SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16664 / August 28, 2000
SEC v. Bilzerian, Civil Action No. 89-1854 (SSH) (U.S. District Court for the District of Columbia)
The Securities and Exchange Commission announced today that on August 21, 2000 the Honorable Stanley S. Harris, U.S. District Judge for the District of Columbia, held Paul A. Bilzerian in civil contempt of two orders of disgorgement and prejudgment interest that had been entered against him. To purge the contempt, Judge Harris ordered Bilzerian to (1) begin paying $5,000 per month into the Registry of the Court, (2) file a sworn accounting of all assets held in his name and in the names of various family corporations, partnerships and a Cook Islands Trust, (3) account for income, expenditures and transfers of Bilzerian and these entities; (4) produce his tax returns and the tax returns of these entities for the past four years, and (5) produce formation and governing documents for his various entities. The Court ordered these conditions for purging Bilzerian's contempt without prejudice to a further order imposing additional conditions after receipt of Bilzerian's disclosures. The Court further ruled that if Bilzerian did not comply with the order to purge his contempt, he would be incarcerated until he did so.
The Court originally entered disgorgement and prejudgment interest orders totaling $62 million against Bilzerian in January and June 1993. The case arose out of a "greenmail" scheme engaged in by Bilzerian, through which he extracted large profits by making deceptive filings with the Commission in order to appear to be a credible takeover threat to two corporations. The corporations turned to friendly suitors, or "white knights" to rescue them from Bilzerian's purported hostile takeovers, which bought Bilzerian's shares at a substantial profit to Bilzerian. After unsuccessfully appealing the disgorgement judgment, Bilzerian attempted to discharge the Commission's judgment in his bankruptcy. Once the U.S. Court of Appeals for the Eleventh Circuit ruled against Bilzerian on this issue, the Commission brought this contempt action, alleging that Bilzerian had concealed his assets through a complex network of family corporations, partnerships, and an offshore asset protection trust formed under the law of the Cook Islands. Among assets held by the Cook Islands trust is the Tampa mansion formerly owned by Bilzerian. On being notified by the Commission that Bilzerian was attempting to sell the mansion, the Court previously ordered a freeze of any proceeds from the mansion's sale.
For further information, see Litigation Releases 15146, 14526, 14170, 13506.