and

corruption. While in the West, many businesses saw the efficiency and utility of private

aircraft, the general sentiment in China was that private aircraft represent a lavish luxury,

and the Chinese government was discouraging its citizens from accepting extravagances.9

73. In this down market, Bombardier was in dire need of aircraft orders. On

August 14, 2015, Reorg Research, a financial reporting service for the restructuring

industry, noted that Bombardier had “become a focal point for distressed and high yield

investors” and issued a report detailing its financial woes, leading to significant layoffs:

The company is currently struggling with low orders in . . . its business aircraft segment. For the most recent quarter [second quarter 2015], Bombardier reported only eight net new orders for its business aircraft segment, which compares to 30 units last year . . . . For the latest quarter, approximately 40% of Bombardier’s total revenues were derived from the business airspace unit.

* * * Bombardier’s aircraft business has been under significant pressure. On its most recent earnings call, Bombardier stated that it is seeing reduced demand, specifically in Russia, China and Latin America. In May of 2015, the company announced that it would be laying off 1,750 jobs tied to the production of Global 5000/6000 jets due to softer than anticipated market demand.

74. Another analyst, later in the call, asked, “‘How did things possibly get so

bad?’ to which management responded that the biggest delta in cash flow for the year was

the lack of customer advances . . . .” On October 29, 2015, a subsequent report by Reorg

7 “Jetcraft Releases Fourth Annual 10-Year Market Forecast,” Associated Press, Oct. 11, 2018, available at https://www.apnews.com/ee25902649044535a531c5cb331e8949. 8 Fang Yan & Siva Govindasamy, Utility Trumps Luxury as China Private Jet Buyers Fly Economy, Reuters, Apr. 13, 2016, available at https://www.reuters.com/article/us-china-airshow-luxury/utility-trumps-luxury-as-china-private-jet-buyers-fly-economy-idUSKCN0XA2R8 (Apr. 13, 2016). 9 Mandy Zuo, Mainland’s private jet sales hit turbulence, Bloomberg, Apr. 15, 2015.


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Research noted that Bombardier’s $1.5 billion notes were trading between 79.25 and 84

cents on the dollar and that the ramp down of production of the Global 5000/6000 program

cost the company $1 billion to $1.2 billion in cash flow in 2015.

75. Bombardier’s share price for its Class B common shares (BBD.B) tumbled.10

From a high of CA$7.29 on March 31, 2011 and CA$4.43 on December 2, 2014, by July

15, 2015 the share price had dropped to CA$2.00, before bottoming out at CA$0.78 on

February 11, 2016.

76. Bombardier needed to enhance its sales, particularly in Asia.

D. Cassidy’s Ponzi-like fraud and embezzlement scheme

77. Cassidy’s acquisition of high-priced Bombardier aircraft that the Debtors

could not afford was driven by one overarching goal: to fund a lifestyle of the rich and

famous at someone else’s expense. As the managing director of a luxury private jet

company, he felt he was entitled to, as he put it, “drink the top shelf expensive and exclusive

alcohol and Champagne and eat caviar” like his customers, instead of “bottom shelf

alcohol” and “McDonalds.”

78. To accomplish his goal, Cassidy executed a Ponzi-like scheme. The scheme

had two parts. First, Cassidy caused the Debtors to purchase high-priced Bombardier

aircraft through an exclusive arrangement with Bombardier and its agent Fazal-Karim in

exchange for kickbacks. Second, Cassidy induced Li Qi, a billionaire residing in Hong

Kong, to supplement the Debtors’ available cash, which was insufficient to repay the debt

service on the aircraft. Li Qi provided regular cash infusions: (a) $100 million in initial

loans at above-market interest rates to purchase two of Zetta’s first Bombardier jets; (b) a

$19 million investment and a $10 million loan at above-market interest rates in February

2016; (c) another $10 million loan in July 2016; (d) a refinancing in September 2016 (in

which Li Qi cashed out $55 million, including a significantly above-market rate of return

on one of the initial aircraft financing loans); and (e) an emergency “bridge loan” of $15

10 Most of Bombardier’s Class A shares are owned by the Bombardier family, while most of the Class B shares are owned by the public.


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million in July 2017.

79. Li Qi’s cash infusions gave Cassidy a source of funds to embezzle. Cassidy

also used some of these funds to make initial payments on additional aircraft and thereby

create the false impression that the Debtors were a profitable, growing business.

80. With respect to the almost half-a-billion-dollar in debt on the Debtors’

aircraft, Cassidy paid debt service (while skimming for himself) at the expense of all other

creditors because without those payments, the Debtors would quickly default and lose their

planes, and Cassidy’s entire scheme would come crashing down.

81. To help create the illusion of profitability and extend the scheme, Cassidy

also caused the Debtors to sell “block hours” (pre-paid hours for a jet charter at a fixed

price). Cassidy created an ostensible business plan, which, apart from omitting any mention

of misappropriation and theft, called for the Debtors to acquire nine planes by the end of

2016 (four leased, one on commission, and four purchased), and sell block hours at $13,800

per hour, growing at 3% year-over-year. But the Debtors could not sell block hours at a

sufficient price to support their debt service obligations, as Cassidy knew full well. Based

on the Debtors’ records, only one customer ever agreed to pay at or above $13,800 per block

hour, and the Debtors’ average contract rate was $10,286.11 per hour, 25% less than the

business plan.

82. The Debtors also provided on-demand charters, but there too, the rates failed

to match Cassidy’s business plan. The business plan called for the Debtors to sell on-

demand charters at $12,000 per hour, also growing at 3% year-over-year. The Debtors’

records show that average on-demand charter rates were less than $9,000 per hour.

83. Cassidy’s aircraft cost projections were significantly understated as well.

Two of the first three aircraft delivered to the Debtors were financed at well above market

interest rates and required monthly debt service payments almost double the monthly rates

assumed in Cassidy’s business plan. The plan also assumed that the Debtors would make

significant down payments that did not occur, especially later as the Debtors fell further and

further behind on their payments.


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84. When factoring in (a) the costs of ferry flights to position aircraft for use by

block hour customers and (b) “upgrades” to Bombardier Global 5000s and 6000s provided

to customers paying lower rates for lower-cost aircraft, the effective average rate fell even

lower.

85. Even as the Debtors sold block hours and flew charters at patently

unsustainable rates, Cassidy continued to buy aircraft. Cassidy caused the Debtors to sign

purchase agreements for fifteen Bombardier aircraft over ten months, from December 2015

to September 2016, for almost half a billion dollars. As Cassidy knew full well, the Debtors

never had any hope of paying off this financing debt.

86. In fact, the Debtors were insolvent almost from inception. The Debtors were

almost never able to pay their bills on time. Because Cassidy had to prioritize debt service

over all other obligations, to keep the scheme from collapsing, the Debtors’ overdue trade

payables exploded.

87. The initial purchases Cassidy orchestrated placed the Debtors immediately

into the red. In December 2015 alone, Cassidy caused the Debtors to acquire seven

Bombardier planes for a total obligation of hundreds of millions of dollars. Cassidy e-mailed

Seagrim and Walter a “Zetta Jet Overview” as of December 8, 2015 that showed that the

Debtors would be more than $1.2 million in the red based on just the initial payments.

88. Zetta could not recover. Each time the Debtors received a cash infusion, such

as the disastrous and fraudulent Minsheng refinancing described in paragraphs 122 to 125

below, the cash went into Cassidy’s pocket or to pay down debt service on the planes, while

the Debtors’ mountain of debt continued to climb.

89. As the Debtors slipped deeper into insurmountable debt, Cassidy cashed in.

He received or was promised kickbacks and other illicit consideration from at least Fazal-

Karim, Jetcraft, and Bombardier, including (a) at least $1 million in kickbacks orchestrated

by Fazal-Karim and Jetcraft; (b) a deal with Fazal-Karim to split ownership of the €3.9

million, 121-foot luxury superyacht called the Nyota; and (c) bribes that Cassidy demanded

from Bombardier. Cassidy also, among other things, (a) stole at least $2.66 million from


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the proceeds of one aircraft financing, (b) misappropriated approximately $3.4 million to

purchase a 70-foot luxury yacht called the Dragon Pearl, and (c) spent – at the very least –

$2 million of the Debtors’ funds on extravagant purchases, including luxury automobiles, a

high-end apartment in Singapore, expensive watches, and lavish vacations.

90. Cassidy knew that his actions would harm the Debtors and their creditors,

and was well aware that the Debtors’ business was on the verge of collapse. In June 2016,

for example, in connection with the refinancing of two aircraft, he told some of the Debtors’

other directors that they needed to approve the deal because the Debtors only had “breathing

room of 1.5 months.” Despite that knowledge, Cassidy shamelessly stole millions of dollars

from the proceeds of the refinancing.

91. Cassidy continued to take on debt and increase the size of the Debtors’ fleet

because it (a) raised the Debtors’ profile (and thus his own) in the rarified world of private

jet enthusiasts; (b) increased the Debtors’ short-term revenue that, along with investments

from Li Qi, allowed him to service some of the Debtors’ increasing mountain of debt; and

(c) allowed him to line his pockets.

F. The Defendants’ participation in Cassidy’s fraud and embezzlement scheme

92. Cassidy needed partners to launch and sustain his Ponzi-like fraud and

embezzlement scheme. He found them in Fazal-Karim, Jetcraft, and Bombardier. Each of

them conspired with Cassidy, defrauded the Debtors, and aided and abetted Cassidy’s

breaches of his fiduciary duties. Each of these Defendants benefitted from their roles in the

scheme, reaping tens of millions of dollars through payments and interest on overpriced

planes.

93. Fazal-Karim agreed to pay Cassidy at least two kickbacks totaling $1

million: $500,000 at the time of one of the earliest transactions and another $500,000 at the

time of one of the last transactions. Cassidy returned the favor: Fazal-Karim and Jetcraft

were involved in at least fourteen of Zetta PTE’s fifteen aircraft transactions or orders

discussed below, as well as in the Falconwing Transaction.

94. Bombardier was a participant from the beginning of the scheme, through the


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actions of its agent Fazal-Karim. Bombardier also agreed to pay Cassidy two bribes, after

Cassidy threatened to take his business elsewhere. On information and belief, the Debtors’

purchases included a significant percentage of Bombardier’s worldwide sales of Global

5000/6000 jets during this period. While on the verge of bankruptcy itself, Bombardier’s

benefit was manifest: more than half a billion in sorely-needed top-line revenue.

95. Once Cassidy accepted the kickbacks and became a corrupted fiduciary, all

of his subsequent transactions involving Fazal-Karim, Jetcraft, and Bombardier (i.e. all

except the Minsheng refinancing) were tainted.

96. In rough chronological order (although with some unavoidable overlap),

these transactions occurred as follows:

a. the “First Element Transaction,” in which Cassidy received a $500,000 kickback

so that Cassidy would continue to purchase planes from Fazal-Karim, Jetcraft,

and Bombardier;

b. the “CAVIC Transactions,” in which Fazal-Karim negotiated the sale of four

Global 6000s directly from Bombardier to the Debtors;

c. the two-stage “Li Qi / Minsheng Transactions,” one of which involved Fazal-

Karim and which Cassidy later refinanced to steal millions of dollars from the

Debtors;

d. the “Bombardier Purchase Orders,” in which Fazal-Karim sold Cassidy two

more Global 6000s directly from Bombardier that were never delivered;

e. the “Second Element Transaction,” in which Cassidy received a second

$500,000 kickback in connection with the acquisition of two additional

Bombardier planes, one from Jetcraft and another from Element;

f. the “Challenger Transactions,” in which Cassidy agreed to purchase four lower-

cost Bombardier Challengers, only one of which was ever delivered, and in

which Fazal-Karim was again involved; and

g. the “Falconwing Transaction,” in which Cassidy manufactured a transaction that

resulted in a $5 million payment to Element and the sale of an aircraft from the


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Debtors to Jetcraft at below market prices, all while Cassidy explicitly admitted

that he could not pay his other creditors.

The transactions are summarized in detail on Schedule 1.

a. The First Element Transaction and the First Kickback

97. The First and Second Element Transactions largely bookend the totality of

the aircraft purchases orchestrated on behalf of the Debtors by Cassidy. In short, with

respect to both of these transactions, Cassidy agreed to purchase Bombardier aircraft, almost

exclusively through Fazal-Karim and Jetcraft, at above market prices and accepted debt

obligations that Cassidy knew the Debtors could not support, while accepting kickbacks

disguised as a payment for undescribed “services.”

i. The Structure: Fazal-Karim, Jetcraft, and Element’s first sale to the Debtors

98. At the time of the First Element Transaction, which occurred in late 2015,

Cassidy received a $500,000 kickback11 on the purchase of a Bombardier Global 5000

(“Plane 1”).12

99. On December 5, 2015, Zetta PTE entered into an aircraft purchase agreement

for Plane 1. Zetta USA (then still AAM) agreed to guarantee the operating lease on the

aircraft, and Element Aviation made a loan to Zetta PTE (through one of the Zetta BVI

Subsidiaries, Zetta Jet 5000-1) to finance the purchase.

