SEC v. Bilzerian Case Analysis

In SEC v. Bilzerian, 112 F. Supp. 2d 12 (D.D.C. 2000), the federal district court in Washington, D.C., held Paul Bilzerian in civil contempt because he had paid nothing on a $62 million disgorgement judgment since 1993.

The sanction ran against Bilzerian personally. After he missed the purge conditions—$5,000 a month plus an accounting—the court appointed a receiver and, in SEC v. Bilzerian, 131 F. Supp. 2d 10 (D.D.C. 2001), ordered him jailed until he complied. No disgorgement order ever named the trust; a 2024 indictment alleged the SEC’s net recovery since 2001 was about $547,000 on a judgment above $180 million with interest.

The Securities Fraud and the $62 Million Judgment

Paul Bilzerian was one of the corporate raiders of the 1980s takeover era. A Manhattan federal jury convicted him in 1989 of securities fraud and conspiracy to defraud the United States: he had concealed his takeover-target stock accumulations by filing false SEC disclosures. He was sentenced to four years in prison and a $1.5 million fine; he paid the fine, and the court later reduced the sentence to twenty months.

The SEC filed a parallel civil action in the District of Columbia seeking disgorgement of the profits. The district court ordered Bilzerian to disgorge $33,140,787 in January 1993 and added $29,196,812 of prejudgment interest that June. The judgment totaled $62,337,599. The D.C. Circuit affirmed in 1994, rejecting his argument that disgorgement was a second punishment for the same conduct.

Bilzerian had already filed a Chapter 11 bankruptcy in 1991, and the disgorgement debt followed him through it. In 1998, the Eleventh Circuit held the judgment nondischargeable under Bankruptcy Code section 523(a)(2)(A) as a debt for money obtained by fraud. Bankruptcy usually strengthens a creditor’s hand against an offshore trust settlor, since federal bankruptcy law gives a trustee a ten-year lookback for self-settled trust transfers. For Bilzerian it ran the other direction: two filings produced no discharge, because a fraud judgment survives bankruptcy.

The Cook Islands Trust and the Family Entity Structure

The Paul A. Bilzerian and Terri L. Steffan 1995 Revocable Trust was, in the district court’s words, “a revocable trust located in the Cook Islands.” Bilzerian and his wife were its settlors. He was also its trustee and one of its beneficiaries. A revocable trust whose settlor is also its trustee defeats the point of offshore trust design: a settlor who can revoke the trust or direct himself as trustee has given up nothing.

The trust sat at the top of a family structure holding roughly $15.2 million. It owned Overseas Holding Company, a Cayman Islands corporation, and Bicoastal Holding Company, a Nevada corporation that received Bilzerian’s salary from Cimetrix, the public company he ran. A Nevada limited partnership, Overseas Holdings Limited Partnership, took title to the family’s Tampa mansion, more than 30,000 square feet, in March 1997, though the deed went unrecorded until January 1999.

The timeline of role changes told the court everything about control. On November 20, 1998, the court ordered Bilzerian to show cause why he should not be held in contempt. Within weeks, he was removed as trustee and as a beneficiary. His mother- and father-in-law became the trustees, and his sister-in-law became the trust protector.

The retained-control defects found in the other offshore trust contempt cases appear here in stronger form. The settlors in FTC v. Affordable Media held co-trustee and protector roles, and Stephan Lawrence kept the power to replace his trustees. Bilzerian was his own trustee outright, of a revocable trust whose terms he never showed the court, and the independent-looking replacements were his wife’s parents. A properly built Cook Islands trust runs the opposite way: an irrevocable deed, a licensed independent trustee, and a duress clause that strips the settlor of influence when a court order arrives.

The Contempt Finding and a Year in Jail

On August 21, 2000, the district court held Bilzerian in civil contempt of the 1993 disgorgement orders. He had admitted paying nothing toward the judgment in seven years. The court found he had transferred his assets into what it called a complex ownership structure of offshore trusts and family-owned companies, and that a debtor claiming poverty must prove inability to pay categorically and in detail. The declarations he offered from his wife and the trust’s attorney were phrased only in the present tense, and he refused to produce the trust instrument.

The purge conditions were modest measured against a $62 million debt: $5,000 monthly payments to the court registry, a sworn accounting covering every entity, tax returns, and the trust and company formation documents. He did not satisfy them.

On December 22, 2000, the court appointed a receiver to find and liquidate his assets, and in January 2001 it ordered him jailed until he complied. He had already filed a second bankruptcy petition on January 2, 2001, listing roughly $140 million in debts and no assets available for creditors. He surrendered to the U.S. Marshals on January 30, 2001, and the bankruptcy court dismissed the petition for cause on February 16.

