SEC v. Jason R Hyatt; Jay Johnson; and Hyatt Johnson Capital, LLC, No. 1:08-CV-2224, Northern District of Illinois (Apr. 25, 2008) — Complaint

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF ILLINOIS 
EASTERN DIVISION 
MICHAEL W, QOBSIN~ 
CLERK, U.S. WIGSR~GTGQUR~ 
UNITED STATES SECURITIES 
AND EXCHANGE COMMISSION, 

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Plaintiff, 
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JASON R HYATT, JURY DEMANDED 
JAY JOHNSON, and 
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HYATT JOHNSON CAPITAL, LLC 
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COMPLAINT 
Plaintiff, the United States Securities and Exchange Commission ("SEC"), alleges as 
follows: 
NATURE OF THE ACTION 
1. This matter centers on a fraudulent scheme in which Jason R. Hyatt ("Hyatt"), Jay 
Johnson ("Johnson") and their company, Hyatt Johnson Capital, LLC ("HJ Capital") 
(collectively, "the Defendants"), fiom 
2003 through the present, acting as unregistered broker- 
dealers and investment advisers, offered and sold to investors membership shares in at least ten 
Limited Liability Corporations ("LLCs") controlled and managed by HJ Capital ("HJ Capital 
LLCs"). The Defendants promised to use investor funds to purchase securities sold by LLCs 
managed by BCI Aircraft Leasing, Inc. ("BCI") on behalf of the HJ Capital LLCs. In reality at 
least 
$5.4 million was misappropriated, among other thing, to operate a Latin-themed restaurant 
in Chicago named De La Costa and to pay for Defendant Hyatt's personal expenses including 

numerous mortgage payments and substantial home improvements for two homes, as well as at 
least $155,000 worth of art and antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon 
Denali, and other vehicles. 
2. According to the Defendants' representations to investors, the BCI LLCs would 
use investor funds, along with other sources of funds, to purchase commercial aircraft on lease to 
commercial airlines. Investors were told that the BCI LLCs would make monthly payments to 
the HJ Capital LLCs from monthly lease income. HJ Capital would then distribute monthly 
payments to the individual investors from these payments. 
3. In addition, through the sale of a promissory note, the Defendants raised another 
$2 million from an individual investor, representing to that investor that his funds would be 
invested in a joint venture between BCI and HJ Capital called Clvcago Aviation Partners, which 
would use the funds to purchase a group of commercial aircraft. 
4. 
Based on these and other representations, from approximately 2003 through 
approximately 2007, the Defendants raised at least $24.5 million from approximately 120 
investors in at least twelve states. 
5. Unbeknownst to HJ Capital investors, BCI and its owner and CEO Brian 
Hollnagel ("Hollnagel") had been defrauding investors by, among other things, failing to use 
investor funds to purchase aircraft as represented (sometimes never purchasing aircraft at all), 
misappropriating investor profits in certain LLCs in order to fund other unrelated purchases on 
behalf of BCI, and using some investors' funds to make payments to other investors as purported 
returns. 
6. Also, unbeknownst to HJ Capital investors, from July 2006 to March 2007, 
Defendant Hyatt, through Defendant HJ Capital, misappropriated nearly $1.6 million in investor 

funds for his personal use, including at least $1 55,000 worth of art and antiques, a Maserati, a 
Mercedes, a Hummer H2, a Yukon Denali, and other vehicles. 
7. In August 2007, the SEC brought an emergency enforcement action in U.S. 
District Court in Chcago against BCI and Hollnagel. SEC v. Hollnanel et al., 1:07-cv-4538 (J. 
Bucklo). As a result of this action and an evidentiary hearing, the Court made findings of fraud, 
issued a preliminary injunction against BCI and Hollnagel, and ordered BCI to repay all 
investors, including the HJ Capital LLCs, within 60 days. Nevertheless, most of the HJ Capital 
investors have not been fully repaid. 
8. 
In February 2006, the Defendants offered and sold a note to an investor for $2 
million ("the $2 million investment"), purportedly to be invested in a BCI 
-HJ Capital joint 
venture called Chicago Aviation Partners to purchase a group of commercial aircraft. 
9. 
Instead, Defendant Hyatt, through Defendant HJ Capital, misappropriated this $2 
million investment to fund the startup costs of a Latin-themed restaurant in Chicago named De 
La Costa, which Hyatt co-owned with several other partners. 
10. When Defendant Johnson became aware of Hyatt's misappropriation of the $2 
million investment, Johnson chose to participate in a scheme with Hyatt to cover up his fraud, 
diverting at least $2.4 million that belonged to other investors to repay the note investor, thereby 
concealing the past misappropriation. At the request of the Defendants, BCI wired these funds 
directly to the investor. 
1 1. 
From 2003 to 2006, Defendant Hyatt, through Defendant HJ Capital, 
misappropriated nearly $1.8 million of investor funds in the form of undisclosed commissions 
from BCI in connection with the capital invested by HJ Capital LLCs in BCI offerings. BCI paid 
these commissions out of the investor funds it received from HJ Capital. 

12. 
Defendant Johnson knew or was reckless in not knowing that Hyatt was receiving 
undisclosed commissions, and yet failed to disclose this fact, and made other misleading 
statements to investors, in connection with subsequent offers or sales of securities. 
13. 
Among other things, the Defendants falsely assured investors that, as part of their 
management of the HJ Capital LLCs, they had performed and would continue to perform due 
diligence regarding BCI' s use of investor funds. 
14. 
Contrary to their representations, the Defendants did little, if anything, to verify 
the legitimacy of the BCI offerings. 
15. 
In fact, the Defendants received records indicating that BCI was diverting HJ 
Capital investor hnds for improper uses, specifically, diversion to undisclosed, materially 
different BCI LLCs. Defendants thus knew or were reckless in not knowing of BCI's improper 
diversion of investor funds. Despite this, the Defendants failed to either adequately review or 
take action to follow up on these red flags. The Defendants also failed to disclose this 
information to HJ Capital investors. 
16. It appears that the Defendants were still depleting the HJ Capital bank accounts as 
recently as March 2008 as evidenced by $20,000 in checks drawn against the HJ Capital account 
payable directly to Hyatt and signed by Johnson. 
17. 
Through the activities alleged in this complaint, Defendants Hyatt, Johnson, and 
HJ Capital have, and unless enjoined, will continue to, directly and indirectly, engage in 
transactions, acts, practices or courses of business which are violations of Section 17(a) of the 
Securities Act of 1933 (the "Securities Act") [15 U.S.C. 
5 77q(a)], Sections 10(b) [15 U.S.C. 5 
78j(b)] and 15(a)(l) [15 U.S.C. 5 78o(a)(l)] of the Securities Exchange Act of 1934 (the 
"Exchange Act") and Rule lob-5 [17 C.F.R. 
5 240.10b-51 thereunder, and Sections 206(1) , 

206(2) and 206(4) of the Investment Advisers Act of 1940 (the "Advisers Act") [15 U.S.C. 88 
80b-6(1) and 80b-6(2)] and Rule 206(4)-8 [17 C.F.R. 8 275.206(4)-81 thereunder. 
18. 
The SEC brings this action pursuant to Section 20(b) of the Securities Act [15 
U.S.C. 
8 77t(b)], Sections 21(d) and (e) of the Exchange Act [15 U.S.C. $8 78u(d) and 78u(e)], 
and Section 209(d) of the Advisers Act [15 U.S.C. 
$8 80b-9(d)] 
JURISDICTION 
19. This Court has jurisdiction pursuant to Section 22 of the Securities Act [15 U.S.C. 
8 77~1,Section 27 of the Exchange Act [15 U.S.C. tj 78aa], Section 214 of the Advisers Act [15 
U.S.C. 
8 80b-141, and 28 U.S.C. 5 1331. 
20. 
The acts, practices and courses of business constituting the violations alleged 
herein occurred withn the jurisdiction of the United States District Court for the Northern 
District of Illinois and elsewhere. 
21. The Defendants are inhabitants of, and transact business in, the Northern District 
of Illinois. 
22. 
The Defendants, directly or indirectly, have made, and are making, use of the 
mails or the means or instrumentalities of interstate commerce in connection with the 
transactions, acts, practices and courses of business alleged herein. 
DEFENDANTS 
23. Jason Hyatt, age 34, is a resident of St. Charles, Illinois. Defendant Hyatt is a 
founder and managing partner of HJ Capital and was formerly registered with as a securities 
broker. In 
a January 2008 deposition, Defendant Hyatt repeatedly invoked his Fifth Amendment 
privilege against self-incrimination, refusing to answer any questions about HJ Capital, BCI, or 
his personal finances. 

24. Defendant Hyatt worked for BCI and Hollnagel from at least 2001 until 2003 as 
the Director of Corporate Finance for BCI. 
25. 
Jay Johnson, age 48, is resident of Downers Grove, Illinois. Defendant Johnson is 
a founder and managing partner of HJ Capital. In a January 2008 deposition, Johnson repeatedly 
invoked his Fifth Amendment privilege against self-incrimination, refusing to answer any 
questions about HJ Capital. BCI, or his personal finances. 
26. 
Hyatt Johnson Capital, LLC is a privately-held Illinois corporation with its 
principal place of business in Downers Grove, Illinois. HJ Capital is operated out of the homes 
of Hyatt and Johnson, the only owners and managers. HJ Capital is owned and controlled 
equally by Hyatt and Johnson. 
OTHER RELEVANT PARTIES 
27. 
BCI Aircraft Leasing, Inc. ("BCI") is a privately-held Illinois corporation with its 
principal place of business in Chicago, Illinois. 
28. 
Brian 
N. Hollnagel ("Hollnagel"), age 34, is the Chief Executive Officer ("CEO") 
and founder of BCI and resides in Chicago, Illinois. 
29. Hollnagel and BCI are defendants in the SECYs litigation initiated on August 13, 
2007. SEC v. Hollnagel et al., 1 :07-cv-4538 (J. Bucklo). 
FACTS 

BACKGROUND 

30. Between 2003 and 2007, Defendants Hyatt, Johnson, and HJ Capital 
communicated with potential investors to solicit their purchase of membershp shares of LLCs 
controlled by HJ Capital. Such communications occurred variously in person, through telephone 
conversations, or in writing, or in other ways making use of interstate commerce. 