100. At the same time, Element, the Debtors (including Zetta Jet 5000-1), and

TVPX entered into a complex web of disguised financing agreements to effectuate the

transaction. The agreements relating to the First Element Transaction are identified on

Schedule 2.

11 Kickbacks to Cassidy were also the subject of a pre-petition lawsuit the Debtors filed against Cassidy in the United States District Court for the Central District of California, Case No. 2:17-cv-06648-JAK-GJS. 12 See Bombardier, Zetta Jet Expands Fleet with Purchase of a Global 6000 Business Jet

and Options for Four Additional Global Aircraft, https://www.bombardier.com/en/media/ newsList/details.bombardierbusinessaircraft20151215zetta-jet-expands-fleet-with-p.bombardiercom.html?filter-bu=all&f-year=2015&f-month=11&f-type=all&show-by-page=50&page=1&f-min-year=2002 (Dec. 15, 2015) (the “Dec. 15, 2015 Press Release”).


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101. As part of the First Element Transaction, the Debtors made actually or

constructively fraudulent transfers comprised of (i) payments directly from the Debtors as

evidenced by their bank statements, or (ii) payments by way of financing through Element,

at the direction of the Debtors, as derived from proof of claim 144-1. Between February

2016 and August 2017, Zetta PTE paid Element on the loan. The various payments from

Zetta PTE to and on behalf of Jetcraft Corporation, Jetcoast, and Element are set forth on

Schedule 3.

102. Element and Jetcraft received millions of dollars from the First Element

Transaction.

ii. The Corruption: The First Kickback

103. At approximately the same time that the Debtors purchased Plane 1, Jetcraft

agreed to pay Cassidy a $500,000 kickback (the “First Kickback”). The price Zetta PTE

paid for Plane 1 was unfair and overinflated. The kickback also facilitated the continued

acquisition of Bombardier aircraft by the Debtors through Fazal-Karim and Jetcraft, to the

exclusion of Bombardier’s and Jetcraft’s competitors.

104. The First Kickback was not appropriately disclosed to the Debtors. If the

First Kickback had been disclosed to the Debtors, the board would not have agreed to go

through with the transaction.

105. Nor was the First Kickback disclosed in the transaction documents, which

Jetcraft and Jetcoast executed.

106. Fazal-Karim, Jetcraft, and Jetcoast knew that the First Kickback had no

legitimate purpose.

107. Thus, by no later than December 5, 2015, Fazal-Karim, Jetcraft, and Cassidy

had entered into an agreement to defraud the Debtors, and Fazal-Karim and Jetcraft had

aided and abetted Cassidy’s breaches of his fiduciary duties, by agreeing to pay Cassidy at

least the First Kickback, in a transaction that was unfair to the Debtors and caused them to

pay an inflated price for the aircraft. As a result of these agreements, which were brought

to fruition in early 2016, Fazal-Karim, Jetcraft, Element, and Cassidy benefitted at the


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expense of the Debtors and their creditors.

108. Because this transaction, including the transfers to Jetcraft Corporation and

Jetcoast, the obligations incurred by the Debtors to Element Aviation, and the transfers from

Zetta PTE to Element Aviation, was a result of actual or constructive fraud, the Trustee

seeks to avoid the transaction in its entirety and recover all relevant transfers.

b. The CAVIC Transactions

109. At roughly the same time as the First Element Transaction and the First

Kickback, Cassidy agreed to purchase four additional planes directly from Bombardier.

Fazal-Karim was involved in the transactions. These transactions (the “CAVIC

Transactions”) involved the purchase of four aircraft (“Planes 2-5” and collectively, the

“CAVIC Aircraft”), directly from Bombardier, financed by AVIC’s offshore financing

subsidiary CAVIC. The Debtors were already behind on their bills to other creditors, and

had no hope of repaying the obligations they incurred through these transactions.

110. On December 10, 2015, Cassidy, on behalf of Zetta PTE, executed four

purchase agreements, one for each CAVIC Aircraft (the “CAVIC APAs”).13

111. To complete the purchase of the CAVIC Aircraft, the Debtors obtained

financing from CAVIC through a disguised financing in the form of a leveraged lease in

which TVPX (on behalf of Zetta BVI Subsidiaries) “leased” the CAVIC Aircraft from

CAVIC and then “sub-leased” the CAVIC Aircraft to Zetta USA.

112. In order to repay CAVIC for the financing, the Debtors made payments

through the mechanism of “lease” payments under disguised financing arrangements. The

parties’ intent and the economic realities of the transactions indicate that the arrangements

between the parties were not true leases, but rather disguised financings.

113. Had all obligations been fulfilled under the operative documents, CAVIC

would have had no residual ownership interest in the CAVIC Aircraft. Thus, the parties

intended for the Debtors to own the CAVIC Aircraft after completion of all payments,

which were made up of the principal loan made to the Debtors (in the form of a financing),

13 See Dec. 15, 2015 Press Release.


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plus interest.

114. Between December 4, 2015 and June 27, 2017, the Debtors made actually

or constructively fraudulent transfers to BAC totaling $147.4 million comprised of: (i)

payments directly from the Debtors as evidenced by their bank statements, as set forth on

Schedule 4; and (ii) payments by way of financing through CAVIC, at the direction of the

Debtors, in the amount of (A) $40,000,000 pursuant to proof of claim 164-1, (B)

$40,360,000 pursuant to proof of claim 166-1, and (C) $40,000,000 pursuant to proof of

claim 168-1.

c. The Li Qi / Minsheng Transactions

115. Also in December 2015, Cassidy worked with Li Qi (who eventually became

a shareholder and director of Zetta PTE) to acquire two additional Global 6000s. Fazal-

Karim was involved in at least one of these transactions.

116. In August 2016, Cassidy and Li Qi restructured the existing debt on the two

Global 6000s, which was owed to Li Qi through his affiliated entities. The Debtors received

proceeds, of which amount Cassidy promptly embezzled $2.66 million, and used additional

amounts for other improper purposes, including with respect to his Singapore residence and

a yacht he had purchased for himself. As part of the same transaction, the Debtors used an

additional $12.4 million to make down payments on four additional aircraft. Li Qi received

a significantly above-market rate of return on his loans. During all of this time, the Debtors

continued to fall further and further behind on their other debts.

i. The initial purchases in December 2015

117. In or around December 2015, Li Qi agreed to provide Zetta PTE with $100

million in loans to fund two of the Debtors’ first aircraft acquisitions. Li Qi’s company,

Universal Leader, already owned one of these aircraft, a Global 6000 (“Plane 7”). Cassidy

agreed to acquire Plane 7 in a finance lease arrangement, and to acquire the other aircraft, a

Global 6000 (“Plane 6”) from Bombardier.14

118. Also in December 2015, Universal Leader transferred $48 million into Zetta

14 See Dec. 15, 2015 Press Release.


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PTE’s bank account. Upon information and belief, there was no formal loan documentation

regarding the transfer of these funds prior to their transfer. The funds were commingled

with other funds in Zetta PTE’s account.

119. On December 10 and 28, 2015, respectively, Zetta PTE transferred $46.3

million and then $1 million from its Singapore account to the US bank account of BAC

toward the purchase of Plane 6. Even though Zetta PTE paid Bombardier directly for Plane

6 (using loan proceeds from Universal Leader), Zetta PTE did not receive title to Plane 6.

Zetta PTE then entered into a finance lease arrangement with Glove Assets (not Universal

Leader, although both entities are controlled by Li Qi) regarding Plane 6.

120. Fazal-Karim was involved in the transaction.

121. Shortly thereafter, in February 2016, Li Qi caused a third entity, Truly Great,

to invest $19 million in exchange for a 10% interest in Zetta PTE and loaned $10 million to

Zetta PTE at an above-market interest rate. Li Qi also became a Director of Zetta PTE.

Cassidy used much of these funds to pay down payments on the CAVIC Aircraft.

ii. The Minsheng refinancing in September 2016

122. As was so often the case, by summer 2016, the Debtors were once again out

of cash at a time when Cassidy needed to make debt payments, avoid default, and keep the

proverbial balls in the air. Again, the Debtors’ overdue trade payables had increased and

the Debtors were behind on their bills. In fact, Cassidy told the other directors on June 28,

2016, that they had “no choice” but to do a deal. He would try to “keep[] off the wolves”

until the funds from the refinancing came in, but they only had “breathing room of 1.5

months.”

123. To that end, Cassidy engineered a refinancing by Minsheng, a Chinese state-

owned aviation financing company, of the Universal Leader and Glove Assets disguised

financing debt. The Minsheng refinancing was patently unfair to the Debtors’ estates. In

return for proceeds to the Debtors, the transaction added over $20 million in incremental

debt to the balance sheet including duplicated debt to Glove Assets on Plane 6, gave

Universal Leader a significantly above-market return on its loan for Plane 7, and provided


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Minsheng $12.4 million, some of which was used for down payments on four aircraft, only

one of which was ever delivered.

124. The Minsheng refinancing closed on September 21, 2016. The day after

closing, Cassidy took $3.66 million as a “Director Fee – Geoffery Cassidy” and deposited

these funds into his personal bank account. Of this $3.66 million taken by Cassidy, $1

million was allegedly due and payable to Cassidy and his wife for their ultimate ownership

of equity in AAC, which was worthless. The remaining $2.66 million was plainly

misappropriated by Cassidy, who went so far as to fabricate invoices to cover up his theft,

at the time of an audit in July 2017. Cassidy also misappropriated approximately an

additional $1 million, to pay for a Singapore residence and an installment payment on his

Dragon Pearl yacht.

125. Although Cassidy framed the refinancing as vital to help the Debtors,

Cassidy’s true purpose was to string out his aircraft debt and misappropriate the Debtors’

money, to the detriment of the Debtors and their creditors.

d. The Bombardier Purchase Agreements

126. In February 2016, shortly after the initial purchases and at approximately the

same time as the influx of cash from Li Qi’s initial investment, Fazal-Karim negotiated the

sale of an additional two aircraft by Bombardier to Zetta PTE. Bombardier announced these

purchases to great fanfare, valuing the total of Zetta PTE’s firm offers at approximately

$187 million with options that, if exercised, could increase the total value to $436 million.15

Cassidy had no non-fraudulent plan, let alone ability, to pay off these additional purchases.

The initial cash infusion and revenues were already allocated to other planes, and the

Debtors’ debts were exploding.

127. Even though the Debtors could not afford additional planes, Jetcraft, Fazal-

Karim, and Bombardier facilitated Cassidy’s fraud, and aided and abetted his breaches of

15 See Bombardier, Zetta Jet Firms Up Orders for Two Global 6000 Business Jets and

Adds Options for Two Others, https://www.bombardier.com/en/media/newsList/ details.bba-20160217-zetta-jet-firms-up-orders-for-two-global-6000-busin. bombardiercom.html, (Feb. 17, 2016).


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fiduciary duty, by selling these aircraft to benefit at the expense of the Debtors and their

creditors.

128. These two additional aircraft had not even been delivered when the Debtors

filed for bankruptcy nearly 18 months later.

129. Cassidy on behalf of Zetta PTE transferred $100,000 to Jetcraft Asia on

April 8, 2016, shortly after these purchases. The reason for this transfer is unclear and may

not be related to the Bombardier Purchase Agreements.

e. The Second Element Transaction: Overpriced Planes from Element and Jetcraft

130. In August and September 2016, with the Debtors now on life support and,

by Cassidy’s estimation, only “breathing room of 1.5 months,” Cassidy again bought more

planes from Jetcraft (through Fazal-Karim) and Element. In the Second Element

Transaction, Cassidy received a $500,000 kickback in exchange for agreeing, on behalf of

the Debtors, to purchase a Bombardier plane (“Plane 10”) from Orion, a Jetcraft affiliate

for an above-market price. As part of the same deal, the Debtors also agreed to enter into a

disguised financing for another Bombardier plane (“Plane 11”) owned by Element.

131. Jetcraft and Element received millions of dollars from these transactions.

The Debtors were saddled with even more debt that they could not afford.

i. The Structure: Fazal-Karim, Jetcraft, and Element’s second sale to the Debtors

132. In September 2016, Fazal-Karim, Jetcraft, and Element participated in two

above-market sales to the Debtors, at the expense of the Debtors and their creditors, in a

transaction in which Cassidy received a second $500,000 kickback.

