Appeals Court Upholds Conviction of Corporate Raider Paul Bilzerian
NEW YORK (AP) _ An appeals court has upheld the conviction of former Singer Co. Chairman Paul Bilzerian, a takeover specialist who received one of the stiffest sentences in Wall Street’s insider trading scandal.
Bilzerian, 40, of St. Petersburg, Fla., was convicted in June 1989 of nine counts of violating securities and tax laws. He was sentenced to four years in prison and a $1.5 million fine, but has been free on a $250,000 appeal bond.
A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan on Thursday rejected Bilzerian’s argument that he was denied a fair trial.
The corporate raider challenged a ruling by U.S. District Judge Robert Ward that Bilzerian could be cross-examined by prosecutors about his conversations with attorneys if he testified that he carried out the illegal transactions in ″good faith″ based on advice from lawyers.
″The attorney-client privilege cannot at once be used as a shield and a sword,″ the appeals judges wrote. ″A defendant may not use privilege to prejudice his opponent’s case or to disclose some selected communications for self-serving purposes.″
Bilzerian has the option of asking the full 2nd Circuit Court to review the ruling or appealing to the U.S. Supreme Court.
Bilzerian, who won control of Singer in 1988, was convicted of breaking securities and tax laws and making false statements in connection with three failed takeover attempts in 1985 and 1986.
The companies involved in the takeover attempts were apparel maker Cluett, Peabody & Co., building supplies maker H.H. Robertson & Co. and Hammermill Paper Co. Bilzerian also was charged in connection with another transaction involving Armco Inc. stock.
Bilzerian resigned as chairman of Singer in June 1989 on the same day that the Securities and Exchange Commission filed a civil lawsuit seeking to recover more than $31 million in illegal profits he earned from stock deals.
The main prosecution witness against Bilzerian was Boyd L. Jefferies, the former head of the West Coast brokerage firm that carried his name.
Jefferies, who was implicated by Ivan Boesky and who in turn implicated Bilzerian, pleaded guilty to securities law violations in 1987 and was sentenced to five years of probation and a $250,000 fine.
Jefferies testified that he agreed to help Bilzerian dodge SEC disclosure laws by letting him ″park″ stock - conceal its true ownership - with Jefferies & Co., allowing Bilzerian to secretly accumulate large stock positions in potential takeover targets.
Bilzerian admitted supplying misleading information to the SEC but explained his actions as either inadvertent or mistaken interpretations of the law. He also denied engaging in bogus securities trades to obtain illegal tax losses.