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The former corporate takeover artist, who lives in Hillsborough's biggest house, says he is too broke to pay. A federal judge says he is lying.
By SCOTT BARANCIK
© St. Petersburg Times, published January 31, 2001
TAMPA -- Clutching a copy of the book The Perfect Storm, Paul Bilzerian slipped past a herd of news photographers Tuesday morning, rode the elevator to the fourth floor of the federal courthouse and calmly surrendered to a U.S. marshal.
"Hi," he said softly. "I'm here to report."
Eight stormy years after the Securities and Exchange Commission won a $62-million judgment against him for securities fraud, the agency has not received a penny. Nor have other creditors also owed millions. The reason? Bilzerian, who lives in Hillsborough County's largest home, says he is poor, with just $15,805 to his name.
Until recently, the Tampa Bay area's counterpart to Ivan Boesky and Michael Milken was able to make that claim stand up in court, despite living in a 36,000-square-foot mansion with an indoor basketball court and scoreboard, 21 bathrooms and a 6,000-square-foot guest house. Two separate bankruptcy filings lent credence to Bilzerian, who is not a lawyer but usually represents himself in court.
But earlier this month, a federal judge who says Bilzerian is lying lost patience. And as a result, Bilzerian, 50, is behind bars for the second time in his life.
The former corporate takeover artist may need more than one book to keep busy. Charged with contempt of court, he cannot post bail, and there is no time limit on his incarceration. Bilzerian is said to hold the keys to his own cell: Confess, the legal principle goes, and you will be freed. "It's a terrible waste," said Judith Starr, assistant chief litigation counsel at the SEC. "He never, ever, ever stops."
Bilzerian's battle with the SEC dates back to his brief but flashy career on Wall Street. A Harvard Business School graduate with little money of his own, Bilzerian developed a specialty: Using borrowed funds, he would attempt to take over a vulnerable company, get rejected, then make millions when the stock price shot up.
The enterprise was a bit too successful, as it turned out. In 1989, the government filed criminal charges, charging Bilzerian with making millions by secretly accumulating stock in his takeover targets.
"He lies," the judge in that case concluded.
Bilzerian paid a $1.5-million fine and ultimately served 13 months of a four-year sentence in Florida and Georgia prisons. He spent several additional months in detention at his lakefront mansion, which he had recently built.
Meanwhile, the SEC filed suit to recover Bilzerian's illegal profits. When the agency prevailed in 1993, the judgment was set at $62-million. With interest, the amount due today has reached about $100-million.
Growing up in a working class family in Worcester, Mass., it's unlikely Bilzerian ever imagined having that much money, much less owing it.
A high school dropout, Bilzerian joined the Army in 1968. According to a letter to a fellow recruit, he arrived at Fort Jackson, S.C., seven days before Christmas with 29 cents in his pocket and a copy of Of Mice and Men. He went to Vietnam and returned home with a Bronze Star.
After studying at Clark University in Worcester, Bilzerian hitchhiked west and later enrolled at Stanford University, he told the St. Petersburg Times in 1991. From there he went to Harvard Business School. Despite disdaining his money-hungry classmates, he graduated.
"I thought business couldn't care less for society," he said.
After graduation, Bilzerian used a loan from his father-in-law to buy a radio station in Pinellas Park, almost 3,000 miles away. When he was forced out by his colleagues, however, the case went to court.
Years later, that pattern -- working with borrowed money, and going to court -- would play out over and over in Bilzerian's career. When he bought the Singer Co. in 1988 and broke it up into pieces for sale, for example, more than a dozen lawsuits were filed.
A far stranger battle emerged in 1988 between Bilzerian and officials of the St. Petersburg Northeast Little League.
Bilzerian, whose sons had once played in the league, told league officials that if the their 5-, 6- and 7-year-old players raised $5,000 by selling goods door-to-door, he would match them. When their sales fell short by $52.25, however, Bilzerian refused to pay, and the Little League's vice president told the St. Petersburg Times he had "welshed" on a promise. Bilzerian sued the league official for slander, but the case was dismissed.
More than honor or a mere $5,000 was at stake when Bilzerian came to the federal courthouse in Tampa on Tuesday morning. Dressed casually in faded black jeans, a Brigham Young University golf shirt and white tennis shoes, and sporting his trademark moustache and sideburns, the husband and father of two seemed defeated as he faced more time in a jail cell.
"I've got nothing to say, to tell you the truth," he managed.
But it's more likely Bilzerian was running legal scenarios through his head as he awaited the U.S. marshal. Hours before, in a last-ditch attempt to remain free, he had faxed more than 70 pages of arguments to the federal judge who had ordered him to surrender. He decided not to ask the U.S. Supreme Court for relief, however.
"A waste of time," he said, shaking his head.
Indeed, when Bilzerian's wife, Terri Steffen, left the courthouse Tuesday afternoon, she was carrying a copy of The Perfect Storm. Perhaps her husband had more important things to do than read about someone else's tragedy.
- Information from Times researcher John Martin and Times files was included in this report. Scott Barancik can be reached at (813) 226-3404 or email@example.com.