133. By no later than June 14, 2016, at a time when Cassidy was supposedly

trying to “keep[] off the wolves,” Cassidy and Fazal-Karim began discussing the purchase

of Plane 10.

134. On August 30, 2016, Zetta PTE (through one of the Zetta BVI Subsidiaries,

Zetta Jet 6000-1) entered into an aircraft purchase agreement with Orion, Jetcraft Global,

and the Bank of Utah (as owner trustee). Upon information and belief, Plane 10 was


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significantly over-priced.

135. On September 8, 2016, Cassidy executed a certificate of director of Zetta

PTE authorizing the transactions relating to Plane 10.

136. On September 22, 2016, Element Aviation entered into a loan agreement

with Zetta PTE (through one of the Zetta BVI Subsidiaries, Zetta Jet 6000-1) to finance the

purchase of Plane 10. The Debtors did not make a down payment, as it had in the First

Element Transaction.

137. At the same time, Element, the Debtors (including Zetta Jet 6000-1), and

TVPX entered into a complex web of agreements to effectuate the transaction. The

agreements are identified on Schedule 2.

138. As part of the same deal, the Debtors also closed on Plane 11.

139. On September 22, 2016, the same day that the Debtors purchased Plane 10,

ECN and TVPX entered into an “Aircraft Lease” (the “Plane 11 Master Lease”), and TVPX,

as sub-lessor, leased Plane 11 to Zetta PTE, as sub-lessee, pursuant to an Aircraft Operating

Sub-Lease Agreement dated September 22, 2016 (the “Plane 11 Sub-Lease”).

140. The Plane 11 Master Lease and the Plane 11 Sub-Lease (collectively, the

“Financed Lease”) are not true lease agreements, but rather disguised financings. The

Financed Lease ultimately operated as the sale of Plane 11 to Zetta PTE. Upon information

and belief, the payments on the “lease” were significantly more than the market price of the

aircraft.

141. On September 22, 2016, Cassidy executed a certificate of director of Zetta

PTE to enter into the Financed Lease.

142. At the same time, Element, the Debtors (including a Zetta BVI Subsidiary,

Zetta 5000-2), and TVPX entered into a complex web of disguised financing agreements to

effectuate the transaction. The agreements are identified on Schedule 2.

143. As a result of these agreements, Fazal-Karim, Jetcraft, Element, and Cassidy

benefitted at the expense of the Debtors and their creditors.

144. Because this transaction, including the transfers to Orion, the obligations


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incurred by the Debtors to Element Aviation, and the transfers from Zetta PTE to Element

Aviation, was a result of actual or constructive fraud, the Trustee seeks to avoid the

transaction in its entirety and recover all relevant transfers.

145. As part of the Second Element Transaction, the Debtors made actually or



at the direction of the Debtors, as derived from proof of claim 143-2. Between October 2016

and August 2017, Zetta PTE paid Element Aviation on the loan and under the Financed

Lease. The various payments from Zetta PTE to and on behalf of Jetcraft Global, Orion,

and Element are set forth on Schedule 5.

146. Cassidy on behalf of Zetta PTE also made a transfer of $225,083.97 on

January 19, 2017 and two transfers of $30,000.00, and $12,245.62 on March 8, 2017, all of

which were to Element Aviation. The reason for these transfers is unclear.

ii. The Corruption: The Second Kickback

147. At the same time that Zetta PTE entered into the Second Element

Transaction, and as a near-bookend to the Debtors’ aircraft acquisitions, Cassidy received

a second $500,000 kickback (the “Second Kickback”). Fazal-Karim later had Cassidy

falsify an invoice related to this kickback and even offered to increase the amount of this

kickback from $500,000 to $750,000 if Cassidy could get the Debtors to pay an additional

$250,000. This kickback, disguised as a payment for undescribed “services” was both an

apparent payoff for continuing to work with Fazal-Karim and Bombardier as well as an

inducement to acquire two aircraft as discussed above.

148. On November 22, 2016, Behrend, Jetcraft’s CFO, at Fazal-Karim’s request,

asked Cassidy to send her an invoice in the amount of $500,000 made out to Orion, so that

she could wire him $500,000 for “services” on Plane 10. In reality, of course, this was the

Second Kickback.

149. Cassidy responded attaching an invoice that merely described the reason for

the payment as “services” and included Cassidy’s private bank account.


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150. Cassidy provided no legitimate “services” in connection with the sale.

Cassidy’s legitimate interest, consistent with his fiduciary obligations to the Debtors, was

in representing the Debtors in good faith, and not increasing the purchase price so that he,

Fazal-Karim, and others could personally benefit. Fazal-Karim and Jetcraft were aware that

Cassidy provided no services related to the Plane 10 transaction, and that he deserved no

remuneration from the transaction.

151. On February 10, 2017, Fazal-Karim asked Cassidy to send a revised invoice

at $750,000 for “our files.” The price on the aircraft had decreased from the original deal

by $250,000, and so Cassidy had received only $500,000 as the Second Kickback. Fazal-

Karim also offered to give Cassidy the remaining $250,000 if Cassidy got the Debtors to

pay the remaining $250,000: “[f]or our files better 750k. So that in case you get Zetta to

pay us the extra 250k I can resend to you.” In short, Fazal-Karim was offering to “round

trip” that money back to Cassidy’s personal account if Cassidy would have the Debtors pay

an extra $250,000 for the already overpriced aircraft.

152. Fazal-Karim asked him to send the revised invoice that day because he was

being audited: “Thanks dude. If you can today as my contracts are being audited. Ducking

banks!!”

153. Upon information and belief, Cassidy sent a revised invoice at $750,000.

154. On November 21, 2016, Cassidy sent an email to Fazal-Karim and asked

him to “send the USD$1m to” Cassidy’s personal bank account. Cassidy also said:

“Appreciate if you can send it this week as I need the funds.” Fazal-Karim responded: “Will

do. But it is 500k. The other credit has not been allocated yet. So am gonna go ahead and

ask Anne [Behrend] to send 500k immediately.”

155. Later that day, Behrend sent a $500,000 wire from Jetcraft Global to

Cassidy’s personal bank account.

156. The Second Kickback was not appropriately disclosed to the Debtors. If the

Second Kickback had been disclosed to the Debtors, the board would not have agreed to go

through with the transaction.


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157. Nor was the Second Kickback disclosed in the transaction documents, which

Jetcraft Global and Orion executed.

158. Fazal-Karim, Jetcraft Global, and Orion knew that the Second Kickback had

no legitimate purpose.

f. The Challenger Transactions

159. In October 2016, as part of the refinancing discussed in paragraphs 122 to

125 above, Cassidy caused the Debtors to enter into purchase agreements for four additional

aircraft financed by Minsheng, which Bombardier valued at $129.4 million.16 Fazal-Karim

was involved in these purchases as well. Only one was ever delivered. Time was running

out for Cassidy.

g. The Falconwing Transaction: Cassidy pays off Fazal-Karim and Element on his way out

160. In August 2017, at a time when Cassidy admitted, in writing, that the Debtors

were “unable to provide security that it can fulfill its obligations over time,” Cassidy

manufactured a transaction to purchase a plane at least in part for block hours and re-sell it

to Jetcraft Global, and use the proceeds to pay off a debt to Element Aviation. Block hours

would be worthless if the Debtors failed, and Cassidy was trading the promise of future

returns to the sellers for present cash to keep his Ponzi-like scheme alive. It turned out to be

far too little and far too late, but Cassidy was able to pay off two of the Defendants on his

way out the door, at the expense of the Debtors’ estates and other creditors.

161. As part of the Second Element Transaction, Zetta PTE (through Zetta Jet

6000-1) was obligated to make a payment (the “Element Obligation”) to Element Aviation

but failed on several occasions to make the payment and also failed to make other payments

on the First Element Transaction and the Second Element Transaction.

16 See “Zetta Jet Diversifies its Fleet with Four Bombardier Challenger 650 Business Jets Through Financing Agreement with Minsheng Financial Leasing,” Bombardier, https://www.bombardier.com/en/media/newsList/details.bba-20161030-zetta-jet-diversifies-its-fleet-with-four-bombardie.bombardiercom.html?, (Oct. 30, 2016).


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162. To pay off the Element Obligation, Cassidy entered into a transaction to buy

Plane 16 from Falconwing Limited (“Falconwing”), owned by Fok Kin Canning (“Fok”)

and Wu Kebo (“Wu”), and re-sell it to Jetcraft.

163. In early August 2017, Zetta PTE executed an aircraft purchase agreement to

purchase Plane 16 from Falconwing at least in part for block hours. At approximately the

same time, Zetta PTE and Jetcraft Global executed an aircraft purchase agreement under

which Zetta PTE would sell Plane 16 to Jetcraft Global. In addition, Zetta PTE and Jetcraft

Global entered into a side agreement to split any profits from reselling Plane 16.

164. Cassidy entered into this transaction to benefit Element and Fazal-Karim,

with whom he had a special relationship, at the expense of other creditors, at a time when

the Debtors were insolvent.

165. Cassidy admitted in an August 10, 2017 e-mail to Seagrim and Walter

defending the transaction that he had to increase the number of block hours because the

Debtors were “unable to provide security that it can fulfill its obligations over time,” were

“desperate for the deal and money,” and needed “urgent immediate cash to fulfill [their]

obligations.” As with almost all of his transactions, he was “extracting immediate cash to

pay for obligations” while “any downside of the transaction can be realised in years to come

when the company is stable.”

166. The Falconwing Transaction closed on August 16, 2017. On that day, the

Debtors made a transfer of $5 million to Element Aviation through an escrow agent, at the

direction of the Debtors.

167. Upon information and belief, Fazal-Karim and Jetcraft Global sold Plane 16

to a third party after the Petition Date.

G. Cassidy purchases the $3.4 million Dragon Pearl with Debtor funds

168. While the Debtors were unable to pay their debts as they came due and

Cassidy was obligating the Debtors to purchase hundreds of millions of dollars of aircraft

that they could not afford, Cassidy was busy embezzling funds from the Debtors to purchase


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a $3.4 million, 70-foot yacht called the Dragon Pearl. Cassidy did not have $3.4 million to

purchase the Dragon Pearl, so he misappropriated funds to buy it for himself.

169. The Dragon Pearl is, according to Maritimo, “[t]he most sophisticated and

‘up-specced’ luxury cruiser ever produced by the company.” Included with the Dragon

Pearl was a 26-foot tender painted the same color as the Dragon Pearl’s hull, called the

“Dragon Prince.”

170. Cassidy also caused the Debtors to hire and pay five employees to maintain

and operate the Dragon Pearl. Tang signed their employment contracts on behalf of the

Debtors.

171. Cassidy did not properly disclose the existence of the Dragon Pearl or the

payments to Maritimo.

H. Cassidy and Fazal-Karim’s superyacht venture

172. Cassidy and Fazal-Karim also had a separate, undisclosed side venture in

which Cassidy agreed to purchase half of a superyacht with Fazal-Karim. This side venture

gave Fazal-Karim yet another leverage point to use against Cassidy in future dealings and

a vehicle to pay Cassidy bribes. Upon information and belief, this venture and their

relationship was not properly disclosed.

173. In early 2017, Cassidy and Fazal-Karim planned to begin this new business

venture through which they would purchase a yacht and operate charters. Ultimately, they

set their sights on the 121-foot superyacht, originally called the Tosca, which Fazal-Karim’s

wife named the Nyota. According to the sale listing for the yacht, it requires 5 crew

members; has 8 beds for up to 12 guests in 4 state rooms, 3 double cabins, and one twin

cabin; and is currently located in the south of France.17 174. Fazal-Karim purchased the Nyota. Cassidy and Fazal-Karim agreed that

Fazal-Karim would pay for the Nyota and Cassidy would transfer his 50% share later. It is

unclear whether Cassidy ever paid his half of the Nyota or if Fazal-Karim paid for Cassidy’s

share, although, as discussed in paragraphs 195 to 203 below, Fazal-Karim later used the

17 See http://www.g-yachts.com/en/yachts-for-sale/nyota.


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Nyota as a way to funnel a bribe to Cassidy in the form of a credit against his unpaid

obligation.

175. Fazal-Karim used his various companies and assets interchangeably during

the transaction.

176. On February 7, 2017, an employee of the yacht company sent Cassidy and

Fazal-Karim an e-mail attaching an invoice to FK Partners for 10% of the purchase price

on the Tosca, after Fazal-Karim asked him to direct the invoice to FK Partners rather than

FK Group.