3 1. Between 2003 and 2007, the Defendants raised at least $22.5 million from 
approximately 120 investors through offers and sales of equity interests in at least 10 LLCs 
managed and operated by HJ Capital ("HJ Capital LLCs") to invest in LLCs operated by BCI. 
The Defendants told investors that these LLCs were formed to pool investor funds to invest in 
BCI LLCs, which were also offered to other investors in addition to the HJ Capital LLCs. 
32. 
The Defendants represented to investors that as part of the HJ Capital offerings, 
and in exchange for what was described as an "Asset Management Fee," HJ Capital would 
manage the HJ Capital LLCs as a fiduciary with including the authority to make investment 
decisions on behalf of the HJ Capital LLCs. 
33. 
The BCI LLCs would then make monthly distributions to the HJ Capital LLCs of 
fi-ee cash from the aircraft leases as monthly returns. The HJ Capital LLCs then made 
corresponding monthly payments to their investors as returns. Investors were also told that they 
would receive a percentage of the profits from the sale or refinance of the aircraft. 
34. The Defendants also represented that BCI would in turn use the funds from HJ 
Capital LLCs, along with other sources of funds, to purchase commercial aircraft on lease to 
commercial airlines. 
35. The Defendants received compensation in exchange for investment advice, i.e. the 
authority to make investment decisions on behalf of the HJ Capital LLCs. 
36. 
The Defendants exercised their authority to make investment decisions on behalf 
of the HJ Capital LLCs when, in July 2007, they sold all of the HJ Capital LLCs' interests in 
BCI LLCs back to BCI in exchange for a promissory note. Defendants made no disclosure to 
investors of conversion of their interests in the LLCs in exchange for a note until well after the 

transaction had been concluded. In addition, there are no documents releasing the individual 
investors' interests to HJ Capital or to BCI. 
37. 
In addition, through the sale of a promissory note, the Defendants raised another 
$2 million from an individual investor, representing to that note investor that his funds would be 
invested in a joint venture between BCI and HJ Capital called Chcago Aviation Partners, which 
would use the funds to purchase a group of commercial aircraft. 
38. Unbeknownst to HJ Capital investors, BCI and Hollnagel were engaged in a 
fraudulent scheme in which they improperly diverted a substantial portion of the approximately 
$83 million in investor funds they raised. The Defendants knew or were reckless in not knowing 
that BCI had improperly diverted investor funds. 
39. BCI and Hollnagel defrauded investors by, among other things, failing to use 
investor funds to purchase aircraft as represented (sometimes never purchasing aircraft at all), 
misappropriating investor profits in certain offerings in order to fund other unrelated purchases 
on behalf of BCI, and using some investors' hds to make payments to other investors as 
purported returns. To date, most HJ Capital investors have yet to be fully repaid. 
40. 
In August 2007, the SEC brought an emergency enforcement action in U.S. 
District Court in Chicago against BCI and Hollnagel. SEC v. Hollnagel et al. 1:07-cv-4538 (J. 
Bucklo). As a result of this action and an evidentiary hearing, the Court made findings of fraud, 
issued a preliminary injunction against BCI and Hollnagel, and ordered BCI to repay all 
investors, including HJ Capital investors, within 60 days. The Court, among other things, made 
factual findings that "It is undisputed that BCI made material misrepresentations in its LLC 
offering documents 
..." to investors and that "[tlhere can be no doubt that BCI and Hollnagel 

acted with scienter." August 22,2007 Order, pages 7-8, SEC v. Hollnanel et al., 1:07-cv-4538 
(J. Bucklo), Docket No. 35. 
41. Despite the allegations in the SEC complaint and the Court's factual findings of 
fraud, the Defendants continued to deal with BCI and Hollnagel. Furthermore, the Defendants 
continued to mislead investors regarding, among other things, the true state of their investments. 
42. As 
part of the SEC's ongoing litigation against BCI and Hollnagel, the SEC 
issued subpoenas to Hyatt, Johnson, and HJ Capital. 
In response, Defendants Hyatt and Johnson 
both repeatedly asserted their Fifih Amendment privileges against self-incrimination in 
depositions and with respect to the production of documents. 
43. The SEC currently also has a pending Motion for Contempt against Defendant HJ 
Capital for its failure to produce HJ Capital documents, including emails and telephone records, 
in response to the SECYs subpoenas. 
See SEC v. Hollnanel et al., 1:07-cv-4538 (J. Bucklo), 
Docket No 102. 
44. On April 14,2008, during a hearing in SEC v. Hollnanel et al., 1 :07-cv-4538 (J. 
Bucklo), counsel for HJ Capital represented to the Court that a forensics consultant hired by HJ 
Capital had examined two computers used by Defendant Hyatt for HJ Capital business, and that 
this forensics consultant discovered that "scrubbing software," which is used to "wipe" or 
permanently erase files contained on computer hard drives, had been installed on these 
computers. It appears likely that the scrubbing software was used to destroy information 
potentially relevant to the SEC's subpoenas to the Defendants. 
45. Defendants Hyatt and Johnson also filed motions to quash regarding the SEC's 
subpoenas for their personal bank records, which the Court denied. As a result, the SEC only 
recently received certain bank records, from which the SEC discovered the existence of 

additional personal bank accounts for Hyatt and Johnson. These recently obtained personal bank 
records uncovered further evidence of fraud by Hyatt and HJ Capital. 
HYATT MISAPPROPRIATED NEARLY $5.4 MILLION IN 

INVESTOR FUNDS. 

Hyatt Diverted Nearly 
$1.6 Million in Investor Funds for Personal Use. 

46. 
From July 2006 through March 2007, Defendants Hyatt, Johnson, and HJ Capital 
raised nearly $1.6 million in investor funds through two HJ Capital offerings known as HJ 
United 2005 LLC and HJ T2 2005 LLC in which the Defendants offered and sold securities to 
investors ("the post-June 2006 investments"). 
47. 
The Defendants represented to investors in HJ United 2005 LLC and HJ T2 2005 
LLC that their funds would be invested in BCI LLCs known as BCI United 2005-20 LLC and 
BCI TUI LLC, respectively. 
48. 
Instead, the post-June 2006 investments were wired to separate entities controlled 
by Hyatt: UAL BCI 2006-1 LLC and TUI BCI 2005-17 LLC. Defendant Hyatt created these 
entities in July 2006. 
49. 
Between July 2006 and April 2007, virtually all of this nearly $1.6 million was 
transferred from UAL BCI 2006- 
1LLC and TUI BCI 2005- 17 LLC to one of Defendant Hyatt's 
personal bank accounts. 
50. 
Defendant Hyatt then spent this nearly $1.6 million on personal expenditures, 
including $155,000 worth of 
art and antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon 
Denali, and other vehicles. 
5
1. 
Because this nearly $1.6 million was never invested in BCI LLCs, BCI's monthly 
distributions were insufficient to support these investors' monthly returns. 

52. 
To conceal his fraudulent scheme, Defendant Hyatt made monthly payments from 
his personal bank account to HJ Capital to create the appearance of monthly returns from the 
non-existent investments to make up this shortfall. 
53. 
At least in connection with those instances where investor money was diverted by 
Hyatt, false tax forms were issued to investors in regard to their supposed investments. 
54. 
Hyatt, Johnson and HJ Capital knew or were reckless in not knowing that false 
and misleading tax forms were being issued to HJ Capital investors. 
55. 
Defendant Hyatt used misappropriated investor funds to fund mortgage payments 
and substantial home improvements for two homes that he owns. 
Hyatt Diverted $2 Million in Investor Funds to Operate a Restaurant. 
56. 
In February 2006, the Defendants offered and sold a promissory note to an 
investor for 
$2 million ("The $2 million investment"). 
57. 
The Defendants told this investor (the "note investor") that his $2 million would 
be invested in a BCI 
-HJ Capital joint venture called Chicago Aviation Partners. The note 
investor was told that Chicago Aviation Partners would, in turn, use the $2 million investment to 
purchase a group of commercial aircraft. 
58. 
Instead, Defendant Hyatt, through Defendant HJ Capital, improperly diverted this 
money to a Latin-themed restaurant in Chicago named De La Costa, which Hyatt co-owned with 
several other partners. 
59. 
Specifically, Defendant Hyatt used the $2 million investment to fund startup costs 
of the restaurant, which opened a few months later, in July 2006. 
60. 
These startup costs included over $400,000 for interior decorating and fixniture 
and over $1,000,000 in construction costs. 

