Paul Bilzerian

 ( 1950 Births ) 

In May 1988, the SEC began a probe against shopping center developer Edward J. DeBartolo Sr. to determine whether DeBartolo had illegally aided Bilzerian's hostile takeover attempts through illegal "stock parking", in which one party purchases shares in coordination with another to keep legal ownership separated, beneficial ownership disguised, and avoid either party's holdings exceeding federal disclosure law thresholds. DeBartolo's name had been on the U.S. Justice Department's Organized Crime Principal Subjects list, discontinued years earlier. The following year DeBartolo settled a suit against him by the SEC, agreeing to give up $2.7 million in profits from Cluett Peabody and Hammermill Paper Co. stock transactions.

In December 1988, US Attorney for the Southern District of New York Rudy Giuliani announced that Bilzerian had been indicted in federal district court in Manhattan by a federal grand jury. The indictment was on 12 counts of conspiracy, false statements, tax fraud, and securities fraud, including illegal stock parking, and filing false Schedule 13(d) disclosure statements to illegally hide his ownership of stock in takeover targets Cluett Peabody and Hammermill Paper Company in secret accounts at Jefferies, "Defendant's Supplemental Memorandum of Law in Support of Motion for Reduction of Sentence Pursuant to Rule 35(b), US v. Boesky," April 13, 1989. and claims regarding failed takeovers of H. H. Robinson and Armco.

In January 1989, Bilzerian pleaded not guilty to the charges. At trial in May 1989, the government described him as having used "trickery and deceit" to enrich himself. "Government Opens Case Against Bilzerian," The New York Times, May 3, 1989. A widespread public view was that Bilzerian's activities were "greenmail", with him profiting by deceiving companies into believing they faced a hostile takeover attempt and scaring them into buying their stock from him at a high price. Some saw Bilzerian as guilty only of making a profit in genuine-but-failed takeover attempts which benefited all investors. In an article in New York magazine as the trial was proceeding, Christopher M. Byron questioned whether the case might stem from "Puritan envy". He further opined that the Department of Justice's motivation was at least in part a need to justify its earlier plea bargain with Boyd Jeffries. Daniel Fischel, at the time a professor at the University of Chicago Law School, argued Bilzerian's actions benefited the shareholders of Cluett Peabody and Hammermill Paper Company.

In 1993, a federal judge ruled in favor of the SEC and ordered Bilzerian to disgorge $33.1 million of profits, plus interest. The total amount to be disgorged was thus $62 million. In January 1994, Bilzerian filed an appeal against the civil judgment in the Court of Appeals for the District of Columbia. However, the court rejected his civil appeal as well.

In order to avoid paying the SEC the judgment that had been rendered against him, Bilzerian said that he did not have any money, and declared bankruptcy twice; in 1989 Bilzerian had estimated that his net worth was $81.4 million ($ in current dollar terms), but two years later, after he lost his civil suit to the SEC, he filed for bankruptcy and told the court that he had no assets "other than used clothing, a used Casio watch, and the like". As the SEC continued its efforts to have Bilzerian pay his fine, the judge issued an order in 2000 appointing a receiver to pursue his assets and ordered Bilzerian arrested for civil contempt as he failed to give a full account of his assets, saying he had "made no attempt whatsoever to pay the judgment." Bilzerian then moved to St. Kitts and Nevis to escape the jurisdiction of the U.S. government. He also obtained Armenian citizenship.

Bilzerian first filed for Chapter 11 bankruptcy in August 1991. He listed no assets, though the SEC and other creditors accused him of hiding his assets overseas. He emerged from that bankruptcy having disgorged what he said were all his non-exempt assets in settlement of debts that mostly consisted of claims by the government. In 1999, he tried to put his house in the prestigious Avila neighborhood of Tampa, Florida, up for sale. As the SEC continued its efforts to have Bilzerian pay his fine, the judge issued an order appointing a receiver over Bilzerian’s assets and ordered him arrested for civil contempt as he failed to give a full account of his assets. Bilzerian then filed for bankruptcy again in January 2001, declaring he had non-exempt assets of only $15,805 against $140 million in debts, most of which was for the government's disgorgement judgment. His home, which he called his Taj Mahal, was the largest home in Hillsborough County, a 36,000-square-foot lakefront mansion that included an indoor basketball court and scoreboard, movie theater, 21 bathrooms, elevator, nine-car garage, and a 6,000-square-foot guest house. However, under Florida Bankruptcy Law, the value of his primary residence was shielded from creditors. The SEC alleged that Bilzerian was using bankruptcy as a tactic to block creditors from finding out the true value of his assets, and Bilzerian argued that was a fabrication as the bankruptcy laws require full disclosure and a trustee to take possession of his assets.

On June 11, 2001, while Bilzerian was in prison, FBI agents raided his family's residence on the strength of a sealed warrant and seized computers, files, and a Beretta firearm. The raid appeared to be related to SEC contentions that Bilzerian had concealed his ownership of assets during bankruptcy proceedings by transferring them to trusts and shell corporations, which Bilzerian claimed was a fabrication. Bilzerian unsuccessfully sued the FBI agent for filing a sworn affidavit that contained mostly what Bilzerian alleged were false statements, as a federal judge dismissed his case. Bilzerian was released from prison in January 2002 pursuant to an agreement under which his wife, Terri Steffen would sell the residence and split the proceeds with the SEC, and transfer most of her wealth to the SEC. Bilzerian was critical of the deal, describing it as the SEC using him "as a hostage to extort money" from his wife. In May 2004, Steffen sold her residence for $2.55 million to a partnership controlled by a Belgian businessman; SEC attorneys approved the unusually low price. According to court documents filed in 2006, Steffen's parents purchased a 99% interest in that partnership three weeks later. In September 2024, Bilzerian and his accountant were charged in federal court with conspiracy to commit wire fraud and securities fraud for hiding assets in shell corporations to avoid paying the previous SEC fines.

In December 2024, The Wall Street Journal reported that Bilzerian had "been on the run from the Securities and Exchange Commission for so long 31 that he now owes the agency $180 million with interest."

In a parallel lawsuit, the SEC filed a civil action against him and others in the U.S. District Court for the Southern District of New York, alleging the fraudulent reporting of revenue.

• "How a Wall Street Felon Stayed in His Mansion." The Wall Street Journal, September 16, 2014