Source: http://openjurist.org/127/f3d/237/bilzerian-v-united-states
Timestamp: 2015-11-30 21:07:59
Document Index: 773508627

Matched Legal Cases: ['§ 2255', '§ 78', '§ 1001', '§ 371', '§ 1001', '§ 1001', '§ 1001', '§ 1001', '§ 1001', '§ 1001']

127 F3d 237 Bilzerian v. United States | OpenJurist
127 F. 3d 237 - Bilzerian v. United States HomeFederal Reporter, Third Series127 F.3d
127 F3d 237 Bilzerian v. United States 127 F.3d 237
Paul A. BILZERIAN, Plaintiff-Appellant,v.UNITED STATES of America, Defendant-Appellee.
No. 1683, Docket 96-2920.
Argued June 23, 1997.Decided Sept. 30, 1997.
Paul A. Bilzerian, Pro se, Tampa, FL, for Plaintiff-Appellant.
Robert B. Buehler, Assistant United States Attorney for the Southern District of New York, New York City, for Defendant-Appellee.
Plaintiff appeals from a judgment of the United States District Court for the Southern District of New York (Ward, J.) denying his petition for a writ of habeas corpus pursuant to 28 U.S.C. § 2255. We agree with the district court and, therefore, affirm.
During 1985 and 1986, Paul A. Bilzerian was involved in an ongoing pattern of fraudulent stock transactions. The transactions involved the stock of four companies: Cluett, Peabody and Company, Inc. ("Cluett"), Hammermill Paper Company ("Hammermill"), H.H. Robertson Company ("Robertson"), and Armco Steel ("Armco").
In general, Bilzerian concealed his ownership of stock in these companies either by "parking" or "accumulating" the stock at a registered broker-dealer. In so doing, Bilzerian sought to evade SEC disclosure requirements and to avoid tax liability. Bilzerian also engaged in other criminal activities such as submitting false documentation to the SEC, filing false tax returns with the IRS, and exchanging fraudulent invoices with his stockbroker to further his scheme.
In particular, the transactions that involved Cluett stock included misrepresenting the source of funds used to buy Cluett common stock, secretly accumulating the stock through a nominee, and misrepresenting the nature of the purchase to the SEC. On a Schedule (D) form filed with the SEC Bilzerian represented that the Cluett stock he owned was purchased with "personal funds," when in fact the funds were raised from other investors with whom Bilzerian had a profit-sharing and guarantee-against-loss agreement. Bilzerian also failed to reveal the accumulation of Cluett stock to the SEC as well as his intention to buy the company.
Similarly, the Hammermill transactions involved misrepresentations to the SEC about the source of funds Bilzerian used to buy the Hammermill stock and the secret accumulation of Hammermill stock through a broker.
As for the Robertson and Armco transactions, Bilzerian engaged in "stock parking" shares of the two companies. This means that Bilzerian "sold" his stock in Robertson and Armco to a broker who held it for 30 days with the understanding that Bilzerian would buy the stock back for the purchase price plus interest and commissions. By this device, the broker became the "owner" of the stock in name only and was under no market risk. Through this "stock parking" scheme, Bilzerian could claim a tax loss from the "sale" of the stock, while never giving up his ownership.
In June 1989, Bilzerian was indicted in the United States District Court for the Southern District of New York (Ward, J.) on two counts of securities fraud in violation of 15 U.S.C. § 78j(b), five counts of making false statements to the Securities and Exchange Commission (SEC) in violation of 18 U.S.C. § 1001, and two counts of conspiracy to commit specific offenses and to defraud the SEC and Internal Revenue Service (IRS) in violation of 18 U.S.C. § 371. The securities fraud and false statement counts were based on the Cluett and Hammermill transactions. The conspiracy counts involved the Armco and Robertson transactions.
When Bilzerian was tried, a conviction under 18 U.S.C. § 1001 could be sustained if a jury found the conduct at issue met the requirements of either 18 U.S.C. § 1001(a)(1) or (a)(2). At the time, the law in this Circuit was that, while materiality was an element of the offense for a conviction under 18 U.S.C. § 1001(a)(1), it was an issue to be decided by the judge as a matter of law. A conviction under 18 U.S.C. § 1001(a)(2), on the other hand, did not require any finding of materiality at all. Accordingly, the district judge made a finding of materiality, as a matter of law, with respect to 18 U.S.C. § 1001(a)(1) and did not instruct the jury that materiality was an element of an offense under 18 U.S.C. § 1001(a)(2).