177. On June 1, 2017, Houseman e-mailed Cassidy an invoice on behalf of FK

Partners to “Geoff Cassidy” for 50% of the price of the Nyota. Houseman directed Cassidy

to send the funds to an FK Partners account. The same day, Fazal-Karim asked Cassidy to

send the money to his “Swiss account” rather than “Singapore.” Cassidy agreed to send the

money in Euros to Switzerland as requested.

178. Cassidy and Fazal-Karim used Philippe Crevier, a consultant paid by Zetta

PTE using a Zetta PTE e-mail address and signature block, to work with a service company

to help register the a new Maltese company to manage the yacht.

179. Although Cassidy used a consultant paid by Zetta PTE to help manage the

Nyota and had Zetta PTE pay for the insurance, Cassidy and Fazal-Karim agreed that

Cassidy would be the director and a shareholder under his personal name and Fazal-Karim

would be the other shareholder, through one of his companies. Upon information and belief,

when documents were submitted to MYBA, the worldwide yachting association, Fazal-

Karim’s name did not appear as an owner of the Nyota.

180. The Nyota is currently listed for sale by G-Yachts for €3.9 million.

181. Even after he was removed from the Debtors’ Boards of Directors, Cassidy

misrepresented his involvement with the Nyota in a statement justifying his actions, and

claimed that he had only been on the yacht as a guest.


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I. Bombardier is liable for the misconduct of its agent Fazal-Karim

182. Apart from Bombardier’s direct participation in the bribery of Cassidy,

described below, Bombardier is also liable for the misconduct of its agent, Fazal-Karim,

and the conspiracy between Cassidy, Fazal-Karim, and Jetcraft to benefit at the expense of

the Debtors and their future creditors.

183. Bombardier treated Fazal-Karim as its agent. Fazal-Karim acted as

Bombardier’s agent on many of the transactions described above.

184. As seen below, Fazal-Karim, individually and through FK Group, publicly

holds himself out as Bombardier’s exclusive representative for Southeast Asia. Even the

address for FK Group’s webpage identifies FK Group as Bombardier’s representative:

http://www.fk-group.net/bombardier-representative. Similar language has been used since

at least 2015. Upon information and belief, Bombardier has been aware of this website since

at least 2015.

http://www.fk-group.net/bombardier-representative (last accessed on August 25, 2019)

185. As important, both Bombardier and Fazal-Karim acted as though Fazal-

Karim was an agent of Bombardier. Fazal-Karim was a critical member of the Bombardier

team.


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186. Fazal-Karim is copied on most of the e-mails between Cassidy and

Bombardier regarding the negotiation of the aircraft the Debtors purchased. Moreover,

Bombardier employees worked hand-in-hand with Fazal-Karim as their representative.

187. Upon information and belief, one or more of the Fazal-Karim Defendants

received compensation from Bombardier for his involvement in the transactions with the

Debtors.

J. Bombardier gave Cassidy significant gifts in violation of its own policies

188. Bombardier gave Cassidy significant gifts in response to Cassidy’s specific

demands and threats to take his business to competitors. These gifts violated Bombardier’s

Code of Ethics and ensured that Cassidy would continue to purchase Bombardier aircraft.

189. Bombardier has a Code of Ethics that seeks to set “the global standards for

our business and activities, applies to all members of the Bombardier community, including

the Board of Directors, management and employees at every level, in every country and

from every Bombardier legal entity (including joint ventures where Bombardier has a

majority/ controlling interest).”18

190. At the time of the events below, Bombardier’s Code of Ethics broadly

prohibited giving any gifts that even might be improper with respect to the recipient:

“Employees, suppliers, partners and other third parties representing Bombardier must avoid

giving or receiving gifts or entertainment if these might improperly influence the recipient’s

judgment or might be perceived to do so. Gifts can include goods, services, favours, loans,

trips, accommodation or use of property, etc.”19

191. Bombardier’s Code of Ethics permitted token or nominal gifts in certain

limited situations: “Sometimes in business, for example, in certain cultures, an exchange of

gifts is appropriate. In such instances, the gifts should be reasonable, in good taste, and have

token or nominal value.”20

18 https://www.bombardier.com/en/governance/code-of-ethics.html 19 https://web.archive.org/web/20160424114843/https://www.bombardier.com/content/ dam/Websites/bombardiercom/supporting-documents/BInc/Bombardier-code-of-ethics-currentversion-en.pdf, at 14. 20 https://www.bombardier.com/content/dam/Websites/bombardiercom/supporting-


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192. During the relevant period, Cassidy commonly threatened to cancel all of

the Debtors’ deals or abandon deals with Bombardier if his demands for gifts were not met.

Bombardier, often acting through Mattar, provided Cassidy specific gifts in response to

Cassidy’s demands shortly after Cassidy threatened to take his business elsewhere. Each of

these payments were authorized by Mattar, in his capacity as a Bombardier vice president,

to appease Cassidy so he would continue to purchase aircraft in a slow market.

193. On July 28, 2016, Cassidy requested that Bombardier provide him with five

paddock tickets21 to the Singapore F1 event worth $43,890 total for Cassidy’s personal use.

The next day, a Bombardier employee, not understanding that Cassidy was demanding a

payoff, e-mailed Cassidy that another company could sell him tickets.

194. On July 30, 2016, after Cassidy was not immediately given the F1 tickets he

demanded from Bombardier, Cassidy threatened to take his business to Gulfstream, one of

Bombardier’s biggest competitors. Mattar, who knew that Cassidy needed to be appeased

and demanded personal kickbacks, e-mailed another Bombardier employee that the tickets

were for the Zetta team and that the Debtors would not have to pay.

195. At approximately the same time, Bombardier also agreed to provided

Cassidy with two Sea-Doo jet skis, and Mattar took responsibility, with Fazal-Karim, for

payment.

196. On July 14, 2016, Cassidy wrote to Mattar that he needed two Sea-Doo GTX

300 limited edition jet skis. Sea-Doo is a brand of jet ski manufactured by Bombardier

Recreational Products, which was formerly a subsidiary of BI and is still owned in part by

the Bombardier family. The GTX Limited 300 is the jet ski with largest swim platform in

the industry and also has a removable seat allowing for the user to lounge or enjoy a picnic.22

documents/BInc/Bombardier-code-of-ethics-currentversion-en.pdf, at 29. 21 Paddock Club tickets are approximately equivalent to a combination of front-row seats and a luxury box. They include an open bar with Champagne and fine wines as well as gourmet meals made by world-class chefs. See https://tickets.formula1.com/en/pc-paddock-club. 22 See https://www.sea-doo.com/watercraft/touring/gtx-limited.html.


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197. On August 24, 2016, Cassidy e-mailed Fazal-Karim regarding the two Sea-

Doos, and asked if Fazal-Karim could “ensure [Mattar] takes care of this. Maybe best

[Mattar] give his credit card details and let Philippe [Crevier] deal with it.”

198. On September 7, 2016, Fazal-Karim e-mailed Mattar and Crevier that

Crevier should order the two Sea-Doos and send Fazal-Karim the invoice. Fazal-Karim

indicated that he would “sort it out with Bombardier.”

199. On September 8, 2016, Cassidy told Crevier that Jetcraft would pay

Bombardier directly for the two Sea-Doos or “Mick will pay for Jahid.” Upon information

and belief, the Mick referred to in the e-mail is Mick Doohan, an authorized representative

for Jetcraft.

200. On September 14, 2016, Mattar, who was acting on behalf of Bombardier,

agreed to pay for the bribe. Specifically, Mattar wrote to Cassidy and Crevier: “Having

spoken to Jahid, we can do the following, buy and bill back to Jetcraft, and I shall sort it out

with [J]ahid.” Upon information and belief, Mattar suggested that Zetta PTE should

purchase the Sea-Doos and bill them back through Jetcraft to disguise the true purpose of

the transaction, a bribe to Cassidy. On September 19, 2016, Benjamin Ng (Zetta PTE,

Accounts) sent Cassidy an invoice addressed to Jetcraft Corp., Attn: Fazal-Karim, for the

two Sea-Doos. Crevier then sent Fazal-Karim the invoice. The cost of the Sea-Doos

according to the invoice was $42,569.00.

201. On September 21, 2016, Zetta PTE purchased the Sea-Doos. On October 2,

2016, Crevier sent Mattar and Fazal-Karim an e-mail thanking them for the Sea-Doos.

202. Months later, on June 2, 2017, Cassidy asked Fazal-Karim about Jetcraft

paying for the two Sea-Doos, and Fazal-Karim replied “Jetski has nothing to do with

Jetcraft. You can offset jet ski on the boat. It is personal. The invoices to Jetcraft need to be

settled for accounting purposes.” Upon information and belief, the “boat” referenced by

Fazal-Karim was the Nyota. In June 2017, Cassidy personally owed his new venture with

Fazal-Karim €1,500,000 for the purchase of the Nyota. Upon information and belief, Fazal-

Karim knew that $42,569.00 payment for the Sea-Doos for Cassidy would cause issues for


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Jetcraft’s accounting so he requested that Cassidy deduct the amount Fazal-Karim and

Jetcraft owed him for the two Sea-Doos from the amount that Cassidy owed on the Nyota.

203. Thus, although Bombardier agreed to pay Cassidy a bribe in the form of the

Sea-Doos, Zetta PTE ultimately paid for them and Cassidy also received a separate bribe in

an equivalent amount from Fazal-Karim in the form of a credit against what Cassidy owed

Fazal-Karim on the Nyota. Although Cassidy’s fraud was soon to be discovered, the Nyota

would have been a perfect vehicle for Fazal-Karim to funnel future bribes or kickbacks in

the form of credits against Cassidy’s unsatisfied obligation for his 50% ownership interest

in the Nyota.

K. The scheme falls apart and the Debtors file for bankruptcy

204. By the third quarter of 2017, Cassidy was struggling to keep the house of

cards from collapsing. He needed approximately $40 million from new investors to avoid

defaulting on the Debtors’ unsustainable debts and keep his fraudulent scheme from

imploding (much like the final stages of any Ponzi scheme). Cassidy enlisted a French

investment bank to try to find new investors. He contacted a Chinese private equity and

venture capital fund. He began meeting with personnel affiliated with Wu to try to get him

to invest.

205. In mid-2017, during preparations for Zetta PTE’s first, statute-mandated

audit, Zetta PTE’s CFO (who later quit during the audit) started asking questions about the

$2.66 million that Cassidy embezzled following the Minsheng refinancing. Cassidy ham-

handedly falsified two invoices but the jig was up.

206. On August 12, 2017, Walter sent the Zetta PTE Board of Directors and the

Debtors’ new CFO a blistering e-mail stating that everyone recognized that “Zetta has been

operating without proper financial controls,” noted that the CFO quitting mid-audit was a

“BIG RED FLAG,” and explicitly accused Cassidy of “managing a Ponzi scheme” (all

emphasis original). In a follow up e-mail the same day, Walter also noted that Cassidy’s

presentation to the French investment bank overstated the value of the Debtors’ aircraft by

$150 million dollars which Walter twice described as another “MASSIVE RED FLAG”


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(emphasis original). Walter ultimately demanded that Cassidy “prove to us that Zetta is not

a Ponzi scheme.”

207. On August 17, 2017, the Zetta PTE Board of Directors had a meeting in

Hong Kong. Seagrim, Walter, and Li Qi voted to suspend Cassidy and Tang. On August

22, 2017, Cassidy and Tang were removed from the board and their roles at the Debtors.

208. On September 8, 2017, the Debtors filed a federal civil lawsuit against

Cassidy in the United States District Court for the Central District of California, Case No.

2:17-cv-06648-JAK-GJS.

209. On September 15, 2017 (the “Petition Date”), the Debtors commenced these

bankruptcy proceedings by filing voluntary petitions for relief under chapter 11 of the

Bankruptcy Code (the “Chapter 11 Cases”).

210. On November 30, 2017, based upon a lack of funds to operate the Debtors’

business, the Trustee shut down operations, terminated all employees, and, on December 4,

2017, this Court entered the orders granting the Trustee’s motions to convert the Debtors’

Chapter 11 Cases to cases under Chapter 7 of the Bankruptcy Code.

211. On December 5, 2017, the U.S. Trustee appointed the Trustee to serve as the

Chapter 7 Interim Trustee in these Chapter 7 Cases. The Trustee became the permanent

chapter 7 trustee in these Chapter 7 Cases after the conclusion of the section 341 meeting

of creditors.

ALLEGATIONS RELATING TO PREFERENCE TRANSFERS

212. The Trustee is entitled to and seeks to avoid preference transfers made to

Element Aviation, BAC, and Learjet, during the 90 days prior to the Petition Date (the

“Preference Period”).