The Defendants Committed Further Fraud to Conceal Past Instances of Fraud. 
61. Defendant Johnson was aware of Hyatt's misappropriation of investor funds. 
62. For example, Defendant Johnson was aware that Hyatt had directed the $2 million 
investment to Panacea Partners, LLC, the holding company of Hyatt's restaurant De La Costa. 
63. However, Defendant Johnson never took any steps to inform the note investor 
about the misappropriation of his $2 million investment. 
64. Defendant Johnson chose instead to participate in a scheme with Defendant Hyatt 
to cover up the misappropriation of the $2 million investment, specifically by improperly 
diverting other investors' funds to repay the note investor. 
65. 
In July 2007, BCI and the Defendants negotiated a purported buy out of all HJ 
Capital investor interests in BCI offerings. As a result of these negotiations between BCI and the 
Defendants, the Defendants purportedly caused the HJ Capital LLCs to sell their interests in the 
BCI LLCs back to BCI in exchange for a single promissory note. 
In September 2007, pursuant 
to an agreement between the Defendants and BCI, this July 2007 promissory note was then sold 
back to BCI in exchange for six aircraft and certain future cash payments to HJ Capital. 
66. Defendants did not disclose to investors the July or September 2007 transactions 
described in paragraph 65 above until after the September 2007 agreement was executed. 
67. Because BCI never received the $2 million investment, that specific investment 
was not included in the July and September transactions described in paragraph 65 above. 
68. In addition, because the nearly $1.6 million in post-June 2006 investments 
described in paragraphs 46 through 49 above were misappropriated by Defendant Hyatt, and not 
sent to BCI, these investments were also not included in the July and September transactions 
described in paragraph 65 above. 

69. In connection with the July and September transactions described in paragraph 65 
above, in January 2008, BCI paid $3.5 million to HJ Capital on behalf of the HJ Capital 
investors. 
70. 
Ths $3.5 million payment belonged to the investors whose money had been 
invested, through the HJ Capital offerings, in BCI offerings. 
71. This $3.5 million payment was made in connection with BCI's purchase of the HJ 
Capital investors' interests, pursuant to the transactions described in paragraph 65 above. 
72. However, the Defendants instructed BCI to wire $2.4 million of this $3.5 million 
payment directly to the note investor, who had made the $2 million investment, and BCI did so. 
73. The Defendants failed to disclose to any HJ Capital investors that this $2.4 
million was misappropriated in order to repay the note investor. 
74. Certain HJ Capital investors confronted Defendant Johnson, asking whether the 
note investor was going to be repaid out of funds belonging to other HJ Capital investors. 
75. Defendant Johnson falsely assured these investors that their hds would not be 
misappropriated to repay the note investor, because the note investor's $2 million investment 
was sent to BCI, and thus this investment was part of the July and September transactions 
described in paragraph 65 above. 
76. Defendant Johnson, through Defendant HJ Capital, specifically represented to the 
note investor that this wire transfer from BCI was a repayment of his $2 million investment. 
77. However, the Defendants failed to disclose to the note investor that, despite the 
fact that this repayment was coming from BCI, his investment had been misappropriated for use 
by 
Mr. Hyatt's restaurant, and had never reached BCI or Chicago Aviation Partners. 

78. The Defendants also failed to disclose to the note investor that they had 
misappropriated this $2.4 million fi-om the other HJ Capital investors in order to repay the $2 
million investment. 
Hyatt misappropriated another $1.8 million in investor funds in the form of 
undisclosed commissions. 
79. 
Defendant Hyatt, through Defendant HJ Capital, misappropriated nearly $1.8 
million of investor funds in the form of undisclosed commissions from BCI in connection with 
funds invested by HJ Capital LLCs in BCI offerings. 
80. 
Defendants Hyatt and HJ Capital directly received commissions fi-om BCI in 
connection with seven of the ten LLCs in which HJ Capital made offers and sales of securities to 
investors, in exchange for HJ Capital's placement of its investors' pooled funds in BCI offerings. 
81. 
According to BCIYs accounting and tax records, these commissions were taken 
from the investors' 'funds. 
82. 
Based on the commission amounts disclosed to investors and the amount of HJ 
Capital investor hnds invested in BCI LLCs, HJ Capital disclosed that it would receive 
approximately $770,000 in total "organization fees," which functioned as commissions, between 
2003 and 2006. 
83. 
In reality, BCI paid over $2.5 million in total commissions to Defendants Hyatt 
and HJ Capital from 2003 to 2006, the vast majority of which were sent directly to Hyatt 
personally. Thus, nearly $1.8 million of the commissions received from BCI were not disclosed 
to investors. 
84. 
Defendant Johnson received and reviewed 2004 tax records issued 
by BCI 
indicating that approximately 
11% in commissions was being paid in connection with certain HJ 

Capital LLCs' investment of capital in the BCI LLCs during 2004, accounted for as "syndication 
costs" for those investments. 
85. 
In fact, according to the offering materials provided to investors in connection 
with HJ Capital LLCs that invested money in BCI LLCs during 2004, 
HJ Capital should not 
have received any commissions in two of the LLCs, and no more than 5.5% in commissions in 
other LLCs. 
86. 
In 2005, none of the tax records issued by BCI to any of the HJ Capital LLCs 
disclosed any commissions being paid by BCI, although the offering materials for all of those 
LLCs disclosed that HJ Capital would receive a 5.5% commission. 
87. 
In connection with subsequent offers and sales of securities, whose offering 
materials stated that HJ Capital would receive commissions of only 5.5%, Defendant Johnson 
failed to disclose to investors the fact that Hyatt or HJ Capital had taken excess commissions in 
prior offers and sales of securities. 
88. Although they received commissions to sell securities, none of the Defendants 
were registered with the Commission as broker-dealers during any times relevant to this 
Complaint. 
THE DEFENDANTS FALSELY ASSURED INVESTORS REGARDING 

BCI'S USE OF INVESTOR FUNDS. 

89. 
The Defendants made certain assurances to investors regarding the legitimacy of 
the BCI securities in which the HJ Capital LLCs were invested, without having any reasonable 
basis for such assurances. 
90. 
The Defendants made various statements to investors to assure them of the 
legitimacy of the BCI LLC investments, including but not limited to, falsely assuring investors 

that, as part of their management of the HJ Capital LLCs, they had performed and would 
continue to perform due diligence regarding BCI's use of investor funds. 
91. 
These and other false assurances provided comfort to investors that the 
Defendants had verified the legitimacy of the BCI securities: specifically, that BCI would use 
investor funds as represented. 
92. 
In fact, the Defendants did little if anything to verify the legitimacy of the BCI 
securities. 
93. 
In particular, the Defendants failed to take any action even though they had access 
to records BCI sent to HJ Capital that indicated that BCI was improperly diverting HJ Capital 
investor funds. 
94. 
For example, in one 2003 offering known as HJ A3 2003, over $2 million in HJ 
Capital investor funds were supposed to be invested in a BCI LLC known as BCI 2002-4, which 
owned three aircraft on lease to Airpost, the French post office. 
95. 
Instead, BCI invested the over $2 million from HJ A3 2003 into another BCI LLC 
known as BCI 2003-2, which purportedly owned only one aircraft. 
96. 
In fact, BCI 2003-2 did not even own any aircraft. BCI instead misappropriated 
all investor funds for this offering. 
97. 
As early as April 2004, Defendants Johnson and HJ Capital were aware that HJ 
A3 2003 was not invested in BCI 2002-4 as HJ Capital investors were told. Despite this, the 
Defendants continued to provide monthly written updates to HJ A3 2003 investors, falsely 
reassuring them that their funds were invested by BCI as represented. 

98. 
Despite receiving information that HJ Capital investor funds in other LLCs were 
also improperly diverted to other BCI LLCs, the Defendants continued to provide monthly 
written updates falsely reassuring investors that their funds were invested by BCI as represented. 
99. 
Despite the Defendants' promises of due diligence, and receiving information that 
investor funds were being improperly diverted to other LLCs, the Defendants continued to 
reassure investors that due diligence had been performed, providing monthly written updates 
falsely reassuring investors that their funds were invested by BCI as represented. 
100. 
In fact, after the filing of the SEC's complaint against BCI and Hollnagel, the 
Defendants went so far as to falsely assure investors that they and HJ Capital would make 
investors whole in the event that BCI was unable to. 
101. Furthermore, the Defendants did not even bother to obtain any written agreements 
confirming that the HJ Capital LLCs owned shares in the BCI LLCs or what BCI was actually 
doing with the HJ Capital LLCs' funds. 
102. The Defendants had no basis for the assurances they made to investors regarding 
the legitimacy of the BCI securities and BC17s use of HJ Capital investor funds. 
DEFENDANTS CONTINUE TO MANAGE INVESTOR ASSETS AND ARE IN A 

POSITION TO DISSIPATE INVESTOR FUNDS. 

103. In July 2007, the Defendants purportedly agreed to sell all of the HJ Capital 
investors' interests in BCI offerings, in exchange for a $22.7 million unsecured promissory note 
from BCI and approximately $2.35 million in cash. 
104. 
In September 2007, the Defendants purportedly exchanged this $22.7 million 
promissory note for ownership of six aircraft on lease, as well as specific future cash payments. 
105. The Defendants created a new subsidiary to own these six aircraft and take 
custody of cash payments fi-om BCI on behalf of investors. 

