May 23, 2024
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Airborne Wireless insiders indicted for involvement in alleged ‘pump-and-dump’ scheme

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Two men heavily involved with Simi Valley-based Airborne Wireless Network were indicted April 25 for allegedly conspiring to defraud investors in a multi-year scheme involving the acquisition and sale of the company.

Kalistratos “Kelly” Kabilafkas, 48, of Moorpark, and Jack Edward Daniels, 74, of Agoura Hills, were both charged with one count of conspiracy and one count of securities fraud, according to an April 30 press release from the Department of Justice’s Central District of California.

This decision also comes nearly eight months after the U.S. Securities and Exchange Commission won its lawsuit against Airborne Wireless and the associated parties believed to be behind the $45 million pump-and-dump scam in September. 

Kabilafkas has been accused of orchestrating Airborne Wireless’s alleged “pump-and-dump” scheme from the start, while Daniels was the company’s former president and sole director.

According to the April 25 indictment, Kabilafkas and Daniels conspired to secretly acquire the freely tradable shares of a publicly traded shell company that they subsequently rebranded as Airborne. 

In order to acquire the company, Kabilafkas is alleged to have misappropriated a $474,500 sham charitable donation and used those funds to secretly purchase the shell company’s stock. 

Previous reporting from the Business Times highlighted that the scheme started in 2015 when Kabilafkas purchased a company known as Ample-Tee — a shell company with the stated purpose of selling ergonomic products for people with disabilities.

In May 2016, the company changed its name to Airborne Wireless Network, purchasing a patent that the SEC claims was a smokescreen to allow it to raise more money from investors.

Both the SEC and the April 25 indictment allege that hid his involvement from the very start despite being “the true control person” behind the scenes, with Daniels allegedly filing false reports with the SEC to conceal from investors that Kabilafkas secretly held all of Airborne’s stock.

Without disclosing Kabilafkas’s acquisition of Airborne’s shares, both he and Daniels allegedly used investors’ funds to orchestrate a multimillion-dollar advertising campaign designed to inflate Airborne’s stock price, the indictment read.

During the advertising campaign, Airborne’s share price increased significantly for short periods of time, and Kabilafkas allegedly capitalized on the stock price spikes to sell millions of shares of Airborne stock and reap millions of dollars in ill-gotten gains, the indictment said.

According to the SEC, Kabilafkas and a group of associates dumped the vastly overpriced shares on the market, pocketing about $23 million. Airborne also fraudulently raised more than $22 million from investors, amounting to a $45 million pump-and-dump stock fraud scheme.

Kabilafkas’ arraignment was scheduled on April 30 in United States District Court in downtown Los Angeles while Daniels’ arraignment is scheduled for May 3 in the U.S. District Court in downtown Los Angeles.

If convicted, Kabilafkas and Daniels each face a maximum penalty of five years in prison for conspiracy and 20 years in prison for securities fraud.  

email: jmercado@pacbiztimes.com