213. During the Preference Period, the Debtors are presumed to be insolvent

under 11 U.S.C. § 547(f), and in fact were insolvent.

A. The Element Preference Transfers

214. Zetta PTE made transfers to Element Aviation during the Preference Period,

as set forth in Schedules 3 and 5.


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215. The transfers were made on account of antecedent debts under aircraft loan

agreements relating to Plane 1 and Plane 10.

216. The Debtors’ obligations under the aircraft loan agreements were secured by

Plane 1 and Plane 10, but the Defendants were undersecured.

217. The amounts owed to Element Aviation pursuant to the aircraft loan

agreements were at all times during the Preference Period undersecured, making the

undersecured portion a deficiency claim. This deficiency claim is a general unsecured claim,

and it is highly likely that distributions to unsecured creditors in the Chapter 7 Cases will

be significantly below the allows amounts of such claims. Accordingly, the transfers

enabled Element Aviation to receive more than it would have received through the Chapter

7 Cases had the transfers not been made.

B. The Bombardier preference transfers

218. Zetta PTE made a transfer of $3,262,834 to BAC on June 27, 2017, 80 days

before the Petition Date.

219. The transfer was made on account of an antecedent debt under an agreement

dated March 28, 2017, relating to the purchase of Plane 4.

220. Based on the agreement, BAC was unsecured. The transfer allowed BAC to

receive more than it would have in this Chapter 7 proceeding.

221. Similarly, Zetta PTE made a transfer of $1,142,103 to Learjet on July 3,

2017, 74 days before the Petition Date.

222. The transfer was made on account of an antecedent debt under an agreement

dated June 21, 2017, between the Debtors, BI, and BAC.

223. Based on the agreement, Learjet, BI, and BAC were unsecured. The transfer

allowed Learjet, BI, and BAC to receive more than it would have in this Chapter 7

proceeding.

ALLEGATIONS RELATING TO STAY VIOLATIONS

224. The Trustee also brings claims against BAC, Jetcraft, and Jetcraft Global for

violations of the automatic stay under 11 U.S.C. § 362.


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225. BAC violated and continues to violate the automatic stay under 11 U.S.C. §

362 because it refused to pay amounts due under charter agreements and impermissibly set

off debts.

226. Zetta PTE and BAC (together, the “Charter Parties”) are party to a series of

15 agreements through which Zetta PTE would provide charter services on its aircraft to

BAC (the “Charter Agreements”). The Charter Agreements were entered into between

January 17, 2017 and September 5, 2017. BAC owes Zetta PTE $2,360,190 for unpaid

charter services under the Charter Agreements (the “Bombardier Debts”).

227. The Bombardier Debts were immediately due and payable, with past due

interest, and were not subject to setoff or deduction.

228. Upon information and belief, Bombardier exercised an impermissible setoff

of the Bombardier Debts against amounts owed to it by the Debtors (the “Bombardier

Setoff”) on September 7, 2017, eight days before the Petition Date. Bombardier’s

impermissible setoff constitutes a recoverable preferential transfer of the Debtors’ property

within the 90-day period immediately prior to the Petition Date.

229. Subsequent to the Petition Date, prior to learning of Bombardier’s

impermissible Setoff of the Bombardier Debt, the Trustee, through his counsel, demanded

that Bombardier remit the Bombardier Debt to the Debtors’ estates. Thereafter, Bombardier

informed the Trustee that it exercised the Setoff of the Bombardier Debt against amounts

owed to it by Zetta PTE, despite the fact that the Charter Agreements and related documents

prohibited any setoff absent a writing executed by both Bombardier and Zetta PTE.

Bombardier has failed to produce any such writing (other than furnishing the existing Smart

Parts Agreements, which are inapplicable). Bombardier’s impermissible Setoff and

continued refusal to turn over the Bombardier Debt to Zetta PTE’s estates constitutes a

continuing, ongoing violation of the automatic stay.

230. In addition, the Charter Parties are party to a series of executory contracts,

one of which requires Bombardier to provide services related to existing warranties on

aircraft (the “Warranty Contract”). The second bundle of contracts are a series of


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Bombardier Smart Parts Preferred Agreements, which have varying terms, the longest

extending through 2022 (the “Smart Parts Contract,” and together with the Warranty

Contract, the “Service Agreements”). The Service Agreements are executory contracts

under 11 U.S.C. § 365 because performance remains outstanding by each of the Charter

Parties.

231. Zetta USA (through its predecessor AAM), as lessee, and Scout Aviation II,

LLC (“Scout”), as lessor, are party to an Exclusive Aircraft Lease Agreement, dated

October 7, 2014 (as amended, the “Scout Aircraft Lease”) for the lease of a Bombardier

Global Express BD-700-1A10 aircraft (the “Scout Aircraft”). The Scout Aircraft was in

Bombardier’s possession as of December 5, 2017. Prior to the Petition Date, Bombardier

was performing “spot work” on the Scout Aircraft under the Smart Parts Contract.

Bombardier ceased work on the Scout Aircraft prior to the Petition Date and refused to

recommence work on the Scout Aircraft during the Chapter 11 Cases. Bombardier asserted

a perfected lien against the Scout Aircraft under A.R.S. § 33-1022(A) and attempted to

provide notice of such alleged lien pursuant to 11 U.S.C. § 546(b). The Debtors and Scout

disputed the validity of Bombardier’s lien.

232. Bombardier refused to perform under the Smart Parts Agreement with

respect to the Aircraft. As Zetta USA was the lessor under the Aircraft Lease prior to its

rejection, its leasehold interest in the Aircraft was property of its bankruptcy estate under

11 U.S.C. § 541. Further, the Smart Parts Agreement was an executory contract and

Bombardier was required to perform under such agreement during the Chapter 11 Cases.

Bombardier’s refusal to perform under the Smart Parts Agreement violated the automatic

stay and constituted an unlawful interference with Zetta PTE’s leasehold interests under the

Aircraft Lease.

CLAIMS

COUNT I Against the Fazal-Karim Defendants and Bombardier

Aiding and Abetting Breach of Fiduciary Duty

233. The Trustee re-alleges all paragraphs above.


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234. Cassidy, as a director and officer, owed the Debtors fiduciary duties of care,

loyalty, and good faith.

235. By the actions described above – including taking on insurmountable debt

when the Debtors were already insolvent, taking kickbacks and bribes in exchange for

purchasing overpriced aircraft, embezzling millions from the Debtors, and using the

Debtors’ funds to enter into various side ventures with Fazal-Karim – Cassidy violated his

fiduciary duties to the Debtors by knowingly acting against their interests.

236. Fazal-Karim and Jetcraft aided and abetted Cassidy’s breaches of fiduciary

duties by paying Cassidy kickbacks in exchange for causing the Debtors to purchase

overpriced aircraft and entering into various side ventures that Fazal-Karim knew or should

have known Cassidy could not afford without embezzling funds from the Debtors. Fazal-

Karim and the Fazal-Karim Defendants received millions of dollars as a result of Cassidy’s

breaches.

237. Bombardier aided and abetted Cassidy’s breaches of fiduciary duty through

its agent Fazal-Karim. Bombardier also aided and abetted Cassidy’s breaches of fiduciary

duty directly because it agreed to pay Cassidy bribes so that he would continue to purchase

Bombardier aircraft. Bombardier received millions of dollars in payments directly from the

Debtors and indirectly from the proceeds of the loans that Cassidy procured to purchase the

Bombardier aircraft.

238. Each of the Defendants were aware of Cassidy’s breaches of his fiduciary

duties.

239. Each of the Defendants provided substantial assistance and encouragement

to Cassidy’s breaches of fiduciary duty.

240. Each of the Defendants’ conduct was a substantial factor in causing harm to

the Debtors.

241. As a direct and proximate result of the Defendants’ aiding and abetting

Cassidy’s breach of fiduciary duties, the Debtors have sustained damages in an amount to

be proved at trial.


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242. The Fazal-Karim Defendants are alter egos of Fazal-Karim and each other,

and thus are each liable for the acts of the other.

COUNT II Against the Fazal-Karim Defendants and Bombardier

Civil Conspiracy


244. The Defendants each had a role in a common plan and each agreed and

played that role designed to defraud the Debtors and aid and abet Cassidy’s breach of

fiduciary duties owed to the Debtors.

245. The Fazal-Karim Defendants agreed to pay Cassidy kickbacks in exchange

for his purchase of overpriced aircraft that the Debtors could not afford. The Fazal-Karim

Defendants also entered into various side ventures (such as purchasing multi-million dollar

superyachts) that Fazal-Karim knew or should have known Cassidy could not afford without

embezzling funds from the Debtors. Fazal-Karim and the Fazal-Karim Defendants received

millions of dollars as a result of their participation in the conspiracy.

246. Bombardier agreed to participate in the conspiracy through its agent Fazal-

Karim. Bombardier also agreed to pay Cassidy bribes directly so that he would continue to

purchase Bombardier aircraft. Bombardier received millions of dollars in payments directly

from the Debtors and indirectly from the proceeds of the loans that Cassidy procured to

purchase the Bombardier aircraft as a result of its participation in the conspiracy.

247. When they agreed to participate in the conspiracy, each of the Defendants

had actual or constructive knowledge of Fazal-Karim’s and Bombardier’s agreements to

pay kickbacks and bribes to Cassidy.

248. In exchange for the kickbacks and bribes, Cassidy agreed to enter into

transactions on behalf of the Debtors to purchase aircraft for prices significantly higher than

their market value when the Debtors did not have the financial ability to meet those

obligations.


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249. Each of the Defendants committed one or more overt acts in furtherance of

the conspiracy by directly or indirectly paying the kickbacks and bribes and entering into

the purchase and financing agreements for the overpriced aircraft.

250. As a direct and proximate result of the Defendants’ conduct, the Debtors

were damaged in an amount to be proven at trial.



COUNT III Against the Fazal-Karim Defendants and Bombardier

Cal. Bus. & Prof. Code § 17200


253. Under the California Business & Professions Code §17200, businesses are

not permitted to engage in “any unlawful, unfair or fraudulent business act or practice.”

254. The Defendants have each engaged in unlawful business practices by

providing kickbacks and other improper gifts to Cassidy without the Debtors’ knowledge

or consent, in return for Cassidy using his position to benefit the Defendants, and with the

intent to harm or defraud the Debtors, in violation of California’s commercial bribery

statute, Penal Code § 641.3. The Defendants gave Cassidy money or things of value at a

time when Cassidy was an employee of the Debtors, in return for Cassidy corruptly using

his position with the Debtors, and without the Debtors’ knowledge, to benefit them. In

addition, the Defendants conspired with each other and with Cassidy to bribe Cassidy and

to defraud the Debtors, in violation of California’s criminal conspiracy statute, Penal Code

§ 182(a)(1, 4).

255. The Defendants each engaged in unfair business practices, including by

providing the Outside Commissions and other improper gifts to Cassidy and by concealing

and failing to disclose the kickbacks and other improper gifts to Cassidy. These Defendants

used bribes and other improper incentives to entice Cassidy to have the Debtors purchase

aircraft at prices well above what would have been paid in an arm’s length transaction,


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particularly in a private jet market that was struggling through a period of turmoil.

Bombardier agreed to pay some of these bribes to prevent Cassidy from making good on

his threats to take his business to a competitor, Gulfstream.

256. The Defendants have engaged in fraudulent conduct, including by

misrepresenting, concealing, and failing to disclose the kickbacks and other improper gifts

to Cassidy as described in Count VI below.

257. The Defendants used these acts of unlawful, unfair, and fraudulent conduct

to their advantage, and to the Debtors’ detriment, and unfairly benefitted as a result of these

acts. These unlawful, fraudulent, and anti-competitive acts directly resulted in catastrophic

financial losses to the Debtors, which ultimately resulted in its bankruptcy.

258. As a direct and proximate result of the Defendants’ conduct alleged above,

the Debtors suffered an economic injury caused by the violations described herein. The

Debtors are therefore entitled to restitution in the amount to be determined at trial, including

without limitation, the entire value of the purchase and financing agreements that were

procured by the Defendants through their unlawful, unfair, and fraudulent conduct.



COUNT IV Against the Fazal-Karim Defendants and Bombardier

Unjust Enrichment


261. As a result of the Defendants’ illegal and wrongful conduct, they have been

and will be unjustly enriched at the expense of the Debtors in an amount to be proven at

trial.

262. Specifically, the Defendants have been unjustly enriched by receiving

improper payments from the Debtors, sums that rightfully belong to the Debtors and their

creditors.


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263. The Defendants should be required to disgorge and return to the Debtors all

ill-gotten gains that the Defendants illegally and wrongfully obtained at the Debtors’

expense, in an amount to be determined at trial.



