Bridgeport, CT – A Connecticut man, along with four other former executives of Theia Group, Inc., a Washington, D.C.-based aerospace startup, has been charged in a massive multi-year fraud scheme that defrauded investors and lenders out of $250 million, federal officials announced on Tuesday.
Jamil Swati of Salisbury, Connecticut, who served as the head of strategic investments at Theia Group, was arrested in Bridgeport and charged with conspiracy to commit wire fraud and two counts of mail fraud. The U.S. Attorney for the District of Columbia, Edward Martin Jr., stated that Swati was one of five Theia executives involved in the elaborate scheme that deceived investors by providing false financial statements, fabricating government contracts, and misleading stakeholders about the company’s technological capabilities.
A Nationwide Crackdown on Theia Executives
The arrests were part of a coordinated effort by federal authorities to hold accountable those responsible for what officials described as one of the most significant financial frauds in the aerospace industry in recent years. Alongside Swati, law enforcement arrested:
- Erlend Olson, founder of Theia Group, in Albuquerque, New Mexico
- Stephen Buscher, a senior executive, in Memphis, Tennessee
- John Gallagher, another principal of the firm, in Broomall, Pennsylvania
- Joseph Fargnoli, a financial officer, in Rochester, New York
According to federal prosecutors, Theia Group, founded in 2015, had ambitious plans to launch a fleet of 112 satellites to provide global imaging and data analytics services. The company claimed it would raise between $10 billion and $15 billion from investors worldwide, offering data services in exchange for an initial $2 billion investment. However, despite these grand promises, Theia was never able to secure the necessary funding to launch its operations.
Instead, from 2015 until the company was placed into receivership in 2021, the company misled lenders and investors, raising $250 million through fraudulent claims.
Fabricated Contracts and False Financial Statements
Federal prosecutors detailed how Theia executives engaged in a web of deception to maintain the appearance of financial health and progress. The company allegedly presented fake government contracts, including fabricated documentation for a $6 billion escrow account, to lure investors.
Martin’s office stated that the executives repeatedly misrepresented Theia’s technical capabilities, falsely claiming they had developed advanced satellite technology and secured contracts with high-profile government agencies.
“These individuals orchestrated an elaborate scheme to convince investors that Theia Group was a legitimate and successful enterprise when, in reality, it was built on lies,” Martin said. “This case highlights the severe consequences for those who attempt to manipulate financial markets and defraud investors.”
Lavish Spending and Tax Evasion
While Theia Group struggled to secure legitimate funding, its executives allegedly funneled millions of dollars for personal use. Prosecutors highlighted that Olson, the company’s founder, concealed millions in compensation from the IRS between 2018 and 2020, failing to file tax returns and directing payments to a shell entity called Meridian Vector Corporation (MVC).
According to court documents, Olson used funds from MVC to cover extravagant personal expenses, including:
- A private jet membership
- $64,500 in annual rent payments for his residence
- A new Land Rover
- Two condominiums in Las Vegas
- Personal debt repayments
Further investigations revealed that Olson’s tax evasion tactics stretched back more than a decade. Between 2009 and 2011, he directed that his pay and bonuses remain unreported to tax authorities, ultimately evading more than $3.9 million in personal federal income taxes.
Impact on Investors and the Aerospace Industry
The collapse of Theia Group left a trail of financial devastation, with investors and lenders losing hundreds of millions of dollars. Many stakeholders were under the impression that Theia was on the verge of securing lucrative contracts, making the revelations of fraud even more shocking.
Industry analysts note that cases like Theia’s undermine confidence in emerging aerospace companies, particularly startups that rely heavily on investor funding to develop new technologies. The fraudulent activities not only harmed investors but also cast doubt on other legitimate space ventures.
“Investors need to perform thorough due diligence before committing to high-risk startups,” said aerospace analyst Mark Reynolds. “Theia Group’s case serves as a cautionary tale of how deception can lead to massive financial and reputational losses.”
Legal Proceedings and Potential Sentences
All five defendants are currently facing federal charges of conspiracy to commit wire fraud and mail fraud. If convicted, they could face significant prison sentences and hefty fines. Olson’s additional tax evasion charges could lead to even more severe penalties.
Authorities have also announced that they are pursuing asset recovery efforts to reclaim as much of the defrauded funds as possible. This includes the potential seizure of Olson’s properties and other assets purchased using illicit gains.
Martin emphasized the Justice Department’s commitment to holding corporate fraudsters accountable. “This case sends a clear message: No matter how sophisticated the fraud, law enforcement will pursue those responsible and ensure justice is served.”
Conclusion
The arrest of five Theia Group executives, including Connecticut’s Jamil Swati, marks a significant development in one of the largest aerospace fraud cases in recent history. The allegations of falsified contracts, financial misrepresentation, and lavish personal spending paint a troubling picture of deception at the highest levels of the company.
As federal authorities continue their investigation, investors and industry professionals alike are left grappling with the implications of such a large-scale fraud. The outcome of this case will likely serve as a landmark in corporate accountability within the aerospace sector.
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