The Securities and Exchange Commission had one of the worst tense cases in its history.
In 1993, Paul Bilzerian, a corporate raider who had been found guilty of securities fraud and given a four-year prison sentence, paid a $62.3 million fine to the regulatory body.
But for the next 30 years, Bilzerian said he was poor, and the government only got about $550,000 from him. The fine went from $100 million to $180 million with interest.
The SEC had long thought that Bilzerian was hiding money and spent a lot of money trying to find it but failed. Up until now.
Feds and prosecutors in Los Angeles charged Bilzerian on Friday, saying he hid tens of millions of dollars in a weed business that was said to be run by his son, the Instagram lifestyle influencer Dan Bilzerian.
For many years, 74-year-old Paul Bilzerian has lived in St. Kitts and Nevis and fought the SEC at every turn. He defended himself in court by saying he had no money.
“How many bank accounts?” In 2014, he asked the Wall Street Journal, “Do you think I’d be stupid enough to have a bank account?”
Federal charges brought against Bilzerian on Friday say that he did not have any bank accounts. Instead, he put millions of dollars into Ignite International Brands Ltd., a cannabis and lifestyle products company based on his son’s character, a loud, high-stakes poker player with 32 million Instagram followers.
Police say that from 2018 to this year, the elder Bilzerian and his long-time manager Scott Rohleder secretly raised money for Ignite by using fake companies to send money to the company’s accounts.
In writing, it looked like Bilzerian’s son was Ignite’s CEO and in charge of all its business operations. But authorities say Bilzerian Sr. was really in charge of everything behind the scenes. Ignite is a company based in Canada that works out of Los Angeles. Until 2022, it was sold on the stock market.
Paul Bilzerian and Ignite were charged with planning to cheat the US government and with wire fraud and stock fraud. That same year, Rohleder was also Ignite’s top financial officer. He was charged with planning to commit wire and securities fraud and helping to make false tax returns.
He wasn’t charged with anything.
According to Martin Estrada, the U.S. Attorney for the Central District of California, this indictment shows a pattern of illegal behaviour that went on for a long time to avoid a regulator’s decision, trick investors, and cheat the IRS. “My office will keep using all the tools it has to protect investors and keep the economy of our country safe.”
Messages sent to Rohleder, who works as an attorney for both Ignite and Dan Bilzerian, were not answered right away. It wasn’t clear right away if Paul Bilzerian had hired a lawyer, and he couldn’t be reached right away.
Dan Bilzerian has gotten a lot of attention for the crazy and showy life he has shown online, with pictures and videos of him on yachts with women wearing skimpy clothes, shooting powerful guns, and playing poker.
For a long time, people have been wondering how the younger Bilzerian paid for his lavish lifestyle, but he has always been quiet about it. In 2014, he told the Journal that he had made $50 million via poker in a single year. He also said that his father gave him a $100 million trust.
Late last year, Dan Bilzerian filed for bankruptcy in Nevada for a holding company that ran a network of companies linked to Ignite.
As part of his long-running court battle with the SEC over the fine, Paul Bilzerian said that financial moves that one judge called “shenanigans” were actually legal ways to plan his estate.
The elder Bilzerian dropped out of high school but went on to graduate from Stanford University and Harvard Business School. He then worked on Wall Street during the buyout boom of the 1980s and became a famous corporate raider.
But he was charged with stocks fraud in 1988 because the SEC was trying to stop some of the bad things that were going on at the time. The next year, he was found guilty and given a four-year prison term, but he only served thirteen months. He insisted that he was innocent.
When he was found guilty, Bilzerian said he was worth about $50 million. When he got the 1993 fine from the SEC, he said he had lost all of his money on bad investments.