COUNT V Against the Fazal-Karim Defendants and Bombardier Constructive Trust – Cal. Civ. Code §§ 2223 and 2224


266. Through the Defendants’ illegal and wrongful conduct, the Defendants have

“wrongfully detain[ed]” money that rightfully belongs to the Debtors. Cal. Civ. Code §

2223. The Defendants are thus involuntary trustees of that money for the benefit of the

Debtors. Cal. Civ. Code § 2223. The Defendants gained that money “by fraud, . . . undue

influence, the violation of a trust, or other wrongful act[s].” Cal. Civ. Code § 2224. And the

Defendants have no “other and better right thereto,” so they are “involuntary trustee[s] of

the thing gained, for the benefit of the person who would otherwise have had it,” the

Debtors. Cal. Civ. Code § 2224.

267. A res exists. The res is any money gained by the Defendants at the Debtors’

expense as a result of the Defendants’ wrongful conduct. The res is specifically identified

in this Complaint and is traceable.

268. The Debtors have a right to that res. If not for the Defendants’ wrongful

conduct – including their fraudulent misrepresentations and encouragement of Cassidy’s

violation of fiduciary duties – the Debtors would not have entered into the relevant

transactions.

269. The Defendants’ ultimately acquired the res because of their wrongful acts.

270. The Defendants would be unjustly enriched if they are allowed to keep the

res.

271. The Defendants should be required to keep the res in a constructive trust for

the benefit of the Debtors.


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COUNT VI Against the Fazal-Karim Defendants and Bombardier

Fraud


273. The Fazal-Karim Defendants paid Cassidy undisclosed kickbacks to induce

him to cause the Debtors to enter into and guarantee the First and Second Element

Transactions. These fraudulent kickbacks also induced Cassidy to enter into other

transactions in which the Fazal-Karim Defendants received significant benefits.

Bombardier is responsible for the kickbacks through its agency relationship with Fazal-

Karim and Bombardier also agreed to pay Cassidy bribes to continue the relationship.

274. Jetcraft Corporation, Jetcraft Global, Jetcoast, and Orion knew that the

aircraft purchase agreements contained representations that were false when they were

made, and the representations were meant to hide the fact that Cassidy would receive

kickbacks.

275. The Defendants intended that the Debtors would rely on these

misrepresentations and omissions in entering into the agreements to purchase and finance

the aircraft.

276. The Debtors reasonably relied on these misrepresentations.

277. The Defendants also concealed or suppressed material facts from the

Debtors.

278. Among other material omissions, the Defendants concealed that they were

paying kickbacks and bribes to Cassidy in exchange for his causing the Debtors to purchase

overpriced aircraft.

279. The Defendants exclusively knew these material facts and they were not

known to the Debtors.

280. The Defendants actively concealed these material facts from the Debtors and

the Debtors’ other, disinterested directors and management.

281. The Defendants intended to defraud the Debtors by concealing or

suppressing these material facts.


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282. The Debtors were unaware of these facts and would not have entered into

the transactions if they had known the concealed or suppressed facts.

283. Because Cassidy received the kickbacks to his personal bank account and

received the bribes directly, it was reasonable for the Debtors to be unaware of the kickbacks

and bribes.

284. As a direct and proximate result of the Defendants’ conduct, the Debtors

were damaged in an amount to be proven at trial.



COUNT VII

Against Jetcraft Corporation, Jetcoast, ECN, and Element Aviation Avoidance and Recovery of Fraudulent Transfer and Obligations (Plane 1)

11 U.S.C. §§ 548, 550


287. On December 5, 2015, Zetta PTE entered into an aircraft purchase agreement

(the “Plane 1 APA”) to purchase Plane 1 from Jetcraft Corporation, Jetcoast, and the Bank

of Utah. In addition, to finance the purchase of Plane 1, ECN made a loan to Zetta PTE

pursuant to a loan agreement (the “Plane 1 Loan Agreement”).

288. As part of the First Element Transaction, the Debtors made actually or



at the direction of the Debtors, as derived from proof of claim 144-1. Between February

2016 and August 2017, Zetta PTE paid Element Aviation on the loan. The various payments

from Zetta PTE to and on behalf of Jetcraft Corporation, Jetcoast, and Element are set forth

on Schedule 3.

289. Cassidy had the actual intent to delay, hinder or defraud creditors because

he caused Zetta PTE and its subsidiaries to enter into and consummate the Plane 1 APA and

Plane 1 Loan Agreement in exchange for the kickbacks he received from Fazal-Karim and


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Jetcraft, even though he knew, or was substantially certain, that entry into such agreements

would harm creditors of the estates by incurring debt service payments exceeding the

Debtors’ ability to repay such obligations, incurring liabilities in excess of the Debtors’

assets, and otherwise diminishing the estates to the detriment of Debtors’ creditors.

290. Cassidy also had the actual intent to delay, hinder or defraud creditors

because that was the natural consequence of his acts.

291. Alternatively, Zetta PTE did not receive reasonably equivalent value for the

obligations it incurred in entering into the Plane 1 APA and Plane 1 Loan Agreement

because, upon information and belief, Plane 1 was overvalued.

292. Zetta PTE purchased Plane 1 less than two years before the Petition Date.

293. At the time Zetta PTE entered into the Plane 1 APA and Plane 1 Loan

Agreement, the Debtors were insolvent or became insolvent as a result of the transactions,

were engaged in business or about to engage in business for which their remaining property

was unreasonably small capital, or intended to incur, or believed that they would incur,

debts that were beyond their ability to pay as such debts matured.

294. Pursuant to 11 U.S.C. § 548(a)(1), the Trustee is entitled to and therefore

seeks to avoid the Plane 1 APA and Plane 1 Loan Agreement and any obligations arising

from those agreements, as well as the agreements relating to Plane 1 listed on Schedule 2.

295. Because these obligations are avoidable under 11 U.S.C. § 548(a)(1), the

Trustee is entitled to and therefore seeks to recover the value of the transfers made on

account of the obligations under Plane 1 APA and Plane 1 Loan Agreement pursuant to 11

U.S.C. § 550(a).

296. Pursuant to 11 U.S.C. § 550(a), the Trustee is entitled to and therefore seeks

to recover the value of these transfers from Jetcraft Corporation, Jetcoast, ECN, and

Element Aviation, as the initial transferee or the transferee for whose benefit the transfer

was made, pursuant to 11 U.S.C. § 550(a).


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297. The Fazal-Karim Defendants are alter egos of Fazal-Karim and each other.

Accordingly, the Trustee is entitled to and seeks to recover the value of the transfers to

Jetcraft Corporation and Jetcoast from the other Fazal-Karim Defendants as well.

COUNT VIII Against Jetcraft Global, Orion, ECN, and Element Aviation

Avoidance and Recovery of Fraudulent Transfer and Obligations (Plane 10) 11 U.S.C. §§ 548, 550


299. On August 30, 2016, Zetta Jet 6000-1 entered into an aircraft purchase

agreement (the “Plane 10 APA”) to purchase Plane 10 from Orion, Jetcraft Global, and the

Bank of Utah. In addition, to finance the purchase of Plane 10, ECN made a loan to Zetta

PTE pursuant to a loan agreement (the “Plane 10 Loan Agreement”).

300. As part of the Second Element Transaction, the Debtors made actually or



at the direction of the Debtors, as derived from proof of claims 143-2. Between October

2016 and August 2017, Zetta PTE paid Element Aviation on the loan and under the

Financed Lease. The various payments from Zetta PTE to and on behalf of Jetcraft Global,

Orion, and Element are set forth on Schedule 5.


he caused Zetta PTE and its subsidiaries to enter into and consummate the Plane 10 APA

and Plane 10 Loan Agreement in exchange for the kickbacks he received from Fazal-Karim

and Jetcraft, even though he knew, or was substantially certain, that entry into such

agreements would harm creditors of the estates by incurring debt service payments

exceeding the Debtors’ ability to repay such obligations, incurring liabilities in excess of

the Debtors’ assets, and otherwise diminishing the estates to the detriment of Debtors’

creditors.




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obligations it incurred in entering into the Plane 10 APA and Plane 10 Loan Agreement

because, upon information and belief, Plane 10 was overvalued.

304. Zetta PTE purchased Plane 10 less than two years before the Petition Date.

305. At the time Zetta PTE entered into the Plane 10 APA and Plane 10 Loan

Agreement, the Debtors were insolvent or became insolvent as a result of the transactions,

were engaged in business or about to engage in business for which their remaining property

was unreasonably small capital, or intended to incur, or believed that they would incur,

debts that were beyond their ability to pay as such debts matured.


seeks to avoid the Plane 10 APA and Plane 10 Loan Agreement and any obligations arising

from those agreements, as well as the agreements relating to Plane 10 listed on Schedule 2.



account of the obligations under Plane 10 APA and Plane 10 Loan Agreement pursuant to

11 U.S.C. § 550(a).


to recover the value of these transfers from Orion, Jetcraft Global, ECN, and Element

Aviation, as the initial transferee or the transferee for whose benefit the transfer was made,

pursuant to 11 U.S.C. § 550(a).


Accordingly, the Trustee is entitled to and seeks to recover the value of the transfers to

Jetcraft Global and Orion from the other Fazal-Karim Defendants as well.

COUNT IX Against Element Aviation and ECN

Avoidance and Recovery of Fraudulent Transfer and Obligations (Plane 11) 11 U.S.C. §§ 548, 550



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311. On September 22, 2016, Cassidy caused the Debtors to enter into the

Financed Lease, described in paragraphs 137 to 144 above.

312. Between December 2016 and August 2017, Zetta PTE paid Element

Aviation under the Financed Lease. The various payments from Zetta PTE to and on behalf

of Element are set forth on Schedule 5.


he caused Zetta PTE and its subsidiaries to enter into and consummate the Financed Lease

in exchange for the kickbacks he received from Fazal-Karim and Jetcraft, even though he

knew, or was substantially certain, that entry into such agreements would harm creditors of

the estates by incurring debt service payments exceeding the Debtors’ ability to repay such

obligations, incurring liabilities in excess of the Debtors’ assets, and otherwise diminishing

the estates to the detriment of Debtors’ creditors.



315. Alternatively, the Debtors did not receive reasonably equivalent value for

the obligations they incurred in entering into the Financed Lease because the market value

of Plane 11 on September 22, 2016 was less than the ultimate purchase price of Plane 11 to

be paid over the course of the lease term.

316. The purchase and financing of Plane 11 was made within two years of the

Petition Date.

317. At the time the Debtors entered into the Financed Lease, the Debtors were

insolvent or became insolvent as a result of the transaction, were engaged in business or

about to engage in business for which their remaining property was unreasonably small

capital, or intended to incur, or believed that they would incur, debts that were beyond their

ability to pay as such debts matured.


seeks to avoid the Financed Lease and any obligations arising from those agreements, as

well as the agreements relating to Plane 11 listed on Schedule 2.


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account of the obligations under Financed Lease pursuant to 11 U.S.C. § 550(a).


to recover the value of these transfers from ECN and Element Aviation, as the initial

transferee or the transferee for whose benefit the transfer was made, pursuant to 11 U.S.C.

§ 550(a).

COUNT X Against Bombardier

Avoidance and Recovery of Fraudulent Transfers and Obligations (CAVIC Payments)

11 U.S.C. §§ 548, 550


322. On December 10, 2015, Zetta PTE entered into the four CAVIC APAs for

the CAVIC Aircraft.

323. Between December 4, 2015 and June 27, 2017, the Debtors made actually

or constructively fraudulent transfers to BAC totaling $147.4 million comprised of: (i)

payments directly from the Debtors as evidenced by their bank statements, as set forth on

Schedule 4; and (ii) payments by way of financing through CAVIC, at the direction of the

Debtors, in the amount of (A) $40,000,000 pursuant to proof of claim 164-1, (B)

$40,360,000 pursuant to proof of claim 166-1, and (C) $40,000,000 pursuant to proof of

claim 168-1.


he caused Zetta PTE and its subsidiaries to enter into and consummate the CAVIC APAs

in exchange for the kickbacks he received from Fazal-Karim, even though he knew, or was

substantially certain, that entry into such agreements would harm creditors of the estates by

incurring debt service payments exceeding the Debtors’ ability to repay such obligations,

incurring liabilities in excess of the Debtors’ assets, and otherwise diminishing the estates

to the detriment of Debtors’ creditors.


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obligations it incurred in entering into the CAVIC APAs because, upon information and

belief, the CAVIC Aircraft were overvalued and not worth what Zetta PTE agreed to pay

for them.

