Sun . 18 Sep 2018

Paul Bilzerian

paul bilzerian, paul bilzerian net worth
Paul Alec Bilzerian born 1950 is an American corporate takeover specialist12 Convicted of securities and tax laws violations relating to unsuccessful takeover attempts of various companies in the 1980s, Bilzerian served a prison sentence and was also ordered to disgorge his profits, leading him to bankruptcy and ongoing disputes with the Securities and Exchange Commission3 Bilzerian has spent the past 28 years maintaining that he is factually and legally innocent

Contents

  • 1 Career
    • 11 Failed corporate takeovers
    • 12 Singer Corporation
  • 2 Stock parking case
  • 3 Civil suit and bankruptcy
  • 4 Education and family
  • 5 References

Careeredit

One of Bilzerian's first business deals was an investment in a Tampa Bay-area radio station, WPLP, which he made with two Army colleagues from the Vietnam War who had experience in the broadcasting industry4 However, the station performed poorly, and after its bankruptcy in 1980 disputes broke out between Bilzerian and his two fellow investors, leading to a lawsuit by him against them1 In contrast, he was more successful in his real estate investments5 In 1984, he moved to Sacramento, California where his father-in-law and another business associate lived clarification needed

Failed corporate takeoversedit

While living in Sacramento, in 1985 Bilzerian embarked on his first two high-profile takeover attempts, one of New York clothing manufacturer Cluett Peabody & Company, and the other of Pittsburgh construction company H H Robertson6 Bilzerian raised his bid for the remaining 76% of Cluett Peabody in October7 In response, Cluett Peabody's board of directors adopted poison pill provisions, earning them public statements of derision from Bilzerian8 Cluett Peabody eventually accepted a competing merger offer by WestPoint Pepperell now WestPoint Home for $41 per share in cash or equivalent value of WestPoint Pepperell common stock; Bilzerian and his fellow investors agreed separately to sell their stake to WestPoint Pepperell for $3945 per share9

Bilzerian moved back to Florida in 19861 That July he and fellow investors William and Earle I Mack sons of New Jersey real estate developer H Bert Mack10 launched a takeover bid against the Hammermill Paper Company, purchasing about 33 million Hammermill shares at an average price of roughly $47 per share, and then offering $900 million $52 per share to purchase the remainder of the company Bilzerian's offer was ultimately rejected when Hammermill sold out to International Paper instead at $6450 per share, but Bilzerian and his fellow investors still made a profit of nearly $60 million from the deal11

Singer Corporationedit

In 1985, Bilzerian began what would ultimately be a successful takeover attempt against the Singer Corporation, a defense electronics manufacturer In October 1987, it came to light through SEC-mandated disclosures that a group of investors led by Bilzerian had purchased 21 million Singer shares in the preceding two months Singer seemed an unlikely target for a takeover: early reports cast doubt on the idea that the government would permit a hostile takeover of a defense contractor, and the company had already moved its headquarters from Connecticut to takeover-hostile New Jersey in an attempt to fend off a previous takeover by T Boone Pickens5 In January 1988, Pickens provided $150 million in additional financing, allowing the Singer deal to go through12

Bilzerian's unexpected success was attributable to several factors Singer chairman Joseph B Flavin had died in early October, leaving the company without strong leadership to fight off the takeover attempt The Black Monday crash less than two weeks later spooked competing investors13 Finally, the Omnibus Budget Reconciliation Act of 1987 included provisions to disallow sales of assets in certain acquired businesses to be treated as capital gains for tax purposes, making future takeover bids less attractive; however, takeover bids like Bilzerian's which were already outstanding on the date of the Act's passage were exempted from this tax increase13

Stock parking caseedit

Bilzerian's high-profile takeover attempts led to SEC scrutiny of his deals, specifically as to whether investment groups he controlled had concealed the extent of their holdings in the companies which they targeted for takeovers13 In May 1988, the SEC began a probe against Edward J DeBartolo, Sr to determine whether DeBartolo had illegally aided Bilzerian's hostile takeover attempts through "stock parking", in which one party purchases shares in coordination with another in order to keep legal ownership separated and avoid either party's holdings exceeding disclosure thresholds14 Then, in December 1988 Rudy Giuliani announced that Bilzerian had been indicted in Manhattan by a federal grand jury on charges including securities and tax fraud The charges concerned his takeover attempts against Cluett Peabody, H H Robinson, Armco, and Hammermill15

