Calgary financier takes jet firm to court over aircraft ownership

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The quality of the scotch on board isn't in dispute. But just about everything else is in a heated legal battle related to ownership stakes in three executive jets and a helicopter, pitting a Calgary investment banker against another of the city's well-connected players.

Tom Budd, a retired financier-turned-philanthropist, is suing Marc Bombenon, whose background includes work with the Alberta Cancer Foundation and World Presidents Organization, and his company, MBE Jet Ltd. Mr. Budd, along with his personal company, alleges that he was hoodwinked, having spent millions on the ownership positions and providing a $3.3-million loan to the company.

The defendants deny Mr. Budd's allegations, saying he didn't do proper due diligence on contracts and alleging, in turn, that he has threatened to "destroy" the company. None of the allegations have been proved in court, and Mr. Bombenon argues that some of the matters should be settled through arbitration.

Mr. Bombenon and his lawyers did not return repeated calls and e-mails seeking comment.

MBE's financial accounting is now under a microscope and the aircrafts have been grounded, as mandated by a court order.

According to the company's marketing material, MBE pledged to pamper those involved in the limited partnerships with shuttle service in a Cadillac Escalade, their favourite snacks and drinks during flights, and personalized monograms on cups, napkins and pillows.

Mr. Budd, who has filed affidavits from other partners, former MBE pilots and Mr. Bombenon's former assistant and director of operations, alleges in court documents that Mr. Bombenon took secret profit by overcharging partners for some of the jets, inflated expenses and did not properly pay for his own flights.

For example, past employees allege that there was a family trip to a U2 concert in Denver, which the defendants dispute, claiming that it was to an airline-industry event.

Mr. Budd, through investments in limited partnerships, began with a half-interest in one jet in 2008, then took a 25-per-cent stake in a second aircraft. That, he alleges, came after Mr. Bombenon told him other partners were complaining about his flying time.

Then, Mr. Budd says, he bought 50 per cent of a third jet as a favour, and lent MBE, via his company, what it took to cover the other half-stake because he was told that the aircraft company could get a good deal if it had the cash to act quickly. He maintains that, at most, he only wanted a combined 100 per cent – rather than the 125 per cent he held at this point – in an aircraft and that Mr. Bombenon told him that he would sell his excess interests to others.

Mr. Budd has many allegations, among them that he was not aware of millions in debt owing on one of the planes and that he was told that costs such as fuel came without markup. The loan agreement is also in dispute, though he acknowledges that he did not read the final agreement.

"Bombenon admitted (only when pressed) that he had secretly grossed up and pocketed the purchase price of [one of the planes]... and either grossed up the purchase price or received a rebate for another aircraft purchased with Budd or Budd's company," Marcia Garcia, MBE's former operations director, says in an affidavit. "Bombenon had been lying to the limited partners, overcharging them for their use of the aircraft, and pocketing the difference," she also said.

Mr. Bombenon agrees that he made a profit through the fixed fees. "However, Bombenon denies making any representations to suggest that this was the only manner in which either MBE or Bombenon made profit," his statement of defence says. He denies "any representations" that the aircraft and acquisition fees would come without markup.

As for the money owing on one of the planes, MBE and Mr. Bombenon say they had no responsibility to tell the plaintiffs, who should have done their due diligence.

Mr. Bombenon also alleges that after telling Mr. Budd that he was sticking to the terms of the contract, Mr. Budd exploded. "Budd was livid. He repeatedly threatened, pressured and cajoled Bombenon and MBE to change the deal. When Bombenon and MBE refused, Budd threatened to destroy MBE," he alleges in court documents.