106. These aircraft are currently generating excess lease revenue and within the next 
month HJ Capital should receive $292,084 in excess monthly lease revenue, including $50,000 
on April 22nd, which will be deposited into a HJC Asset Holdings bank account controlled by 
the Defendants. 
107. The Proposed Defendants are currently attempting to sell these aircraft, which 
belong to investors. 
108. 
Hyatt used misappropriated investor hnds to fund mortgage payments and 
substantial home improvements for two of his three homes, and to fund most of the startup costs 
of his Chicago restaurant, De La Costa. 
109. It appears that the Defendants are still depleting HJ Capital funds as recently as 
March 2008, as evidenced by $20,000 in checks drawn against the HJ Capital account payable 
directly to Hyatt and signed by Johnson. 
110. 
In general, Defendants Hyatt and Johnson regularly took capital out of HJ Capital 
"whenever money was there." 
11 1. Through 2007, Hyatt was writing himself checks from De La Costa accounts. 
112. Hyatt also used investor funds to purchase at least $155,000 worth of 
art and 
antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon Denali, and other vehicles. Hyatt has 
been attempting to sell at least two houses worth a total of at least $2 million and the restaurant 
De La Costa. 
1 13. Thus, in light of Hyatt's prior behavior, there is a continued risk that Hyatt may 
further misappropriate investor funds under HJ Capital's control. 

COUNT I 

Violations of Section 17(a)(l) of the Securities Act 

114. 
Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 
set forth herein. 
11
5. 
By engaging in the conduct described above, Defendants Hyatt, Johnson, and HJ 
Capital, in the offer and sale of securities, by the use of the means and instruments of 
transportation or communication in interstate commerce or by use of the mails, directly or 
indirectly, have employed devices, schemes and artifices to defraud. 
116. 
Defendants Hyatt, Johnson, and HJ Capital intentionally or recklessly made the 
untrue statements or omissions and engaged in the devices, schemes, artifices, transactions, acts, 
practices and courses of business described above. 
117. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 
Section 17(a)(l) of the Securities Act [15 U.S.C. 
5 77q(a)(l)]. 
COUNT I1 

Violations of Sections 17(a)(2) and (3) of the Securities Act 

1 18. 
Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 
fully set forth herein. 
119. By engaging in the conduct described above, Defendants Hyatt, Johnson, and HJ 
Capital, in the offer and sale of securities, by the use of the means and instruments of 
transportation or communication in interstate commerce or by use of the mails, directly or 
indirectly, have: 
a. 	obtained money or property by means of untrue statements of material fact 
or by omitting to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they were 
made, not misleading; and 
b. 	
engaged in transactions, practices, or courses of business that operated or 
would operate as a fraud or deceit upon the purchasers of such securities. 
120. Defendants Hyatt, Johnson, and HJ Capital made the untrue statements and 
omissions of material fact and engaged in the devices, schemes, artifices, transactions, acts, 
practices and courses of business described above. 
121. 
Defendants Hyatt, Johnson, and HJ Capital at least negligently made the untrue 
statements or omissions and engaged in the devices, schemes, artifices, transactions, acts, 
practices and courses of business described above. 
122. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital have 
violated Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. 
5 77q(a)(2)-(3)]. 
COUNT I11 
Violations of Section 10(b) of the Exchange Act, and Exchange Act Rule lob-5 
123. Paragraphs 1 through 11 3 are re-alleged and incorporated by reference as though 
fully set forth herein. 
124. As more fully described in paragraphs 1 through 1 
13above, Defendants Hyatt, 
Johnson, and HJ Capital, in connection with the purchase and sale of securities, by the use of the 
means and instrumentalities of interstate commerce and by the use of the mails, directly and 
indirectly: used and employed devices, schemes and artifices to defraud; made untrue statements 
of material fact and omitted to state material facts necessary in order to make the statements 
made, in light of the circumstances under which they were made, not misleading; and engaged in 

acts, practices and courses of business which operated or would have operated as a fraud and 
deceit upon purchasers and sellers and prospective purchasers and sellers of securities. 
125. Defendants Hyatt, Johnson, and HJ Capital knew, or were reckless in not 
knowing, the facts and circumstances described in paragraphs 1 through 1 13 above. 
126. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 
Section 10(b) of the Exchange Act [15 U.S.C. 
§ 78j(b)] and Rule lob-5 thereunder [17 C.F.R. ij 
240.1Ob-51. 
COUNT IV 

Violations of Section 15(a)(l) of the Exchange Act 

127. 
Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 
fully set forth herein. 
128. At all times relevant to this Complaint, Defendants Hyatt, Johnson, and HJ 
Capital effected transactions in securities for the accounts of others, for which they received 
transaction based compensation in the form of commissions. 
129. Defendants Hyatt, Johnson, and HJ Capital made use of the mails and the means 
and instrumentalities of interstate commerce to effect transaction in and to induce or attempt to 
induce the purchase of securities. 
130. At all times relevant to this Complaint, Defendants Hyatt, Johnson, and HJ 
Capital were not registered with the Commission as broker-dealers, as required by Section 15(b) 
of the Exchange Act [15 U.S.C. 78o(b)]. 
13 1. 
By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 
Section 15(a)(l) of the Exchange Act [15 U.S.C. 
fj 78o(a)(l)]. 

COUNT V 

Violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 

132. Paragraphs 1 through 113 are re-alleged and incorporated by reference as though 
fully set forth herein. 
133. At all times relevant to this Complaint, and as more hlly described in paragraphs 
1 through 113 above, Defendants Hyatt, Johnson, and HJ Capital acted as investment advisers to 
the HJ Capital LLCs and their investors. 
134. As more fully described in paragraphs 1 through 1 13 above, at all times alleged in 
this Complaint, Defendants Hyatt, Johnson, and HJ Capital, while acting as investment advisers, 
by use of the mails, and the means and instrumentalities of interstate commerce, directly or 
indirectly, knowingly, willfully or recklessly: (i) employed devices, schemes or artifices to 
defraud its clients or prospective clients; and (ii) engaged in transactions, practices and courses 
of business which have operated as a fraud or deceit upon its clients or prospective clients. 
135. 
By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 
Sections 206(1) and 206(2) of the Advisers Act. [15 U.S.C. 
$5 80b-6(1) and 80b-6(2)]. 
COUNT VI 

Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 

136. Paragraphs 1 through 113 are re-alleged and incorporated by reference as though 
hlly set forth herein. 
137. At all times relevant to this Complaint, and as more fully described in paragraphs 
1 through 11 3 above, Defendants Hyatt, Johnson, and HJ Capital acted as investment advisers to 
the HJ Capital LLCs and their investors. 

138. Each of the Defendants, while acting as an investment adviser to a pooled 
investment vehicle, by the use of the means and instrumentalities of interstate commerce and of 
the mails, directly and indirectly, has engaged in transactions, practices, and courses of business 
which operate as a fraud or deceit upon investors in the HJ Capital LLCs. Defendants made 
untrue statements of a material fact or omitted to state a material fact necessary to make the 
statements made, in the light of the circumstances under which they were made, not misleading, 
to any investor or prospective investor in the HJ Capital LLCs, and otherwise engaged in acts, 
practices or courses of business that was fraudulent, deceptive, or manipulative with respect to 
any investor or prospective investor in the HJ Capital LLCs. 
139. 
By reason of the activities described herein, the Defendants violated Section 
206(4) of the Advisers Act [15 U.S.C. 
5 80b-6(4)] and Rule 206(4)-8 [17 C.F.R. 4 275.206(4)-81 
thereunder. 
RELIEF REQUESTED 
Wherefore, the SEC respectfully requests that this Court: 
I. 
Find that Defendants Hyatt, Johnson, and HJ Capital committed the violations charged 
and alleged herein. 
11. 
Grant Orders of Preliminary and Permanent Injunction, in a form consistent with Rule 
65(d) of the Federal Rules of Civil Procedure, permanently restraining and enjoining Defendants 
Hyatt, Johnson, and HJ Capital, their officers, agents, servants, employees, attorneys and those 
persons in active concert or participation with them who receive actual notice of the Order, by 
personal service or otherwise, and each of them from, directly or indirectly, engaging in the 

transactions, acts, practices or courses of business described above, or in conduct of similar 
purport and object, in violation of Section 17(a) of the Securities Act [15 U.S.C. 
5 77q(a)], 
Sections 10(b) [15 U.S.C. 
5 78jI and 15(a)(l) [15 U.S.C. fj 78o(a)(l)] of the Exchange Act and 
Rule lob-5 [17 C.F.R. 
5 240.10b-51 thereunder, and Sections 206(1), (2) and (4) of the Advisers 
Act [15 U.S.C. 
$5 80b-6(1), 80b-6(2) and 80b-6(4)] and Rule 206(4)-8[17 C.F.R. 5 275.206(4)-
81 thereunder. 
111. 
Issue an Order requiring Defendants Hyatt, Johnson, and HJ Capital to disgorge the ill- 
gotten gains that they received as a result of their wrongful conduct, including prejudgment 
interest. 
IV. 
With regard to Defendants Hyatt, Johnson, and HJ Capital's violative acts, practices and 
courses of business set forth herein, issue an Order imposing upon Hyatt, Johnson, and HJ 
Capital appropriate civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. 
5 
77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. 5 78u(d)(3)], and Section 209(e) of the 
Advisers Act [15 U.S.C. 
$5 80b-9(e)]. 
v. 
Retain jurisdiction of this action in accordance with the principals of equity and the 
Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 
decrees that may be entered or to entertain any suitable application or motion for additional relief 
within the jurisdiction of this Court. 

