Paul Bilzerian Indicted For Evading $180M SEC Judgment Through Cannabis Brand Ignite

Once a prominent figure in corporate takeovers, Paul A. Bilzerian was recently indicted by a federal grand jury in California for allegedly dodging a $180 million judgment issued decades ago by the U.S. Securities and Exchange Commission (SEC).

Prosecutors allege that Bilzerian funneled assets through Ignite International Brands, a cannabis and lifestyle company purportedly led by his son, Dan Bilzerian, to evade payment.

Behind the Scenes Control

According to the indictment, detailed by the U.S. attorney's office in Los Angeles, Bilzerian (74) falsely represented himself as indigent while exercising de facto control over Ignite. He allegedly used shell companies to channel millions of dollars into the company, overseeing its operations, strategy, marketing and fundraising. He also had significant influence over hiring and firing decisions of executives and board members.

Ignite’s CEO on paper was his son, D.B., a social media influencer known for his lavish lifestyle. However, prosecutors assert that the elder Bilzerian is the one pulling the strings. When federal authorities became aware of his involvement, Ignite issued a press release labeling Bilzerian and his longtime accountant, Scott Rohleder, as “unpaid consultants.”

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The indictment charges Bilzerian, Ignite International Brands and Rohleder with conspiracy to defraud the United States, conspiracy to commit wire and securities fraud and multiple counts of wire fraud. Dan Bilzerian has not been charged and is identified only by his initials in the court documents.

“This indictment alleges a long-running pattern of criminal behavior to avoid a regulator's judgment, mislead investors, and cheat the IRS,” stated U.S. Attorney Martin Estrada.

Bilzerian's Decades-Long Evasion Of SEC Judgment

Bilzerian's history of evasion stems from his 1989 conviction for securities and tax fraud, which led to a 1993 SEC judgment ordering him to pay over $62 million. Despite ongoing efforts, the SEC has only recovered about $547,000, while the total amount owed has ballooned to more than $180 million with interest.

Additionally, prosecutors accuse the defendants of misleading Ignite’s investors by inflating sales figures. In late 2020, Ignite reportedly issued false invoices totaling approximately $4.63 million for fake sales of vape products. When the supposed customer disputed the invoices, Ignite allegedly shifted the purchases to another Bilzerian-controlled entity to deceive auditors.

Ignite Execs Face Major Legal Consequences

If convicted, Bilzerian and Rohleder face up to five years in federal prison for each conspiracy count and up to 20 years for each wire fraud count. The SEC filed civil charges against Bilzerian, Rohleder and Ignite in connection with the alleged fraudulent activities.

The arraignment is scheduled for October 28, according to The Los Angeles Times, promising further developments in the case.

Photo: Courtesy of JRByron, WilliamCho by Pixabay.