327. The CAVIC APAs were entered into less than two years before the Petition

Date.

328. At the time Zetta PTE entered into the CAVIC APAs, the Debtors were

insolvent or became insolvent as a result of the transactions, were engaged in business or

about to engage in business for which their remaining property was unreasonably small

capital, or intended to incur, or believed that they would incur, debts that were beyond their

ability to pay as such debts matured.


seeks to avoid the CAVIC APAs and any obligations arising from those agreements.



account of the obligations under CAVIC APAs pursuant to 11 U.S.C. § 550(a).


to recover the value of these transfers from Bombardier, as the initial transferee or the

transferee for whose benefit the transfer was made, pursuant to 11 U.S.C. § 550(a).

COUNT XI

Against Bombardier Avoidance and Recovery of Fraudulent Transfer and Obligations (Plane 6)

11 U.S.C. §§ 548, 550



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333. On December 10, 2015, Zetta PTE made a transfer of $46.3 million to BAC

towards the purchase of Plane 6. On December 28, 2015, Zetta PTE made an additional

transfer of $1 million to BAC toward the purchase of Plane 6.

334. Despite making these transfers, Zetta PTE was not a party to any contract

with BAC for Plane 6. Instead, BAC entered into an Asset Purchase Agreement with Glove

Assets for the purchase of Plane 6.

335. After these transfers were made, BAC sold Plane 6 to Glove Assets and

Glove Assets was thereafter the beneficial owner of this plane. Zetta PTE thereafter

purchased Plane 6 from Glove Assets pursuant to a series of complex disguised lease

financings.


he caused the purchase of Plane 6 and the transfers from Zetta PTE to Bombardier in

exchange for the kickbacks he received from Fazal-Karim, even though he knew, or was

substantially certain, that entry into such agreements would harm creditors of the estates by

incurring debt service payments exceeding the Debtors’ ability to repay such obligations,

incurring liabilities in excess of the Debtors’ assets, and otherwise diminishing the estates

to the detriment of Debtors’ creditors.



338. Alternatively, Zetta PTE did not receive reasonably equivalent value for

these two transfers because, even though Zetta PTE paid BAC $47.3 million for the plane,

BAC sold the plane to Glove Assets and Glove Assets became the beneficial owner of Plane

6. In addition, upon information and belief, Plane 6 was overvalued and not worth the $47.3

million Zetta PTE paid to BAC toward the purchase price.

339. These two transfers were transfers of Zetta PTE’s property.

340. The transfers were made less than two years before the Petition Date.


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341. Because these transfers are avoidable under 11 U.S.C. § 548(a)(1), the

Trustee is entitled to and therefore seeks to recover the value of the transfers made pursuant

to 11 U.S.C. § 550(a).


to recover the value of these transfers from Bombardier, as the initial transferee or the

transferee for whose benefit the transfer was made, pursuant to 11 U.S.C. § 550(a).

COUNT XII Against ECN and Element Aviation

Avoidance and Recovery of U.S. Preference Transfer 11 U.S.C. §§ 547, 550


344. In the 90 days prior to the Petition Date, the Debtors made transfers to

Element Aviation, as set forth on Schedules 3 and 5.

345. These transfers were made while the Debtors were insolvent.

346. The transfers to Element Aviation were to or for the benefit of a creditor

pursuant to 11 U.S.C. § 547(b)(1).

347. At the time of these transfers, Element Aviation was a creditor of the Debtors

because the Debtors owed it payments for Plane 1 and Plane 10 pursuant to the Aircraft

Loan Agreements.

348. These transfers benefitted Element Aviation by reducing a debt the Debtors

owed Element Aviation for the financing of Plane 1 and Plane 10.

349. The transfers were made on account of an antecedent debt owed by the

Debtors under the aircraft loan agreements before the transfer was made.

350. The transfers enabled Element Aviation to recover more than it would have

received under Chapter 7 of the Bankruptcy Code if: (i) this transfer had not been made:

and (ii) Element Aviation received payment of such debt to the extent provided by the

Bankruptcy Code.

351. The Trustee bases this allegation on: (i) to the extent Element Aviation is a

secured creditor, it is undersecured; and (ii) a review of the Debtors’ schedules and the

proofs of claim filed in its bankruptcy cases show that general unsecured creditors will not


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be paid in full.

352. Accordingly, pursuant to 11 U.S.C. § 547, the Trustee is entitled to and

therefore seeks to avoid the transfer to Element Aviation.

353. Element Aviation was the initial transferee of the transfers.

354. Because the transfers were avoidable under 11 U.S.C. § 547 they are

recoverable pursuant to 11 U.S.C. § 550(a).

355. The Trustee is entitled to and therefore seeks to recover the value of the

transfers from ECN and Element Aviation, as the initial transferee or the transferee for

whose benefit the transfer was made, pursuant to 11 U.S.C. § 550(a).

COUNT XIII Against Bombardier



357. In the 90 days prior to the Petition Date, the Debtors made a transfer of

$3,262,834 to BAC.

358. This transfer was made while the Debtors were insolvent.

359. This transfer was to or for the benefit of a creditor pursuant to 11 U.S.C. §

547(b)(1).

360. At the time of these transfers, BAC was a creditor of the Debtors because

the Debtors owed it payments for Plane 4 pursuant to an aircraft purchase agreement.

361. These transfers benefitted BAC by reducing a debt the Debtors owed BAC

for the purchase of Plane 4.

362. The transfer was made on account of an antecedent debt.

363. The transfer enabled BAC to recover more than it would have received (i)

as a creditor in the Chapter 7 Cases; (ii) if the transfer had not been made, and (iii) if BAC

had received payment of its debt to the extent provided by the Bankruptcy Code.

364. Accordingly, pursuant to 11 U.S.C. § 547, the Trustee is entitled to and

therefore seeks to avoid the transfer.


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365. BAC was the initial transferee.

366. Because the transfer is avoidable under 11 U.S.C. § 547 it is recoverable

pursuant to 11 U.S.C. § 550(a).


transfers from Bombardier, as the initial transferee or the transferee for whose benefit the

transfer was made, pursuant to 11 U.S.C. § 550(a).

COUNT XIV Against Bombardier and Learjet, Inc.



369. In the 90 days prior to the Petition Date, Zetta PTE made a transfer of

$1,142,103 to Learjet.

370. The transfer was made while Zetta PTE was insolvent.

371. The transfer was made to or for the benefit of Learjet, BI, or BAC, who were

each creditors under 11 U.S.C. § 547(b)(1).

372. The transfer was made on account of an antecedent debt owed by Zetta PTE.

373. The transfer enabled Learjet, BI, and BAC to recover more than they would

have received (i) as a creditor in the Chapter 7 Cases; (ii) if the transfer had not been made,

and (iii) if Learjet had received payment of its debt to the extent provided by the Bankruptcy

Code.

374. Pursuant to 11 U.S.C. § 547, the Trustee is entitled to and therefore seeks to

avoid the transfer to Learjet.

375. Learjet was the initial transferee.

376. Because the transfer is avoidable under 11 U.S.C. § 547, it is recoverable

under 11 U.S.C. § 550.


transfer from Learjet, BI, or BAC, as the initial transferee or the transferee for whose benefit

the transfer was made, under 11 U.S.C. § 550(a).


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COUNT XV Against Bombardier

Willful Violation of Automatic Stay 11 U.S.C. § 362


379. Since the Debtors’ filing of their chapter 11 petitions on September 15, 2017,

there has been a stay prohibiting any entity from obtaining possession of, interfering with,

or exercising control over, the Debtors’ property, including, but not limited to, any interests

in executory contracts and unexpired leases, and any attempt to retain possession of property

of the estates absent relief from the automatic stay.

380. As set forth above, Bombardier performed an unauthorized Setoff of the

Bombardier Debts against debts owed to it by Zetta PTE, and since the Petition Date,

Bombardier has continued to refuse pay the Bombardier Debts, which are assets of the

Debtors’ estates, to Zetta PTE. Bombardier’s actions are in clear violation of the Debtors’

automatic stay under applicable law.

381. As set forth above, Bombardier refused to perform under the Smart Parts

Agreement, which represented an illegal, unilateral ceasing of performance under an

executory contract, in violation of 11 U.S.C. § 365, and which also constitutes direct

interference with Zetta PTE’s leasehold interest in the Aircraft Lease. Bombardier’s actions

were in clear violation of the automatic stay under applicable law.

382. Bombardier has publicly (in open Court and in pleadings filed with the

Court) refused to comply with the terms of the Smart Parts Program. Bombardier’s actions

constitute an intentional, willful, and deliberate violation of Zetta PTE’s automatic stay

under 11 U.S.C. § 362(a)(3).

383. In addition, Bombardier’s violation of 11 U.S.C. § 362(a)(3) is actionable as

a willful violation of the stay under 11 U.S.C. § 105, because Bombardier had actual

knowledge of the these proceedings based on its active participation in such proceedings.

384. Under 11 U.S.C. § 362(k), an individual injured by any willful violation of

a stay may recover actual damages, including costs and attorneys’ fees.


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385. Zetta PTE has been damaged by Bombardier’s willful violations of the stay,

through the delay in the use of the Aircraft, which was not air-ready until the maintenance

Bombardier is to provide under the Smart Parts Program is completed, through the loss of

access to estate property and funds that were needed to maintain the Debtors’ business as a

going concern prior to the Shutdown Date.

COUNT XVI Against Jetcraft Corporation and Jetcraft Global

Turnover of Property of the Estate 11 U.S.C. § 542


387. On August 9, 2017, Zetta PTE and Jetcraft Global entered into the Side

Letter Agreement, under which they agreed to split profits from the resale of Plane 16.

388. Upon information and belief, Jetcraft Corporation or Jetcraft Global sold

Plane 16 to a third party after the Petition Date.

389. The portion of the net profit due to Zetta PTE under the Side Letter would

be the property of the Debtors’ estate.

390. Under 11 U.S.C. § 542(b), “an entity that owes a debt that is property of the

estate and that is matured, payable on demand, or payable on order, shall pay such debt to,

or on the order of, the trustee, except to the extent that such debt may be offset under section

553 of this title against a claim against the debtor.”

391. The portion of the net profit due to Zetta PTE under the Side Letter would

be a debt owed to Zetta PTE, which is payable on demand and is not subject to offset under

11 U.S.C. § 553.

392. Accordingly, Jetcraft Corporation or Jetcraft Global must turn over the

portion of the net profit due to Zetta PTE under the Side Letter from the sale of Plane 16 to

the Trustee for the benefit of the Debtors’ estates.


Accordingly, the Trustee is entitled to and seeks to recover the value of the property from

the other Fazal-Karim Defendants as well.


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COUNT XVII Against all Defendants Disallowance of Claims

11 U.S.C. § 502(d)


395. 11 U.S.C. § 502(d) provides that the claim of any entity from which property

is recoverable under 11 U.S.C. §§ 542 or 550, or that is a transferee of a transfer avoidable

under 11 U.S.C. §§ 547 or 548, shall be disallowed unless the transferee has paid the amount

for which it is liable under 11 U.S.C. §§ 542 or 550.

396. The Defendants are entities from which property is recoverable under 11

U.S.C. §§ 542 or 550 or transferees of transfers which are avoidable under 11 U.S.C. §§

547 or 548.

397. Pursuant to 11 U.S.C. § 502(d), any and all claims of the Defendants against

the Debtors must be disallowed until such time as the Defendants pay the Trustee the

amounts required or turned over the property that is recoverable.