Grant appropriate emergency relief to prevent further secretion or dissipation of assets 
invested by investors. 
VII 
Grant an Order for any other relief this Court deems appropriate. 
Respectfully submitted, 
Gregory von Schaumburg, IL Bar No. 3 127782 
Robin Andrews, IL 
Bar No. 6285644 
Sally Hewitt, IL Bar No. 6193997 
Attorneys for Plaintiff 
U.S. SECURITIES 
AND 
EXCHANGE COMMISSION 
175 
W. Jackson Blvd., Suite 900 
Chicago, IL 60604 
Telephone: (3 12) 353-7390 
Facsimile: (312) 353-7398 
Dated: April 18,2008 

UNITED STATES DISTRICT COURT 
NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 
MICHAEL W ,  QOBSIN~ 

CLERK, U.S. WIGSR~GTG Q U R ~  

UNITED STATES SECURITIES 
AND EXCHANGE COMMISSION, 


CASENO.
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J /TTx
Plaintiff, (-;9 ,: 7 7 

JASON R HYATT, JURY DEMANDED 
JAY JOHNSON, and 

?'J? 6HYATT JOHNSON CAPITAL, LLC : 
&J:'?.. s -

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i 

Defendants. 

p*nycjq- -n  *--- 77 = - "  -
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COMPLAINT 

Plaintiff, the United States Securities and Exchange Commission ("SEC"), alleges as 

follows: 

NATURE OF THE ACTION 

1. This matter centers on a fraudulent scheme in which Jason R. Hyatt ("Hyatt"), Jay 

Johnson ("Johnson") and their company, Hyatt Johnson Capital, LLC ("HJ Capital") 

(collectively, "the Defendants"), fiom 2003 through the present, acting as unregistered broker- 

dealers and investment advisers, offered and sold to investors membership shares in at least ten 

Limited Liability Corporations ("LLCs") controlled and managed by HJ Capital ("HJ Capital 

LLCs"). The Defendants promised to use investor funds to purchase securities sold by LLCs 

managed by BCI Aircraft Leasing, Inc. ("BCI") on behalf of the HJ Capital LLCs. In reality at 

least $5.4 million was misappropriated, among other thing, to operate a Latin-themed restaurant 

in Chicago named De La Costa and to pay for Defendant Hyatt's personal expenses including 



numerous mortgage payments and substantial home improvements for two homes, as well as at 

least $155,000 worth of art and antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon 

Denali, and other vehicles. 

2. According to the Defendants' representations to investors, the BCI LLCs would 

use investor funds, along with other sources of funds, to purchase commercial aircraft on lease to 

commercial airlines. Investors were told that the BCI LLCs would make monthly payments to 

the HJ Capital LLCs from monthly lease income. HJ Capital would then distribute monthly 

payments to the individual investors from these payments. 

3. In addition, through the sale of a promissory note, the Defendants raised another 

$2 million from an individual investor, representing to that investor that his funds would be 

invested in a joint venture between BCI and HJ Capital called Clvcago Aviation Partners, which 

would use the funds to purchase a group of commercial aircraft. 

4. Based on these and other representations, from approximately 2003 through 

approximately 2007, the Defendants raised at least $24.5 million from approximately 120 

investors in at least twelve states. 

5. Unbeknownst to HJ Capital investors, BCI and its owner and CEO Brian 

Hollnagel ("Hollnagel") had been defrauding investors by, among other things, failing to use 

investor funds to purchase aircraft as represented (sometimes never purchasing aircraft at all), 

misappropriating investor profits in certain LLCs in order to fund other unrelated purchases on 

behalf of BCI, and using some investors' funds to make payments to other investors as purported 

returns. 

6. Also, unbeknownst to HJ Capital investors, from July 2006 to March 2007, 

Defendant Hyatt, through Defendant HJ Capital, misappropriated nearly $1.6 million in investor 



funds for his personal use, including at least $1 55,000 worth of art and antiques, a Maserati, a 

Mercedes, a Hummer H2, a Yukon Denali, and other vehicles. 

7. In August 2007, the SEC brought an emergency enforcement action in U.S. 

District Court in Chcago against BCI and Hollnagel. SEC v. Hollnanel et al., 1:07-cv-4538 (J. 

Bucklo). As a result of this action and an evidentiary hearing, the Court made findings of fraud, 

issued a preliminary injunction against BCI and Hollnagel, and ordered BCI to repay all 

investors, including the HJ Capital LLCs, within 60 days. Nevertheless, most of the HJ Capital 

investors have not been fully repaid. 

8. In February 2006, the Defendants offered and sold a note to an investor for $2 

million ("the $2 million investment"), purportedly to be invested in a BCI -HJ Capital joint 

venture called Chicago Aviation Partners to purchase a group of commercial aircraft. 

9. Instead, Defendant Hyatt, through Defendant HJ Capital, misappropriated this $2 

million investment to fund the startup costs of a Latin-themed restaurant in Chicago named De 

La Costa, which Hyatt co-owned with several other partners. 

10. When Defendant Johnson became aware of Hyatt's misappropriation of the $2 

million investment, Johnson chose to participate in a scheme with Hyatt to cover up his fraud, 

diverting at least $2.4 million that belonged to other investors to repay the note investor, thereby 

concealing the past misappropriation. At the request of the Defendants, BCI wired these funds 

directly to the investor. 

1 1. From 2003 to 2006, Defendant Hyatt, through Defendant HJ Capital, 

misappropriated nearly $1.8 million of investor funds in the form of undisclosed commissions 

from BCI in connection with the capital invested by HJ Capital LLCs in BCI offerings. BCI paid 

these commissions out of the investor funds it received from HJ Capital. 



12. Defendant Johnson knew or was reckless in not knowing that Hyatt was receiving 

undisclosed commissions, and yet failed to disclose this fact, and made other misleading 

statements to investors, in connection with subsequent offers or sales of securities. 

13. Among other things, the Defendants falsely assured investors that, as part of their 

management of the HJ Capital LLCs, they had performed and would continue to perform due 

diligence regarding BCI' s use of investor funds. 

14. Contrary to their representations, the Defendants did little, if anything, to verify 

the legitimacy of the BCI offerings. 

15. In fact, the Defendants received records indicating that BCI was diverting HJ 

Capital investor hnds for improper uses, specifically, diversion to undisclosed, materially 

different BCI LLCs. Defendants thus knew or were reckless in not knowing of BCI's improper 

diversion of investor funds. Despite this, the Defendants failed to either adequately review or 

take action to follow up on these red flags. The Defendants also failed to disclose this 

information to HJ Capital investors. 

16. It appears that the Defendants were still depleting the HJ Capital bank accounts as 

recently as March 2008 as evidenced by $20,000 in checks drawn against the HJ Capital account 

payable directly to Hyatt and signed by Johnson. 

17. Through the activities alleged in this complaint, Defendants Hyatt, Johnson, and 

HJ Capital have, and unless enjoined, will continue to, directly and indirectly, engage in 

transactions, acts, practices or courses of business which are violations of Section 17(a) of the 

Securities Act of 1933 (the "Securities Act") [15 U.S.C. 5 77q(a)], Sections 10(b) [15 U.S.C. 5 

78j(b)] and 15(a)(l) [15 U.S.C. 5 78o(a)(l)] of the Securities Exchange Act of 1934 (the 

"Exchange Act") and Rule lob-5 [17 C.F.R. 5 240.10b-51 thereunder, and Sections 206(1) , 



206(2) and 206(4) of the Investment Advisers Act of 1940 (the "Advisers Act") [15 U.S.C. 88 

80b-6(1) and 80b-6(2)] and Rule 206(4)-8 [17 C.F.R. 8 275.206(4)-81 thereunder. 

18. The SEC brings this action pursuant to Section 20(b) of the Securities Act [15 

U.S.C. 8 77t(b)], Sections 21(d) and (e) of the Exchange Act [15 U.S.C. $8 78u(d) and 78u(e)], 

and Section 209(d) of the Advisers Act [15 U.S.C. $8 80b-9(d)] 

JURISDICTION 

19. This Court has jurisdiction pursuant to Section 22 of the Securities Act [15 U.S.C. 

8 77~1,Section 27 of the Exchange Act [15 U.S.C. tj 78aa], Section 214 of the Advisers Act [15 

U.S.C. 8 80b-141, and 28 U.S.C. 5 1331. 

20. The acts, practices and courses of business constituting the violations alleged 

herein occurred withn the jurisdiction of the United States District Court for the Northern 

District of Illinois and elsewhere. 

21. The Defendants are inhabitants of, and transact business in, the Northern District 

of Illinois. 

22. The Defendants, directly or indirectly, have made, and are making, use of the 

mails or the means or instrumentalities of interstate commerce in connection with the 

transactions, acts, practices and courses of business alleged herein. 

DEFENDANTS 

23. Jason Hyatt, age 34, is a resident of St. Charles, Illinois. Defendant Hyatt is a 

founder and managing partner of HJ Capital and was formerly registered with as a securities 

broker. In a January 2008 deposition, Defendant Hyatt repeatedly invoked his Fifth Amendment 

privilege against self-incrimination, refusing to answer any questions about HJ Capital, BCI, or 

his personal finances. 



24. Defendant Hyatt worked for BCI and Hollnagel from at least 2001 until 2003 as 

the Director of Corporate Finance for BCI. 

25. Jay Johnson, age 48, is resident of Downers Grove, Illinois. Defendant Johnson is 

a founder and managing partner of HJ Capital. In a January 2008 deposition, Johnson repeatedly 

invoked his Fifth Amendment privilege against self-incrimination, refusing to answer any 

questions about HJ Capital. BCI, or his personal finances. 

26. Hyatt Johnson Capital, LLC is a privately-held Illinois corporation with its 

principal place of business in Downers Grove, Illinois. HJ Capital is operated out of the homes 

of Hyatt and Johnson, the only owners and managers. HJ Capital is owned and controlled 

equally by Hyatt and Johnson. 

OTHER RELEVANT PARTIES 

27. BCI Aircraft Leasing, Inc. ("BCI") is a privately-held Illinois corporation with its 

principal place of business in Chicago, Illinois. 

28. Brian N. Hollnagel ("Hollnagel"), age 34, is the Chief Executive Officer ("CEO") 

and founder of BCI and resides in Chicago, Illinois. 

