A relief defendant cannot avoid an SEC enforcement action simply by asserting he owns the funds. A recipient of "ill-gotten gains," however acquired, must prove he has a legitimate claim to the property both in law and in fact to avoid forfeiture to the SEC. It is insufficient to claim the money is a loan or compensation for services.
What's Mine Is Mine. "Not So Fast," Says SEC
In SEC v. Messina, the SEC initiated an enforcement action against the head of an alleged pyramid scheme, Phil Xu, for defrauding investors of over $65 million. To reduce his assets, Xu made two transfers to his attorney, one for $200,000 purportedly for fees for services, and another for $5 million as an "uncategorized expense." Xu's attorney prepared a loan agreement for the $5 million transfer the following day.
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