I-Team: Convicted businessman re-emerges with new venture

News

A Las Vegas businessman with a checkered history is back on the radar of airline observers. Barry Michaels went to prison in the 1990s in connection with a proposed airline that never got off the ground.

At a recent aviation symposium, Michaels introduced himself as the founder and current CEO of Avatar Airlines.

If his name sounds familiar, it is because Michaels is no stranger to the I-Team. He was at the center of a 2009 I-Team expose on a project he called Family Airlines.

“We’re at the point where we have to raise money. You can’t buy airplanes without money,” Michaels said in 2009 about Family Airlines.

Last month, he told a Miami news affiliate something similar about Avatar Airlines.

“We’re at the money stage right now, and we hope to raise 300 million dollars and own our own aircraft,” he said.

Mr. Michaels is apparently at the same stage with Avatar today as he was with Family Airlines in 2009: raising money. Just as he did with Family Airlines, Michaels is promising almost unbelievably low fares.

“It ranges from 19 dollars to 99 dollars, our fares,” he said.

Part of Michaels’ plan to make those low fares work involves a fleet of jumbo jets flying to cities within the United States. Some industry observers are dubious.

“This isn’t a bad idea; it’s a ludicrous idea,” travel consultant Henry Harteveldt said.

He has been following Avatar Airlines and its predecessor Family Airlines. He says he doesn’t think the concept will fly.

“There certainly is demand in the market for more airline capacity, and competition always helps the consumer,” he said. “But, to fly big, expensive 747s around is just not a good idea. Plus, Mr. Michaels seems to have a checkered history when it comes to trying to raise money and run a business.”

Michaels’ history includes felony convictions in the mid 1990s for tax and securities fraud involving the original Family Airlines project.

The Securities and Exchange Commission (SEC) said Michaels participated in the fraudulent issuance of $5 million in stock and used investor money to fund a lavish lifestyle that included a $50,000 down payment on a house and his and hers Mercedes Benz automobiles.

Despite those criminal convictions, Michaels told the I-Team in 2009 that people could trust him.

“I do think they should,” he said. “Because, I think people change for one thing.”

Perhaps only Barry Michaels knows how much he’s changed, but Avatar Airlines seems to have changed very little from Family Airlines, which never got off the ground.

There is one difference. Though the SEC slapped Michaels with an injunction against selling unregistered stock, part of Avatar’s financing includes a crowdfunding component.

Whether donations to the Help Avatar Fly fund ever yield more than coffee cups and t-shirts remains to be seen.

The I-Team reached out to Barry Michaels through Avatar Airlines – by phone and e-mail. No one answered the phone. The I-Team is still awaiting a response to the email.

We also asked the SEC if the injunction against Mr. Michaels regarding stock would affect his ability to raise money via crowdfunding. An SEC spokesperson declined to comment.
 
The Federal Aviation Administration says Avatar has not filed a formal application for certification – only a pre-application statement of intent.

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