29. Hollnagel and BCI are defendants in the SECYs litigation initiated on August 13, 

2007. SEC v. Hollnagel et al., 1 :07-cv-4538 (J. Bucklo). 

FACTS 


BACKGROUND 


30. Between 2003 and 2007, Defendants Hyatt, Johnson, and HJ Capital 

communicated with potential investors to solicit their purchase of membershp shares of LLCs 

controlled by HJ Capital. Such communications occurred variously in person, through telephone 

conversations, or in writing, or in other ways making use of interstate commerce. 



3 1. Between 2003 and 2007, the Defendants raised at least $22.5 million from 

approximately 120 investors through offers and sales of equity interests in at least 10 LLCs 

managed and operated by HJ Capital ("HJ Capital LLCs") to invest in LLCs operated by BCI. 

The Defendants told investors that these LLCs were formed to pool investor funds to invest in 

BCI LLCs, which were also offered to other investors in addition to the HJ Capital LLCs. 

32. The Defendants represented to investors that as part of the HJ Capital offerings, 

and in exchange for what was described as an "Asset Management Fee," HJ Capital would 

manage the HJ Capital LLCs as a fiduciary with including the authority to make investment 

decisions on behalf of the HJ Capital LLCs. 

33. The BCI LLCs would then make monthly distributions to the HJ Capital LLCs of 

fi-ee cash from the aircraft leases as monthly returns. The HJ Capital LLCs then made 

corresponding monthly payments to their investors as returns. Investors were also told that they 

would receive a percentage of the profits from the sale or refinance of the aircraft. 

34. The Defendants also represented that BCI would in turn use the funds from HJ 

Capital LLCs, along with other sources of funds, to purchase commercial aircraft on lease to 

commercial airlines. 

35. The Defendants received compensation in exchange for investment advice, i.e. the 

authority to make investment decisions on behalf of the HJ Capital LLCs. 

36. The Defendants exercised their authority to make investment decisions on behalf 

of the HJ Capital LLCs when, in July 2007, they sold all of the HJ Capital LLCs' interests in 

BCI LLCs back to BCI in exchange for a promissory note. Defendants made no disclosure to 

investors of conversion of their interests in the LLCs in exchange for a note until well after the 



transaction had been concluded. In addition, there are no documents releasing the individual 

investors' interests to HJ Capital or to BCI. 

37. In addition, through the sale of a promissory note, the Defendants raised another 

$2 million from an individual investor, representing to that note investor that his funds would be 

invested in a joint venture between BCI and HJ Capital called Chcago Aviation Partners, which 

would use the funds to purchase a group of commercial aircraft. 

38. Unbeknownst to HJ Capital investors, BCI and Hollnagel were engaged in a 

fraudulent scheme in which they improperly diverted a substantial portion of the approximately 

$83 million in investor funds they raised. The Defendants knew or were reckless in not knowing 

that BCI had improperly diverted investor funds. 

39. BCI and Hollnagel defrauded investors by, among other things, failing to use 

investor funds to purchase aircraft as represented (sometimes never purchasing aircraft at all), 

misappropriating investor profits in certain offerings in order to fund other unrelated purchases 

on behalf of BCI, and using some investors' h d s  to make payments to other investors as 

purported returns. To date, most HJ Capital investors have yet to be fully repaid. 

40. In August 2007, the SEC brought an emergency enforcement action in U.S. 

District Court in Chicago against BCI and Hollnagel. SEC v. Hollnagel et al. 1:07-cv-4538 (J. 

Bucklo). As a result of this action and an evidentiary hearing, the Court made findings of fraud, 

issued a preliminary injunction against BCI and Hollnagel, and ordered BCI to repay all 

investors, including HJ Capital investors, within 60 days. The Court, among other things, made 

factual findings that "It is undisputed that BCI made material misrepresentations in its LLC 

offering documents ..." to investors and that "[tlhere can be no doubt that BCI and Hollnagel 



acted with scienter." August 22,2007 Order, pages 7-8, SEC v. Hollnanel et al., 1:07-cv-4538 

(J. Bucklo), Docket No. 35. 

41. Despite the allegations in the SEC complaint and the Court's factual findings of 

fraud, the Defendants continued to deal with BCI and Hollnagel. Furthermore, the Defendants 

continued to mislead investors regarding, among other things, the true state of their investments. 

42. As part of the SEC's ongoing litigation against BCI and Hollnagel, the SEC 

issued subpoenas to Hyatt, Johnson, and HJ Capital. In response, Defendants Hyatt and Johnson 

both repeatedly asserted their Fifih Amendment privileges against self-incrimination in 

depositions and with respect to the production of documents. 

43. The SEC currently also has a pending Motion for Contempt against Defendant HJ 

Capital for its failure to produce HJ Capital documents, including emails and telephone records, 

in response to the SECYs subpoenas. See SEC v. Hollnanel et al., 1:07-cv-4538 (J. Bucklo), 

Docket No 102. 

44. On April 14,2008, during a hearing in SEC v. Hollnanel et al., 1 :07-cv-4538 (J. 

Bucklo), counsel for HJ Capital represented to the Court that a forensics consultant hired by HJ 

Capital had examined two computers used by Defendant Hyatt for HJ Capital business, and that 

this forensics consultant discovered that "scrubbing software," which is used to "wipe" or 

permanently erase files contained on computer hard drives, had been installed on these 

computers. It appears likely that the scrubbing software was used to destroy information 

potentially relevant to the SEC's subpoenas to the Defendants. 

45. Defendants Hyatt and Johnson also filed motions to quash regarding the SEC's 

subpoenas for their personal bank records, which the Court denied. As a result, the SEC only 

recently received certain bank records, from which the SEC discovered the existence of 



additional personal bank accounts for Hyatt and Johnson. These recently obtained personal bank 

records uncovered further evidence of fraud by Hyatt and HJ Capital. 

HYATT MISAPPROPRIATED NEARLY $5.4 MILLION IN 

INVESTOR FUNDS. 


Hyatt Diverted Nearly $1.6 Million in Investor Funds for Personal Use. 


46. From July 2006 through March 2007, Defendants Hyatt, Johnson, and HJ Capital 

raised nearly $1.6 million in investor funds through two HJ Capital offerings known as HJ 

United 2005 LLC and HJ T2 2005 LLC in which the Defendants offered and sold securities to 

investors ("the post-June 2006 investments"). 

47. The Defendants represented to investors in HJ United 2005 LLC and HJ T2 2005 

LLC that their funds would be invested in BCI LLCs known as BCI United 2005-20 LLC and 

BCI TUI LLC, respectively. 

48. Instead, the post-June 2006 investments were wired to separate entities controlled 

by Hyatt: UAL BCI 2006-1 LLC and TUI BCI 2005-17 LLC. Defendant Hyatt created these 

entities in July 2006. 

49. Between July 2006 and April 2007, virtually all of this nearly $1.6 million was 

transferred from UAL BCI 2006- 1LLC and TUI BCI 2005- 17 LLC to one of Defendant Hyatt's 

personal bank accounts. 

50. Defendant Hyatt then spent this nearly $1.6 million on personal expenditures, 

including $155,000 worth of art and antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon 

Denali, and other vehicles. 

51. Because this nearly $1.6 million was never invested in BCI LLCs, BCI's monthly 

distributions were insufficient to support these investors' monthly returns. 



52. To conceal his fraudulent scheme, Defendant Hyatt made monthly payments from 

his personal bank account to HJ Capital to create the appearance of monthly returns from the 

non-existent investments to make up this shortfall. 

53. At least in connection with those instances where investor money was diverted by 

Hyatt, false tax forms were issued to investors in regard to their supposed investments. 

54. Hyatt, Johnson and HJ Capital knew or were reckless in not knowing that false 

and misleading tax forms were being issued to HJ Capital investors. 

55. Defendant Hyatt used misappropriated investor funds to fund mortgage payments 

and substantial home improvements for two homes that he owns. 

Hyatt Diverted $2 Million in Investor Funds to Operate a Restaurant. 

56. In February 2006, the Defendants offered and sold a promissory note to an 

investor for $2 million ("The $2 million investment"). 

57. The Defendants told this investor (the "note investor") that his $2 million would 

be invested in a BCI -HJ Capital joint venture called Chicago Aviation Partners. The note 

investor was told that Chicago Aviation Partners would, in turn, use the $2 million investment to 

purchase a group of commercial aircraft. 

58.  Instead, Defendant Hyatt, through Defendant HJ Capital, improperly diverted this 

money to a Latin-themed restaurant in Chicago named De La Costa, which Hyatt co-owned with 

several other partners. 

59. Specifically, Defendant Hyatt used the $2 million investment to fund startup costs 

of the restaurant, which opened a few months later, in July 2006. 

60. These startup costs included over $400,000 for interior decorating and fixniture 

and over $1,000,000 in construction costs. 



The Defendants Committed Further Fraud to Conceal Past Instances of Fraud. 

61. Defendant Johnson was aware of Hyatt's misappropriation of investor funds. 

62. For example, Defendant Johnson was aware that Hyatt had directed the $2 million 

investment to Panacea Partners, LLC, the holding company of Hyatt's restaurant De La Costa. 

63. However, Defendant Johnson never took any steps to inform the note investor 

about the misappropriation of his $2 million investment. 

64. Defendant Johnson chose instead to participate in a scheme with Defendant Hyatt 

to cover up the misappropriation of the $2 million investment, specifically by improperly 

diverting other investors' funds to repay the note investor. 