In January 1989, Bilzerian pleaded not guilty to the charges amidst growing public controversy and demanded a speedy trial to clear his name There were, broadly speaking, two different camps of opinion on Bilzerian's actions Much of the public had a negative view of corporate takeovers in general and saw Bilzerian's activities as "greenmail", 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 However, others saw Bilzerian as guilty of nothing but making a profit in genuine-but-failed takeover attempts which benefited all investors1 In an article in New York magazine, Christopher Byron questioned the entire basis of the case against Bilzerian, describing it as fueled by "Puritan envy" He further stated that the Department of Justice's primary motivation for the case was not the prosecution of wrongdoing but rather the need to justify its earlier unpopular plea bargain with Boyd Jeffries of Jefferies & Company, which would see Jefferies avoid any jail time at all in exchange for the opportunity to "drag some headline-sized names through the mud"16

After two days of deliberations in June, the jury found Bilzerian guilty on nine counts including conspiracy, making false statements, and securities and tax law violations17 In September, Judge Robert Joseph Ward sentenced Bilzerian to four years in prison and a fine of $15 million Bilzerian was permitted to remain free pending appeal18 Bilzerian's appeal came before the Court of Appeals for the Second Circuit, which in January 1991 ruled against him, finding no merit in his argument that his trial had been unfair19 His sentence was set to begin in December 1991 at the Federal Prison Camp, Eglin in Fort Walton Beach, Florida20 Bilzerian was released from prison in January 1993 to serve out his sentence under house arrest21 Bilzerian has also maintained that the Court of Appeals for the Second Circuit refused to address two unanimous United States Supreme Court decisions that mandated that Bilzerian's conviction be reversed22 After Bilzerian's release from prison, he went on to become president of a Utah-based software company called Cimetrix23 However, in 2002, the government confiscated Bilzerian's ownership in Cimetrix and eventually drove the company from several years of high sales growth and profitability to the verge of bankruptcy

Civil suit and bankruptcyedit

Simultaneously with the criminal charges, the SEC announced in May 1989 that it would file a civil suit against Bilzerian in an effort to force him to disgorge the profits from the takeover attempts24 In 1993, a federal judge ruled in favor of the SEC and ordered Bilzerian to disgorge $331 million of profits, plus interest25 The total amount to be disgorged was thus $62 million In January 1994, Bilzerian also filed an appeal against the civil judgment in the Court of Appeals for the District of Columbia26 However, in July the court rejected his civil appeal as well27

Due to the size of the fines against him, Bilzerian first filed for bankruptcy in 1991 Bilzerian emerged from that bankruptcy having paid roughly $400,000 in settlement of debts exceeding $300 million28 In 1999 he tried to put his house up for sale in the prestigious Avila neighborhood of Tampa, Florida, and at one point even Mike Tyson was reportedly interested in buying2930 He filed for bankruptcy again in January 2001, declaring his assets of $15,805 against $140 million in debts Under Florida Bankruptcy Law, the value of his primary residence was protected from creditors The SEC alleged that Bilzerian was using bankruptcy as a tactic to block creditors from finding out the true value of his assets28 Later in the month, a federal judge ordered Bilzerian imprisoned for contempt of court due to his failure to disclose his assets31

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 corporations32 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 Bilzerian was critical of the deal, describing it as the SEC using him "as a hostage to extort money" from his wife31 In May 2004, Steffen sold her residence for $255 million to a partnership controlled by a Belgian businessman; SEC attorneys approved the unusually low price3 According to court documents filed in 2006, Steffen's parents purchased a 99% interest in that partnership three weeks later33

