The US Securities and Exchange Commission has accused the owner of MD Helicopters of committing fraud by hiding information from investors.
MD Helicopters is one of about 35 companies controlled by Patriarch Partners founder Lynn Tilton, a former Goldman Sachs banker.
In 2003, Tilton established the first of three collateralized debt obligation (CDO) funds, which combined raised more than $2.5 billion to provide loans to “distressed companies” owned or managed by Patriarch Partners, according to the SEC’s legal complaint filed on 30 March.
A “certain” number of Tilton’s companies “have failed to pay as much as 90% of the interest that they owe” to the fundsNo,, but Tilton never disclosed that information, the SEC complaint alleges.
As a result, Tilton received nearly $200 million in fees from her investors “to which she was not entitled”, the complaint says.
The SEC does not say whether MD Helicopters is among the companies that fell behind on the interest payments to the CDO funds providing the loans.
Speaking to reporters in early March at Heli-Expo, Tilton dismissed a question about whether the SEC investigation was having an impact on MD Helicopters’ operations, then accused the journalist who asked the question of sexism.
Tilton acquired MD Helicopters 10 years ago when the company was nearing financial collapse. She has said that she has invested heavily to revive production of the MD500, MD600 and MD900 series of helicopters.
Although sales have improved since Tilton became owner, MD Helicopters has struggled operationally. The lack of affordable parts has driven Tilton to bring much of the supply chain in-house.
Source: FlightGlobal.com