65. In July 2007, BCI and the Defendants negotiated a purported buy out of all HJ 

Capital investor interests in BCI offerings. As a result of these negotiations between BCI and the 

Defendants, the Defendants purportedly caused the HJ Capital LLCs to sell their interests in the 

BCI LLCs back to BCI in exchange for a single promissory note. In September 2007, pursuant 

to an agreement between the Defendants and BCI, this July 2007 promissory note was then sold 

back to BCI in exchange for six aircraft and certain future cash payments to HJ Capital. 

66. Defendants did not disclose to investors the July or September 2007 transactions 

described in paragraph 65 above until after the September 2007 agreement was executed. 

67. Because BCI never received the $2 million investment, that specific investment 

was not included in the July and September transactions described in paragraph 65 above. 

68. In addition, because the nearly $1.6 million in post-June 2006 investments 

described in paragraphs 46 through 49 above were misappropriated by Defendant Hyatt, and not 

sent to BCI, these investments were also not included in the July and September transactions 

described in paragraph 65 above. 



69. In connection with the July and September transactions described in paragraph 65 

above, in January 2008, BCI paid $3.5 million to HJ Capital on behalf of the HJ Capital 

investors. 

70. Ths  $3.5 million payment belonged to the investors whose money had been 

invested, through the HJ Capital offerings, in BCI offerings. 

71. This $3.5 million payment was made in connection with BCI's purchase of the HJ 

Capital investors' interests, pursuant to the transactions described in paragraph 65 above. 

72. However, the Defendants instructed BCI to wire $2.4 million of this $3.5 million 

payment directly to the note investor, who had made the $2 million investment, and BCI did so. 

73. The Defendants failed to disclose to any HJ Capital investors that this $2.4 

million was misappropriated in order to repay the note investor. 

74. Certain HJ Capital investors confronted Defendant Johnson, asking whether the 

note investor was going to be repaid out of funds belonging to other HJ Capital investors. 

75. Defendant Johnson falsely assured these investors that their h d s  would not be 

misappropriated to repay the note investor, because the note investor's $2 million investment 

was sent to BCI, and thus this investment was part of the July and September transactions 

described in paragraph 65 above. 

76. Defendant Johnson, through Defendant HJ Capital, specifically represented to the 

note investor that this wire transfer from BCI was a repayment of his $2 million investment. 

77. However, the Defendants failed to disclose to the note investor that, despite the 

fact that this repayment was coming from BCI, his investment had been misappropriated for use 

by Mr. Hyatt's restaurant, and had never reached BCI or Chicago Aviation Partners. 



78. The Defendants also failed to disclose to the note investor that they had 

misappropriated this $2.4 million fi-om the other HJ Capital investors in order to repay the $2 

million investment. 

Hyatt misappropriated another $1.8 million in investor funds in the form of 
undisclosed commissions. 

79. Defendant Hyatt, through Defendant HJ Capital, misappropriated nearly $1.8 

million of investor funds in the form of undisclosed commissions from BCI in connection with 

funds invested by HJ Capital LLCs in BCI offerings. 

80. Defendants Hyatt and HJ Capital directly received commissions fi-om BCI in 

connection with seven of the ten LLCs in which HJ Capital made offers and sales of securities to 

investors, in exchange for HJ Capital's placement of its investors' pooled funds in BCI offerings. 

81. According to BCIYs accounting and tax records, these commissions were taken 

from the investors' 'funds. 

82. Based on the commission amounts disclosed to investors and the amount of HJ 

Capital investor hnds invested in BCI LLCs, HJ Capital disclosed that it would receive 

approximately $770,000 in total "organization fees," which functioned as commissions, between 

2003 and 2006. 

83. In reality, BCI paid over $2.5 million in total commissions to Defendants Hyatt 

and HJ Capital from 2003 to 2006, the vast majority of which were sent directly to Hyatt 

personally. Thus, nearly $1.8 million of the commissions received from BCI were not disclosed 

to investors. 

84. Defendant Johnson received and reviewed 2004 tax records issued by BCI 

indicating that approximately 11% in commissions was being paid in connection with certain HJ 



Capital LLCs' investment of capital in the BCI LLCs during 2004, accounted for as "syndication 

costs" for those investments. 

85.  In fact, according to the offering materials provided to investors in connection 

with HJ Capital LLCs that invested money in BCI LLCs during 2004, HJ Capital should not 

have received any commissions in two of the LLCs, and no more than 5.5% in commissions in 

other LLCs. 

86. In 2005, none of the tax records issued by BCI to any of the HJ Capital LLCs 

disclosed any commissions being paid by BCI, although the offering materials for all of those 

LLCs disclosed that HJ Capital would receive a 5.5% commission. 

87. In connection with subsequent offers and sales of securities, whose offering 

materials stated that HJ Capital would receive commissions of only 5.5%, Defendant Johnson 

failed to disclose to investors the fact that Hyatt or HJ Capital had taken excess commissions in 

prior offers and sales of securities. 

88. Although they received commissions to sell securities, none of the Defendants 

were registered with the Commission as broker-dealers during any times relevant to this 

Complaint. 

THE DEFENDANTS FALSELY ASSURED INVESTORS REGARDING 

BCI'S USE OF INVESTOR FUNDS. 


89. The Defendants made certain assurances to investors regarding the legitimacy of 

the BCI securities in which the HJ Capital LLCs were invested, without having any reasonable 

basis for such assurances. 

90. The Defendants made various statements to investors to assure them of the 

legitimacy of the BCI LLC investments, including but not limited to, falsely assuring investors 



that, as part of their management of the HJ Capital LLCs, they had performed and would 

continue to perform due diligence regarding BCI's use of investor funds. 

91. These and other false assurances provided comfort to investors that the 

Defendants had verified the legitimacy of the BCI securities: specifically, that BCI would use 

investor funds as represented. 

92. In fact, the Defendants did little if anything to verify the legitimacy of the BCI 

securities. 

93. In particular, the Defendants failed to take any action even though they had access 

to records BCI sent to HJ Capital that indicated that BCI was improperly diverting HJ Capital 

investor funds. 

94. For example, in one 2003 offering known as HJ A3 2003, over $2 million in HJ 

Capital investor funds were supposed to be invested in a BCI LLC known as BCI 2002-4, which 

owned three aircraft on lease to Airpost, the French post office. 

95. Instead, BCI invested the over $2 million from HJ A3 2003 into another BCI LLC 

known as BCI 2003-2, which purportedly owned only one aircraft. 

96. In fact, BCI 2003-2 did not even own any aircraft. BCI instead misappropriated 

all investor funds for this offering. 

97. As early as April 2004, Defendants Johnson and HJ Capital were aware that HJ 

A3 2003 was not invested in BCI 2002-4 as HJ Capital investors were told. Despite this, the 

Defendants continued to provide monthly written updates to HJ A3 2003 investors, falsely 

reassuring them that their funds were invested by BCI as represented. 



98. Despite receiving information that HJ Capital investor funds in other LLCs were 

also improperly diverted to other BCI LLCs, the Defendants continued to provide monthly 

written updates falsely reassuring investors that their funds were invested by BCI as represented. 

99. Despite the Defendants' promises of due diligence, and receiving information that 

investor funds were being improperly diverted to other LLCs, the Defendants continued to 

reassure investors that due diligence had been performed, providing monthly written updates 

falsely reassuring investors that their funds were invested by BCI as represented. 

100. In fact, after the filing of the SEC's complaint against BCI and Hollnagel, the 

Defendants went so far as to falsely assure investors that they and HJ Capital would make 

investors whole in the event that BCI was unable to. 

101. Furthermore, the Defendants did not even bother to obtain any written agreements 

confirming that the HJ Capital LLCs owned shares in the BCI LLCs or what BCI was actually 

doing with the HJ Capital LLCs' funds. 

102. The Defendants had no basis for the assurances they made to investors regarding 

the legitimacy of the BCI securities and BC17s use of HJ Capital investor funds. 

DEFENDANTS CONTINUE TO MANAGE INVESTOR ASSETS AND ARE IN A 

POSITION TO DISSIPATE INVESTOR FUNDS. 


103. In July 2007, the Defendants purportedly agreed to sell all of the HJ Capital 

investors' interests in BCI offerings, in exchange for a $22.7 million unsecured promissory note 

from BCI and approximately $2.35 million in cash. 

104. In September 2007, the Defendants purportedly exchanged this $22.7 million 

promissory note for ownership of six aircraft on lease, as well as specific future cash payments. 

105. The Defendants created a new subsidiary to own these six aircraft and take 

custody of cash payments fi-om BCI on behalf of investors. 



106. These aircraft are currently generating excess lease revenue and within the next 

month HJ Capital should receive $292,084 in excess monthly lease revenue, including $50,000 

on April 22nd, which will be deposited into a HJC Asset Holdings bank account controlled by 

the Defendants. 

107. The Proposed Defendants are currently attempting to sell these aircraft, which 

belong to investors. 

108. Hyatt used misappropriated investor hnds to fund mortgage payments and 

substantial home improvements for two of his three homes, and to fund most of the startup costs 

of his Chicago restaurant, De La Costa. 

109. It appears that the Defendants are still depleting HJ Capital funds as recently as 

March 2008, as evidenced by $20,000 in checks drawn against the HJ Capital account payable 

directly to Hyatt and signed by Johnson. 

110. In general, Defendants Hyatt and Johnson regularly took capital out of HJ Capital 

"whenever money was there." 

11 1. Through 2007, Hyatt was writing himself checks from De La Costa accounts. 

