ASSET PROTECTION ISSUE:

How effective is tirelessly and shamelessly defending an obviously losing battle over the assets of an Offshore Trust?

CASE SUMMARY:

In 1991, Mr. Bilzerian was found guilt of securities fraud in connection with a “Greenmail” scheme.  In 1993 the court ordered Mr. Bilzerian to disgorge $63 million in profits from the fraud.  They were discouraged to find that he proved unable to produce the money which was held in a Cook Islands Trust and various related entities.

By 2000 he was fighting a contempt of court charge and continuing to maintain that he was unable to produce either cash or even records relating to the trust.

While managing to stay out of jail by the grace of the court over the holiday season of 2000, Mr. Bilzerian tried again to file a 2nd bankruptcy petition in January of 2001 .

TRIAL RESULT:

In 2001 the court reviewed in detail his failure to comply and found him deficient in his efforts.  They held him in contempt of court and ordered him to surrender to the U.S. Marshals Service on January 19th 2001.

In January of 2002 he was released from prison on a deal in which he agreed to sell his primary residence in Florida (protected under the FL homestead provisions).

He and his attorney then proceeded to file a series of frivolous lawsuits leading to a 2009 court hearing in which the court was so exacerbated by the attorney representing Bilzerian that they issued an order for him to withdraw the lawsuits and stop representation of Bilzerian or face a contempt charge himself.

LINK TO CASE DOCKET:

http://www.sec.gov/litigation/litreleases/lr16664.htm  (2001)

http://www.leagle.com/decision/In%20FDCO%2020101101945  (2009)

ASSET PROTECTION SUMMARY:

This case really represents the limits to which a Settlor of an Offshore Trust can go to defend, obscure and delay a final judgement against him.  The facts are convoluted and a reading of the file gives us a good idea of what type of character Mr. Bilzerian is.  In the end, he and his attorney’s games did not work.  Nevertheless, he was successful in avoiding jail for the most part for a long, long time and in that sense I would imagine he deemed his play a success.

TAKE AWAY:

While it is hard to condone any of the actions of Mr. Bilzerian, it cannot be denied that his having his Cook Islands Trust in place gave him leverage and time to launch a massive series of defenses and attacks.  If  nothing else, this case represents the power of possession of the assets – Possession really is 9/10ths of the law!

CategoryCase Summaries

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