PRAYER FOR RELIEF

WHEREFORE, the Trustee respectfully requests that the Court enter

judgment in his favor, and against the Defendants, as follows:

a. Enter judgment in favor of the Trustee and against all Defendants for

compensatory and punitive damages in an amount to be determined at trial;

b. Enter judgment in favor of the Trustee and against all Defendants for

restitution and disgorgement in the amount to be determined at trial;

c. Enter judgment in favor of the Trustee and against Jetcraft, Jetcoast, and

Element Aviation, pursuant to 11 U.S.C. §§ 548(a)(1)(A) or 548(a)(1)(B), 548(c), and 550,

avoiding the transfers made in the amount of at least $54,747,617.87 pursuant to the Plane

1 APA and Plane 1 Loan Agreement and directing Jetcraft, Jetcoast, and Element Aviation

to return the value of the transfers to the Trustee;


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d. Enter judgment in favor of the Trustee and against Jetcraft Global, Orion,

Element Aviation, and ECN, pursuant to 11 U.S.C. §§ 548(a)(1)(A) or 548(a)(1)(B), 548(c),

and 550, avoiding the transfers made in the amount of at least $62,983,414 pursuant to the

Plane 10 APA and Plane 10 Loan Agreement and directing Jetcraft Global, Orion, Element

Aviation, and ECN to return the value of the transfers to the Trustee;

e. Enter judgment in favor of the Trustee and against Element Aviation

pursuant to 11 U.S.C. §§ 548(a)(1)(A) or 548(a)(1)(B), 548(c), and 550, avoiding the

transfers in the amount of at least $1,566,122.81 made pursuant to the Financed Lease and

directing Element Aviation to return the value of the transfers to the Trustee;

f. Enter judgment in favor of the Trustee and against Bombardier pursuant to

11 U.S.C. §§ 548(a)(1)(A) or 548(a)(1)(B), 548(c), and 550, avoiding the transfers in the

amount of at least $147,492,834 made pursuant to the CAVIC APAs and directing

Bombardier to return the value of the transfers to the Trustee;

g. Enter judgment in favor of the Trustee and against Bombardier pursuant to

11 U.S.C. §§ 548(a)(1)(A) or 548(a)(1)(B), 548(c), and 550, avoiding the transfers in the

amount of at least $47.3 million made pursuant to the asset purchase agreement with Glove

Assets relating to Plane 6, and directing Bombardier to return the value of the transfers to

the Trustee;

h. Enter judgment in favor of the Trustee and against Element Aviation,

pursuant to 11 U.S.C. §§ 547 and 550, avoiding the transfers in the amount of at least

$7,445,066.70 and directing Element Aviation to return the value of the transfers to the

Trustee;

i. Enter judgment in favor of the Trustee and against BAC, pursuant to 11

U.S.C. §§ 547 and 550, avoiding the transfer in the amount of at least $3,262,834 and

directing Bombardier to return the value of the transfer to the Trustee;

j. Enter judgment in favor of the Trustee and against Learjet, BI, and BAC,

pursuant to 11 U.S.C. §§ 547 and 550, avoiding the transfer in the amount of at least


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$1,142,103 and directing Learjet, BI, and BAC to return the value of the transfer to the

Trustee;

k. Enter judgment in favor of the Trustee and against BI and BAC for violation

of the automatic stay imposed by 11 U.S.C. § 362, and awarding damages to the Trustee in

an amount to be determined at trial;

l. Enter judgment in favor of the Trustee and against Jetcraft and Jetcraft

Global, pursuant to 11 U.S.C. § 542, directing Jetcraft and Jetcraft Global to turn over any

property of the Debtors’ bankruptcy estates including the portion of the net profit due to

Zetta PTE under the Side Letter;

m. Enter judgment in favor of the Trustee and against all Defendants pursuant

to 11 U.S.C. § 502(h) disallowing any claims filed by the Defendants until they return the

Preference Transfers to the Trustee; and

n. Grant such other relief as is just and equitable.

* * *

Respectfully submitted,

DATED: September 13, 2019

DLA PIPER LLP (US) By: /s/ John K. Lyons ROBBIN L. ITKIN JOHN K. LYONS (Pro Hac Vice) JEFFREY S. TOROSIAN (Pro Hac Vice) JOSEPH A. ROSELIUS (Pro Hac Vice) Attorneys for the Trustee


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Schedule 1

(Summary of Aircraft Transactions)

Case 2:17-bk-21386-SK Doc 1106-1 Filed 09/13/19 Entered 09/13/19 16:54:28 Desc Schedule 1 Page 1 of 3

Plane Contract Date Delivery Date Parties

Seller: JetCoast 5000-5 LLC; Jetcraft Corporation; Bank of Utah

Buyer: Zetta PTE

Financier: ECN Aviation, Inc.

Seller: Bombardier Aerospace Corporation

Buyer: Zetta PTE

Financier: CAVIC Aviation Leasing (Ireland) 22 Co. Designated Activity Company


Buyer: Zetta PTE



Buyer: Zetta PTE



Buyer: Zetta PTE



Buyer/Lessor: Glove Assets Investment Ltd. (Li Qi)

Lessee: Zetta PTE

Lessee: Zetta Jet PTE Ltd.

Trustee: Wells Fargo Bank Northwest, N.A.

Beneficiary: Universal Leader Investment Ltd. (Li Qi)


Buyer: Zetta PTE


Buyer: Zetta PTE

Schedule 1 - Summary of Aircraft Transactions

The CAVIC Transactions

The First Element Transaction

The Li Qi / Minsheng Transactions

The Bombardier Purchase Orders

Plane 9 2/16/2016 N/A

Plane 8 2/16/2016 N/A

Plane 6 12/8/2015 12/29/2015

Plane 7 12/25/2015 9/19/2016

Plane 5 12/10/2015 N/A

Plane 3 12/10/2015 9/22/2016

Plane 4 12/10/2015 3/28/2017

Plane 2 12/10/2015 8/24/2016

Plane 1 12/5/2015 12/30/2015


Seller: Orion Aircraft Holdings Limited; Jetcraft Corporation; Bank of Utah

Buyer: Zetta Jet Global 6000-1 Ltd.

Financier: ECN Aviation, Inc.

Lessor: ECN Capital Corp.

Lessee: TVPX ARS, Inc. (owner trustee for Zetta PTE)

Purchase: Seller: Bombardier Aerospace Corporation

9/20/2016 Buyer: Yuntian 4 Leasing Company Ltd.

Lease: Owner-Trustee/Lessor: Wells Fargo Bank Northwest, N.A.

10/26/2016 Lessee: TVPX ARS, Inc. (Zetta PTE)


Buyer: Yuntian 4 Leasing Company Ltd.





Seller: Falconwing Ltd.

Buyer / Seller: Zetta PTE

Buyer: Jetcraft Global

$5 mm Payment: Element Aviation

The Second Element Transaction

The Challenger Transactions

The Falconwing Transaction

Plane 16 8/8/2017 8/16/2017

Plane 14 9/20/2016 N/A

Plane 15 9/20/2016 N/A

Plane 12 10/26/2016

Plane 13 9/20/2016 N/A

Plane 10 8/30/2016 9/22/2016

Plane 11 9/22/2016 9/22/2016


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Schedule 2

(Agreements Relating To Specific Planes)


Schedule 2 – Agreements Relating To Specific Planes

Plane Date Name of Agreement Parties The First Element Transaction

1 December 5, 2015 Aircraft Purchase

Agreement

Jetcoast 5000-5 LLC; Jetcraft Corporation; Bank of Utah;

Zetta Jet Pte Ltd.

1 December 30, 2015 Aircraft Loan Agreement Zetta Jet Global 5000-1 Limited; Element Aviation Inc.

1 December 30, 2015 Guarantee Zetta Jet Pte. Ltd.; Asia Aviation Company Pte. Ltd.;

Advanced Air Management, Inc.; Element Aviation, Inc.

1 December 30, 2015 Beneficial Interest

Security Agreement

Zetta Jet Global 5000-1 Limited; Element Aviation Inc.

1 December 30, 2015 Operator Agreement

Acknowledgment

Zetta Jet Pte. Ltd.; Advanced Air Management, Inc.; Element

Aviation, Inc.

1 December 30, 2015 Lease Assignment and

Subordination Agreement

Zetta Jet Pte. Ltd.; TVPX ARS, Inc.; Element Aviation, Inc.

1 January 4, 2016 Guarantee Zetta Jet Pte. Ltd.; Asia Aviation Company Pte. Ltd.

1 September 22, 2016 First Amendment to

Aircraft Loan Agreement


1 September 22, 2016 First Amendment to

Beneficial Interest

Security Agreement


1 December 30, 2016 Second Amendment to



The CAVIC Transactions


Agreement

Bombardier Aerospace Corp.; Zetta Jet Pte. Ltd.

2 February 16, 2016 Amendment No. 1 to

Aircraft Purchase

Agreement


2 March 8, 2016 Amendment No. 2 to

Aircraft Purchase

Agreement




Agreement



Aircraft Purchase

Agreement


3 March 8, 2016 Amendment No. 2 to

Aircraft Purchase

Agreement



Agreement



Aircraft Purchase

Agreement


4 May 11, 2016 Amendment No. 2 to

Aircraft Purchase

Agreement


4 December 13, 2016 Amendment No. 3 to

Aircraft Purchase

Agreement


The Li Qi/Minsheng Transactions

7 August 12, 2016 Aircraft Purchase

Agreement

Wells Fargo; Zetta Pte.; Glove Assets Investment Ltd.

The Second Element Transaction

10 August 30, 2016 Aircraft Purchase

Agreement

Orion Aircraft Holdings Limited; Jetcraft Corporation; Bank

of Utah; Zetta Jet Pte Ltd.

10 September 22, 2016 Aircraft Loan Agreement Zetta Jet Global 6000-1 Limited; Element Aviation Inc.

10 September 22, 2016 Guarantee Zetta Jet Pte. Ltd.; Asia Aviation Company Pte. Ltd.;

Advanced Air Management, Inc.; Element Aviation, Inc.

10 September 22, 2016 Beneficial Interest

Security Agreement



10 September 22, 2016 Operator Agreement

Acknowledgment

Zetta Jet Pte. Ltd.; Advanced Air Management, Inc.; Element

Aviation Inc.

10 September 22, 2016 Lease Assignment and


Zetta Jet Pte. Ltd.; TVPX ARS, Inc.; Element Aviation, Inc.

10 December 30, 2016 First Amendment to



10 June 30, 2017 Second Amendment to



11 September 22, 2016 Aircraft Lease Element Financial Corporation; TVPX ARS Inc.

11 September 22, 2016 Guarantee Zetta Jet Pte. Ltd.; Asia Aviation Company Pte. Ltd.;

Advanced Air Management, Inc.; Element Financial

Corporation

11 September 22, 2016 Guarantee Zetta Jet Pte. Ltd.; Asia Aviation Company Pte. Ltd.

11 September 22, 2016 Beneficial Interest

Security Agreement

Element Financial Corporation; Zetta Jet Global 5000-2

Limited

11 September 22, 2016 Operator Agreement

Acknowledgment

Zetta Jet Pte. Ltd.; Zetta Jet USA, Inc.; Element Financial

Corporation

11 September 22, 2016 Sublease Assignment and


Element Financial Corporation; TVPX ARS Inc.; Zetta Jet Pte.

Ltd.

11 December 30, 2016 First Amendment to

Aircraft Lease

ECN Capital Corp; Zetta Jet Global 5000-2 Limited; TVPX

ARS Inc.


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Schedule 3

(The First Element Transaction)


Date Payment Payor Payee

12/30/2015 $37,800,000.00

Element Aviation Inc. (at the

direction of Zetta PTE) Jetcoast 5000-5, LLC

12/10/2015 $2,775,000.00 Zetta PTE Jetcraft Corporation

1/5/2016 $1,780,000.00 Zetta PTE Jetcraft Corporation

2/2/2016 $247,094.26 Zetta PTE Element Aviation Inc.



4/8/2016 $11,010.40 Zetta PTE

Mourant Ozannes for the benefit of Element

Aviation, Inc.















6/27/2017 $26,748.41 Zetta PTE


Aviation, Inc.


7/3/2017 $7,764.80 Zetta PTE


Aviation, Inc.


Jetcraft Corporation

Schedule 3 - The First Element Transaction

Payments (Plane 1)

12/31/2015 $1,000,000.00 Zetta PTE (credit transfer)


1 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Schedule 4

(The CAVIC Transactions)



12/4/2015 $250,000

Universal Leader (on behalf

of Zetta PTE) Bombardier Aerospace Corporation

2/16/2016 $5,000,000 Zetta PTE Bombardier Aerospace Corporation



12/4/2015 $250,000






12/4/2015 $250,000





Schedule 4 - The CAVIC Transactions

Payments regarding Plane 2




1 1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Schedule 5

(The Second Element Transaction)



9/22/2016 $49,500,000.00

Element Aviation Inc. (at

the direction of Zetta PTE) Orion Aircraft Holdings Limited

10/4/2016 $1,625,000.00 Zetta PTE Element Aviation Inc.



3/28/2017 $22,860.63 Zetta PTE

Daugherty, Fowler, Peregrin, Haught &

Jensen for the benefit of Element Aviation




6/27/2017 $10,553.49 Zetta PTE

Daugherty, Fowler, Peregrin, Haught &

Jensen for the benefit of Element Aviation



8/16/2017 $5,000,000.00 Zetta PTE ECN Aviation Inc.










Payments (Plane 11)

Schedule 5 - The Second Element Transaction

Payments (Plane 10)


Documents

ROBBIN L. ITKIN (SBN 117105) - … · ROBBIN L. ITKIN (SBN 117105) [email protected] DLA PIPER LLP (US) 2000 Avenue of the Stars ... watches, and lavish vacations, for his