112. Hyatt also used investor funds to purchase at least $155,000 worth of art and 

antiques, a Maserati, a Mercedes, a Hummer H2, a Yukon Denali, and other vehicles. Hyatt has 

been attempting to sell at least two houses worth a total of at least $2 million and the restaurant 

De La Costa. 

1 13. Thus, in light of Hyatt's prior behavior, there is a continued risk that Hyatt may 

further misappropriate investor funds under HJ Capital's control. 



COUNT I 


Violations of Section 17(a)(l) of the Securities Act 


114. Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 

set forth herein. 

115. By engaging in the conduct described above, Defendants Hyatt, Johnson, and HJ 

Capital, in the offer and sale of securities, by the use of the means and instruments of 

transportation or communication in interstate commerce or by use of the mails, directly or 

indirectly, have employed devices, schemes and artifices to defraud. 

116. Defendants Hyatt, Johnson, and HJ Capital intentionally or recklessly made the 

untrue statements or omissions and engaged in the devices, schemes, artifices, transactions, acts, 

practices and courses of business described above. 

117. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 

Section 17(a)(l) of the Securities Act [15 U.S.C. 5 77q(a)(l)]. 

COUNT I1 


Violations of Sections 17(a)(2) and (3) of the Securities Act 


1 18. Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 

fully set forth herein. 

119. By engaging in the conduct described above, Defendants Hyatt, Johnson, and HJ 

Capital, in the offer and sale of securities, by the use of the means and instruments of 

transportation or communication in interstate commerce or by use of the mails, directly or 

indirectly, have: 

a. 	 obtained money or property by means of untrue statements of material fact 

or by omitting to state material facts necessary in order to make the 



statements made, in light of the circumstances under which they were 

made, not misleading; and 

b. 	 engaged in transactions, practices, or courses of business that operated or 

would operate as a fraud or deceit upon the purchasers of such securities. 

120. Defendants Hyatt, Johnson, and HJ Capital made the untrue statements and 

omissions of material fact and engaged in the devices, schemes, artifices, transactions, acts, 

practices and courses of business described above. 

121. Defendants Hyatt, Johnson, and HJ Capital at least negligently made the untrue 

statements or omissions and engaged in the devices, schemes, artifices, transactions, acts, 

practices and courses of business described above. 

122. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital have 

violated Section 17(a)(2) and (3) of the Securities Act [15 U.S.C. 5 77q(a)(2)-(3)]. 

COUNT I11 

Violations of Section 10(b) of the Exchange Act, and Exchange Act Rule lob-5 

123. Paragraphs 1 through 11 3 are re-alleged and incorporated by reference as though 

fully set forth herein. 

124. As more fully described in paragraphs 1 through 1 13above, Defendants Hyatt, 

Johnson, and HJ Capital, in connection with the purchase and sale of securities, by the use of the 

means and instrumentalities of interstate commerce and by the use of the mails, directly and 

indirectly: used and employed devices, schemes and artifices to defraud; made untrue statements 

of material fact and omitted to state material facts necessary in order to make the statements 

made, in light of the circumstances under which they were made, not misleading; and engaged inacts, practices and courses of business which operated or would have operated as a fraud and 

deceit upon purchasers and sellers and prospective purchasers and sellers of securities. 

125. Defendants Hyatt, Johnson, and HJ Capital knew, or were reckless in not 

knowing, the facts and circumstances described in paragraphs 1 through 1 13 above. 

126. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule lob-5 thereunder [17 C.F.R. ij 

240.1Ob-51. 

COUNT IV 


Violations of Section 15(a)(l) of the Exchange Act 


127. Paragraphs 1 through 1 13 are re-alleged and incorporated by reference as though 

fully set forth herein. 

128. At all times relevant to this Complaint, Defendants Hyatt, Johnson, and HJ 

Capital effected transactions in securities for the accounts of others, for which they received 

transaction based compensation in the form of commissions. 

129. Defendants Hyatt, Johnson, and HJ Capital made use of the mails and the means 

and instrumentalities of interstate commerce to effect transaction in and to induce or attempt to 

induce the purchase of securities. 

130. At all times relevant to this Complaint, Defendants Hyatt, Johnson, and HJ 

Capital were not registered with the Commission as broker-dealers, as required by Section 15(b) 

of the Exchange Act [15 U.S.C. 78o(b)]. 

13 1. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 

Section 15(a)(l) of the Exchange Act [15 U.S.C. fj 78o(a)(l)]. 



COUNT V 


Violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 


132. Paragraphs 1 through 113 are re-alleged and incorporated by reference as though 

fully set forth herein. 

133. At all times relevant to this Complaint, and as more hlly described in paragraphs 

1 through 113 above, Defendants Hyatt, Johnson, and HJ Capital acted as investment advisers to 

the HJ Capital LLCs and their investors. 

134. As more fully described in paragraphs 1 through 1 13 above, at all times alleged in 

this Complaint, Defendants Hyatt, Johnson, and HJ Capital, while acting as investment advisers, 

by use of the mails, and the means and instrumentalities of interstate commerce, directly or 

indirectly, knowingly, willfully or recklessly: (i) employed devices, schemes or artifices to 

defraud its clients or prospective clients; and (ii) engaged in transactions, practices and courses 

of business which have operated as a fraud or deceit upon its clients or prospective clients. 

135. By reason of the foregoing, Defendants Hyatt, Johnson, and HJ Capital violated 

Sections 206(1) and 206(2) of the Advisers Act. [15 U.S.C. $5  80b-6(1) and 80b-6(2)]. 

COUNT VI 


Violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 


136. Paragraphs 1 through 113 are re-alleged and incorporated by reference as though 

hlly set forth herein. 

137. At all times relevant to this Complaint, and as more fully described in paragraphs 

1 through 11 3 above, Defendants Hyatt, Johnson, and HJ Capital acted as investment advisers to 

the HJ Capital LLCs and their investors. 



138. Each of the Defendants, while acting as an investment adviser to a pooled 

investment vehicle, by the use of the means and instrumentalities of interstate commerce and of 

the mails, directly and indirectly, has engaged in transactions, practices, and courses of business 

which operate as a fraud or deceit upon investors in the HJ Capital LLCs. Defendants made 

untrue statements of a material fact or omitted to state a material fact necessary to make the 

statements made, in the light of the circumstances under which they were made, not misleading, 

to any investor or prospective investor in the HJ Capital LLCs, and otherwise engaged in acts, 

practices or courses of business that was fraudulent, deceptive, or manipulative with respect to 

any investor or prospective investor in the HJ Capital LLCs. 

139. By reason of the activities described herein, the Defendants violated Section 

206(4) of the Advisers Act [15 U.S.C. 5 80b-6(4)] and Rule 206(4)-8 [17 C.F.R. 4 275.206(4)-81 

thereunder. 

RELIEF REQUESTED 

Wherefore, the SEC respectfully requests that this Court: 

I. 

Find that Defendants Hyatt, Johnson, and HJ Capital committed the violations charged 

and alleged herein. 

11. 

Grant Orders of Preliminary and Permanent Injunction, in a form consistent with Rule 

65(d) of the Federal Rules of Civil Procedure, permanently restraining and enjoining Defendants 

Hyatt, Johnson, and HJ Capital, their officers, agents, servants, employees, attorneys and those 

persons in active concert or participation with them who receive actual notice of the Order, by 

personal service or otherwise, and each of them from, directly or indirectly, engaging in the 



transactions, acts, practices or courses of business described above, or in conduct of similar 

purport and object, in violation of Section 17(a) of the Securities Act [15 U.S.C. 5 77q(a)], 

Sections 10(b) [15 U.S.C. 5 78jI and 15(a)(l) [15 U.S.C. fj 78o(a)(l)] of the Exchange Act and 

Rule lob-5 [17 C.F.R. 5 240.10b-51 thereunder, and Sections 206(1), (2) and (4) of the Advisers 

Act [15 U.S.C. $ 5  80b-6(1), 80b-6(2) and 80b-6(4)] and Rule 206(4)-8[17 C.F.R. 5 275.206(4)-

81 thereunder. 

111. 

Issue an Order requiring Defendants Hyatt, Johnson, and HJ Capital to disgorge the ill- 

gotten gains that they received as a result of their wrongful conduct, including prejudgment 

interest. 

IV. 

With regard to Defendants Hyatt, Johnson, and HJ Capital's violative acts, practices and 

courses of business set forth herein, issue an Order imposing upon Hyatt, Johnson, and HJ 

Capital appropriate civil penalties pursuant to Section 20(d) of the Securities Act [15 U.S.C. 5 

77t(d)], Section 21(d)(3) of the Exchange Act [15 U.S.C. 5 78u(d)(3)], and Section 209(e) of the 

Advisers Act [15 U.S.C. $5 80b-9(e)]. 

v. 

Retain jurisdiction of this action in accordance with the principals of equity and the 

Federal Rules of Civil Procedure in order to implement and carry out the terms of all orders and 

decrees that may be entered or to entertain any suitable application or motion for additional relief 

within the jurisdiction of this Court. 



Grant appropriate emergency relief to prevent further secretion or dissipation of assets 

invested by investors. 

VII 

Grant an Order for any other relief this Court deems appropriate. 

Respectfully submitted, 

Gregory von Schaumburg, IL Bar No. 3 127782 
Robin Andrews, IL Bar No. 6285644 
Sally Hewitt, IL Bar No. 6193997 
Attorneys for Plaintiff 
U.S. SECURITIES AND 
EXCHANGE COMMISSION 
175 W. Jackson Blvd., Suite 900 
Chicago, IL 60604 
Telephone: (3 12) 353-7390 
Facsimile: (312) 353-7398 

Dated: April 18,2008