Release came with a settlement his family made. On January 16, 2002, the court entered a consent judgment against Bilzerian’s wife and the family entities, ending roughly a year of custody. She agreed to sell the Tampa mansion and split the proceeds with the receiver, and Cimetrix stock, senior notes, and a Minnesota lot went to the receivership estate. The court found that his wife and the entities, by making those transfers, had purged his contempt.

The pattern matches how contempt actually operates in offshore trust cases: the sanction pressures the settlor personally, and the endgame is a negotiated payment rather than a turnover of trust assets. Courts do distinguish genuine inability from manufactured inability—in United States v. Grant, the court declined to hold a settlor in contempt because her compliance efforts were real. Bilzerian, who controlled his structure at every step, never had that defense available.

What the SEC Reached and What It Never Did

Thirty years of enforcement against Bilzerian produced a short recovery ledger.

What the pursuit reached. The receiver collected domestic assets: roughly half the proceeds when the Tampa mansion sold for $2.55 million in 2004, Cimetrix stock and senior notes, and a Minnesota lot. Court filings later showed the mansion’s buyer was a partnership acquired, weeks after the sale, by Bilzerian’s wife’s parents. The family kept the house.

What it never reached. The trust itself was never ordered to disgorge; every transfer in the settlement came from Bilzerian’s wife and the family entities. The SEC never filed a claim in the Cook Islands courts, where a U.S. judgment is unenforceable and the claim would start over under Cook Islands law.

What collecting cost. A 2014 Wall Street Journal review of the court records found the receivership had spent about $8.6 million to collect about $3.7 million. A 2024 federal indictment alleged that since 2001 the SEC had recovered a net of approximately $547,000, while the judgment balance, with interest, now exceeds $180 million.

A federal agency with unlimited staying power, armed with contempt, receivership, and bankruptcy tools, spent more on collection than it recovered. Every asset the court traced to the trust, from the Tampa mansion to the Cimetrix stock, was inside the United States.

What Bilzerian Shows About Government-Agency Creditors

A disgorgement judgment is a different creditor problem than a private money judgment. It survives bankruptcy when the underlying debt arises from fraud, it accrues interest indefinitely, and the agency behind it does not run out of litigation budget or patience the way a contingency-fee plaintiff does. A private creditor weighing enforcement against a Cook Islands trust faces a beyond-reasonable-doubt standard and out-of-pocket foreign counsel fees, and almost always settles. The SEC could afford to keep pressing for thirty years.

Agency speed is the other difference. In the agency matters we see, asset freezes arrive with the complaint itself, not after judgment, which leaves a person facing regulatory exposure a planning window measured in weeks rather than years. Bilzerian’s own sequence confirms the point in reverse: his trust was built in 1995, two years after the judgment, which is why every transfer into it drew scrutiny.

Even with those advantages, the SEC had no offshore assets to pursue. Its resources bought pressure on the man himself: jail, a receiver, decades of proceedings. The pressure ended in the family settlement rather than a court-ordered turnover from the trust.

The Settlor’s Price: A Second Federal Indictment in 2024

A federal grand jury in California indicted Bilzerian again on September 26, 2024. Six of the indictment’s nine counts name Bilzerian, including conspiracy to defraud the United States by evading the SEC judgment, and four wire fraud counts; a September 2025 superseding indictment charges him in five. Prosecutors allege he used shell companies with nominee owners to hide income and assets while filing false claims of poverty, and that he ran a public company through his son as nominal CEO.

By then Bilzerian was a resident of St. Kitts and Nevis.

The conduct that kept assets from the SEC for three decades—concealment, nominee ownership, sworn statements of indigence—is the conduct now charged as a crime. Cook Islands trusts can be established after a claim arises, and even after a lawsuit is filed, when the transfer is disclosed and the trust deed addresses the existing creditor through a Jones clause. What no structure can launder is telling a court there is nothing left while directing the entities that hold everything.

Read against the full body of Cook Islands trust case law, the case fits half the settled pattern: the settlors who were sanctioned retained control, funded during or after litigation, or concealed assets. The other half, a foreign trustee holding assets offshore that no U.S. order could reach, never applied to Bilzerian, because his trust held only U.S. property.

The offshore layer protected nothing: the family purged the contempt by handing the receiver the U.S. assets the structure held, some already sitting in the court’s registry. The conduct cost Bilzerian roughly a year in custody and, decades later, a federal criminal prosecution. What a Cook Islands trust protects is property a foreign trustee holds outside the United States, and that protection takes structure and candor: an independent trustee, no retained roles, full disclosure, and funding done before the government is the creditor.