Stock Speculator Bilzerian Indicted on Counts Linked to Investment Conspiracies

Stock speculator Paul A. Bilzerian was indicted today by a federal grand jury in Manhattan on 12 counts of securities and tax fraud, conspiracy and making false statements to the government.

The indictment, announced by the U.S. attorney’s office, involves Bilzerian’s alleged illegal cover-up of details of four multimillion-dollar investments in 1985 and 1986. Bilzerian is also head of the defense company Singer Co., which he took over in January.

Bilzerian, 38, faces a maximum of five years in jail on each of the 12 counts, as well as a fine of $250,000 on each count or twice the gain derived from each alleged offense.

The government charges that Bilzerian made big profits through investments in the apparel company Cluett, Peabody & Co. and Hammermill Paper Co., both of which were later taken over by other parties, while failing to inform securities regulators about his partners and the extent of his holdings.

Stock Parking Charge

In two other cases, he is charged with concealing investments in H. H. Robertson Co. and Armco Inc. in an illegal stock parking scheme with the West Coast securities firm Jefferies and Co.

In stock parking, one party holds stock for another. The purpose of the practice is to conceal the true ownership of the stock. Parking can be used to avoid federal law that requires investors to make a public filing with the SEC if they acquire more than a 5% stake in a company.

Bilzerian said in a statement that he believes a jury will find him innocent of the charges. “I intend to fight this indictment, and I expect to be vindicated,” Bilzerian said.

“I believe this indictment is the price I am paying for having become publicly identified with takeovers,” he said.

Bilzerian comes from a middle-class Massachusetts family and lives primarily in Tampa, Fla. A Harvard Business School graduate, Bilzerian has said he made more than $100 million from real estate between 1979 and 1982 and additional sums in stock market speculation beginning around 1982.