SEC v. Brian N. Hollnagel; and BCI Aircraft Leasing, Inc., No. LR-20330, Northern District of Illinois (Oct. 12, 2007) — Press Release

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20330 / October 12, 2007 SEC v. Brian N. Hollnagel and BCI Aircraft Leasing, Inc., Civil Action No. 07 C 4538 (N.D. Ill.)(Bucklo, J.) The Securities and Exchange Commission ("Commission") announced that on October 5, 2007, the Commission filed a Motion for Order to Show Cause to determine whether Defendants Brian N. Hollnagel ("Hollnagel") and BCI Aircraft Leasing, Inc. ("BCI") should be held in contempt of an order entered on August 22, 2007 by the Honorable Elaine E. Bucklo of the United States District Court for the Northern District of Illinois ("Order") in light of Defendants' multiple violations of the Order. In addition, on October 11, 2007, the Commission filed a Supplement to the Motion for Order to Show Cause. Previously, on August 13, 2007, the Commission filed a civil injunctive complaint alleging that Hollnagel and BCI, from 1999 through 2006, raised at least $82 million from approximately 120 investors through the fraudulent offer and sale of membership shares of Limited Liability Corporations ("LLCs") controlled and managed by BCI. According to the complaint, Hollnagel, a resident of Chicago, Illinois, and BCI, headquartered in Chicago, Illinois, told investors that they would use investor funds to purchase specifically identified commercial aircraft for the LLCs and, in turn, lease the aircraft to commercial airlines. According to the complaint, investors were told they would receive part of the lease revenue from the particular aircraft, in the form of regular monthly payments, as their return. The complaint further alleged that the Defendants also told investors that if an aircraft owned by an LLC was sold, investors were entitled to half of all proceeds from the sale above and beyond their capital contribution. In reality, according to the complaint, Defendants operated a massive Ponzi scheme. In addition, the complaint alleged that, in 2007, Defendants continued their scheme by fraudulently repurchasing investors' interests through materially misleading statements. Finally, the complaint alleges that, as a result of their conduct, Hollnagel and BCI violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. As part of the Order entered on August 22, 2007, the court found that BCI and Hollnagel made material misrepresentations to investors and acted with scienter. As a result, the Court issued a preliminary injunction against Hollnagel and BCI enjoining them from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Court declined, however, to grant the Commission's request for an asset freeze or the appointment of a receiver at that time to give BCI and Hollnagel the opportunity to fulfill their promise to pay investors within 60 days the $48 million that is due to them. The Court further provided, among other things, that BCI must provide certain reports to the Commission on a weekly basis and must provide notice to the Commission prior to any significant withdrawals (in excess of $20,000). In its Motion for an Order to Show Cause and the Supplement to the Motion, the Commission alleges, among other things, that Defendants, on multiple occasions, did not comply with the reporting and notice requirements set forth in the Order and that Defendants were not repaying all of the investors in cash as required by the Order. For additional information, see Litigation Release No. 20254 (Aug. 24, 2007). Motion for Order to Show Cause and Supplement to Motion for Order to Show Cause

U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 20330 / October 12, 2007 SEC v. Brian N. Hollnagel and BCI Aircraft Leasing, Inc., Civil Action No. 07 C 4538 (N.D. Ill.)(Bucklo, J.) The Securities and Exchange Commission ("Commission") announced that on October 5, 2007, the Commission filed a Motion for Order to Show Cause to determine whether Defendants Brian N. Hollnagel ("Hollnagel") and BCI Aircraft Leasing, Inc. ("BCI") should be held in contempt of an order entered on August 22, 2007 by the Honorable Elaine E. Bucklo of the United States District Court for the Northern District of Illinois ("Order") in light of Defendants' multiple violations of the Order. In addition, on October 11, 2007, the Commission filed a Supplement to the Motion for Order to Show Cause. Previously, on August 13, 2007, the Commission filed a civil injunctive complaint alleging that Hollnagel and BCI, from 1999 through 2006, raised at least $82 million from approximately 120 investors through the fraudulent offer and sale of membership shares of Limited Liability Corporations ("LLCs") controlled and managed by BCI. According to the complaint, Hollnagel, a resident of Chicago, Illinois, and BCI, headquartered in Chicago, Illinois, told investors that they would use investor funds to purchase specifically identified commercial aircraft for the LLCs and, in turn, lease the aircraft to commercial airlines. According to the complaint, investors were told they would receive part of the lease revenue from the particular aircraft, in the form of regular monthly payments, as their return. The complaint further alleged that the Defendants also told investors that if an aircraft owned by an LLC was sold, investors were entitled to half of all proceeds from the sale above and beyond their capital contribution. In reality, according to the complaint, Defendants operated a massive Ponzi scheme. In addition, the complaint alleged that, in 2007, Defendants continued their scheme by fraudulently repurchasing investors' interests through materially misleading statements. Finally, the complaint alleges that, as a result of their conduct, Hollnagel and BCI violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. As part of the Order entered on August 22, 2007, the court found that BCI and Hollnagel made material misrepresentations to investors and acted with scienter. As a result, the Court issued a preliminary injunction against Hollnagel and BCI enjoining them from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The Court declined, however, to grant the Commission's request for an asset freeze or the appointment of a receiver at that time to give BCI and Hollnagel the opportunity to fulfill their promise to pay investors within 60 days the $48 million that is due to them. The Court further provided, among other things, that BCI must provide certain reports to the Commission on a weekly basis and must provide notice to the Commission prior to any significant withdrawals (in excess of $20,000). In its Motion for an Order to Show Cause and the Supplement to the Motion, the Commission alleges, among other things, that Defendants, on multiple occasions, did not comply with the reporting and notice requirements set forth in the Order and that Defendants were not repaying all of the investors in cash as required by the Order. For additional information, see Litigation Release No. 20254 (Aug. 24, 2007). Motion for Order to Show Cause and Supplement to Motion for Order to Show Cause