An indictment was unsealed today in the Central District of California charging two California men with conspiring to defraud investors in a multi-year scheme involving the acquisition and sale of Airborne Wireless Network securities (stock ticker ABWN).
According to court documents, Kalistratos “Kelly” Kabilafkas, 48, of Moorpark, and Jack E. Daniels, 74, of Agoura Hills, allegedly conspired to secretly acquire the freely tradeable shares of a publicly traded shell company that they subsequently rebranded as Airborne. To acquire the company, Kabilafkas allegedly misappropriated a $474,500 sham charitable donation and used the funds to secretly buy the shell company’s stock.
Following the acquisition, together with Kabilafkas, Daniels—Airborne’s president and sole director—allegedly filed false reports with the Securities and Exchange Commission to conceal from investors that Kabilafkas secretly held all of Airborne’s stock.
Without disclosing Kabilafkas’s acquisition of Airborne’s shares, Kabilafkas and Daniels allegedly used investors’ funds to orchestrate a multimillion-dollar advertising campaign designed to inflate Airborne’s stock price. 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.
Kabilafkas and Daniels are charged with one count of conspiracy to commit securities fraud and one count of securities fraud. 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.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Martin Estrada for the Central District of California; Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group; Acting Assistant Director in Charge Mehtab Syed of the FBI Los Angeles Field Office; and Special Agent in Charge Tyler Hatcher of the IRS Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.
USPIS, the FBI, and IRS-CI are investigating the case.
