SEC - The United States Securities and Exchange Commission

08/18/2022 | Press release | Distributed by Public on 08/18/2022 08:34

Airborne Wireless Network, et al.

SEC Obtains Final Judgment Against Defendant for Role in $45 Million Fraudulent Scheme

Litigation Release No. 25476 / August 18, 2022

Securities and Exchange Commission v. Airborne Wireless Network, et al., No. 21-civ-01772 (S.D.N.Y. filed March 2, 2021)

On August 17, 2022, the U.S. District Court for the Southern District of New York entered a final judgment against Eric Scheffey, who was charged with participating in a fraudulent scheme to gain control of Airborne Wireless Network, promote its stock, and defraud investors.

According to the SEC's complaint, filed on March 2, 2021, Kalistratos "Kelly" Kabilafkas secretly purchased essentially all of the outstanding stock of a shell company now known as Airborne, which he secretly controlled, and then distributed millions of shares among himself and his associates, including Scheffey. As alleged, Scheffey participated in Kabilafkas' scheme by deceiving broker-dealers in order to have the shares deposited in his brokerage accounts and cleared for sale to the public. The complaint alleges that Scheffey then sold these shares into the public market while an Airborne promotional campaign was underway.

Without admitting or denying the SEC's allegations, Scheffey consented to the entry of a final judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, ordering a $75,000 civil penalty, and imposing a penny stock bar.

The SEC's litigation against four remaining defendants and two relief defendants is ongoing and being conducted by Daniel Maher, Nick Margida, and Drew Dorman, and supervised by Olivia S. Choe. The SEC's investigation was conducted by Paul J. Bohr, Jennie B. Krasner, Drew Dorman, Jeffrey Anderson, and Robert Nesbitt, with the assistance of the Enforcement Division's IT Forensics Lab, and supervised by Peter Rosario and George Bagnall.