Education and familyedit

Bilzerian was born in Miami, Florida, but grew up in Worcester, Massachusetts He is an Armenian American34 His father, a civil servant, and his mother later divorced, leading to troubled teenage years for Bilzerian; he would later describe himself as a "juvenile delinquent"1 Called into the principal's office of his high school one day in 1968 for violating the dress code by wearing blue jeans, Bilzerian impulsively responded by dropping out of school4 However, after serving in the Vietnam War and earning a Vietnamese Gallantry Cross, Bronze Star Medal, and Army Commendation Medal,3 he turned his life around, earning a Bachelor of Arts with honors from Stanford University in 19751 Bilzerian entered Harvard Business School that same year He was unsure about his choice to attend, having passed on offers of admissions to several law schools in order to enroll at HBS4 After his graduation, Bilzerian married Stanford classmate Terri Steffen in 1978, and moved with her to St Petersburg, Florida1

Bilzerian has two sons, Adam and Dan Bilzerian Adam attended Gaither High School, where he represented his school in tennis35 Angered by the government's treatment of his father, Adam abandoned his dream of becoming an Army Green Beret32 After graduating from Vanderbilt University, he moved to Saint Kitts and Nevis in 2007 and became a citizen there, relinquishing his United States citizenship in the process3236 Both Adam and Dan went on to careers as professional poker players; Norman Chad nicknamed them the "Flying Bilzerian Brothers" for their performance in the 2009 World Series of Poker37 Adam also wrote a book about his experiences, which the Midwest Book Review's Small Press Bookwatch reviewed favorably as "a well-versed list of grievances with the powers that be in America, making for an intriguing read through and through"38

In June 2014, a Bloomberg News report incorrectly stated that Paul Bilzerian had become one of the licensed service providers who processed applications for the same Saint Kitts and Nevis citizenship-by-investment program which his son had used The report also stated that Bilzerian had gone on to process a citizenship-by-investment application for Bitcoin investor Roger Ver, and that the two men had co-launched a website through which customers could use Bitcoins to pay for the fees and the real estate purchase in the citizenship-by-investment program39 The government of Saint Kitts and Nevis responded in a statement the following week that Bitcoin was not an acceptable payment method for participation in the program40

Referencesedit

  1. ^ a b c d e f g Reed, Ted 1989-01-15 "Bilzerian Court Fight May Be A Long One" Chicago Tribune Retrieved 2012-11-09 
  2. ^ "Who in the world lives there" St Petersburg Times 1995-09-24 Retrieved 2013-01-06 
  3. ^ a b c Testerman, Jeff 2005-09-04 "Tampa mansion at center of sprawling tax dispute" St Petersburg Times Retrieved 2012-11-09 
  4. ^ a b c Cowan, Alison Leigh 1987-05-24 "Corporate Raider: Paul Bilzerian; a scrappy takeover artist rises to the top" The New York Times Retrieved 2012-11-10 
  5. ^ a b Gellene, Denise 1987-10-30 "Bilzerian Group May Try Takeover of Singer" Los Angeles Times Retrieved 2012-11-09 
  6. ^ "Bilzerian bid again brings suit" The Sacramento Bee 1985-07-10 Retrieved 2012-11-09 
  7. ^ "Bilzerian ups offer for Cluett" The Sacramento Bee 1985-10-16 Retrieved 2012-11-09 
  8. ^ "Bilzerian scores Cluett action as 'self-serving'" The Sacramento Bee 1985-10-24 Retrieved 2012-11-09 
  9. ^ "Acquisition may mean diversification" The Robesonian 1985-11-06 Retrieved 2012-11-09 
  10. ^ New York Times: "HAMMERHILL GETS BID OF $722 MILLION" by JOHN CRUDELE July 25, 1986
  11. ^ Greiff, James 1986-08-12 "Hammermill finds its 'white knight'" St Petersburg Times Retrieved 2012-11-09 
  12. ^ Cole, Robert J 1988-01-07 "Bilzerian's Singer Bid Aided by Pickens Loan" The New York Times Retrieved 2012-11-09 
  13. ^ a b c Cowan, Alison Leigh 1988-08-24 "How Bilzerian Scored at Singer" The New York Times Retrieved 2012-11-09 
  14. ^ "SEC Probe Checks Possible DeBartolo, Bilzerian Ties" Los Angeles Times 1988-05-14 Retrieved 2012-11-09 
  15. ^ Richter, Paul 1988-12-22 "Corporate Raider Bilzerian Charged With Stock Fraud" Los Angeles Times Retrieved 2012-11-09 
  16. ^ Byron, Christopher 1989-06-12 "Trials of a bungling raider" New York Retrieved 2012-11-09 
  17. ^ "Bilzerian Guilty On 9 Counts In Securities Case" Philadelphia Inquirer 1989-06-10 Retrieved 2012-11-09 
  18. ^ Paltrow, Scot J 1989-09-28 "Bilzerian Gets $15-Million Fine, 4-Year Prison Term" Los Angeles Times Retrieved 2012-11-09 
  19. ^ Haller, Vera 1991-01-04 "Appeals Court Upholds Conviction of Corporate Raider Paul Bilzerian" Associated Press Retrieved 2012-11-09 
  20. ^ Craddock, John 1991-11-02 "A resigned Bilzerian prepares for prison" St Petersburg Times Retrieved 2012-11-09 
  21. ^ "Raider must stay in home" The Prescott Courier 1993-01-17 Retrieved 2012-11-09 
  22. ^ https://supremejustiacom/cases/federal/us/515/506/casepdf; https://wwwlawcornelledu/supct/html/92-5129ZOhtml
  23. ^ Trigaux, Robert 1999-03-15 "No time to rest for Paul Bilzerian" St Petersburg Times Retrieved 2012-11-09 
  24. ^ "SEC Plans To File Civil Suit Against Bilzerian" Associated Press 1989-04-18 Retrieved 2012-11-09 
  25. ^ "Ex-corporate raider must pay restitution" Houston Chronicle 1993-02-02 Retrieved 2012-11-09 
  26. ^ "Bilzerian appeals order to pay $62 million" Associated Press 1994-01-14 Retrieved 2012-11-09 
  27. ^ "Bilzerian loses case" Boston Globe 1994-07-23 Retrieved 2012-11-09 
  28. ^ a b Barancik, Scott 2001-01-05 "Ex-corporate raider files for bankruptcy" St Petersburg Times Retrieved 2012-11-09 
  29. ^ Trigaux, Robert September 17, 2014 "Years after $62 million judgment, Paul Bilzerian is alive and well on Caribbean island" TampaBaycom Retrieved August 17, 2017 
  30. ^ Duryea, Bill 1999-02-19 "From one big house to another" St Petersburg Times Retrieved 2012-11-09 
  31. ^ a b Barancik, Scott 2002-02-05 "Truce" St Petersburg Times Retrieved 2012-11-09 
  32. ^ a b c Barancik, Scott 2001-06-22 "FBI agents raid Bilzerian home" St Petersburg Times Retrieved 2012-11-08 
  33. ^ Coats, Bill 2006-04-14 "Bilzerian mansion stays in family" Tampa Bay Times Retrieved 2012-11-09 
  34. ^ "Paul Bilzerian - Dan Bilzerian's MY father" in Armenian Dan Bilzerian on YouTube 27 April 2014 
  35. ^ "Boys tennis roundup" St Petersburg Times 2001-04-21 Retrieved 2012-11-08 
  36. ^ Abrahamian, Atossa 2012-02-12 "Special Report: Passports for a price" Reuters Retrieved 2012-11-08 
  37. ^ Kaplan, Michael April 2010 "Laak and Esfandiari shoot guns" Poker Player Magazine Retrieved 2012-11-08 
  38. ^ "The Biography Shelf" Small Press Bookwatch October 2010 Retrieved 2012-11-08  Cites Bilzerian, Adam 2010 America: love it or leave it — so I left Libertad Publications ISBN 9780615360645 
  39. ^ Clenfield, Jason; Alpeyev, Pavel 2014-06-15 "'Bitcoin Jesus' Calls Rich to Tax-Free Tropical Paradise" Bloomberg News Retrieved 2014-07-10 
  40. ^ "Warning!" Saint Kitts and Nevis Citizenship by Investment Unit 2014-06-24 Retrieved 2014-07-10 

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