Originally created 01/08/01

Using bankruptcy laws to great advantage



TAMPA, Fla. - Claiming nearly $140 million in debts and just $15,805 in assets, corporate takeover artist Paul Bilzerian has filed for bankruptcy - again.

Bilzerian, who lives in the Tampa Bay area's largest house and whose career as a corporate takeover artist was cut short by a jail term, first sought bankruptcy protection from his creditors in 1991. Judge Alexander Paskay finally closed that case in June after Bilzerian paid less than $400,000 to settle debt claims that exceeded $300 million.

"It was the biggest headache of any case that I've ever done," said Stephen Meininger, who served as the trustee's counsel in the case.

Now, just six months later, the 50-year-old Bilzerian again has filed for protection from creditors, claiming meager assets that include an estimated $100 in used clothing and a $5 Casio watch. And once more, he's acting as his own attorney, a role he's pulled off well.

Perhaps Bilzerian's greatest achievement so far has been staving off creditors who would like a piece of the 11-bedroom, 37,000-square-foot house he shares with wife Terri Steffen, 46, and other family members. Florida law has been helpful in that regard: Under the state constitution, said attorney Alan Gassman, a bankruptcy filer's primary house is protected from most creditors.

Judith Starr, assistant chief litigation counsel at the Securities and Exchange Commission, said Bilzerian has used other tactics to shelter his house, a Minnesota vacation house, stocks and other assets from creditors.

She said he has shuffled ownership of those assets between himself, Steffen and a family trust in the Cook Islands in the South Pacific.

Bilzerian did not return calls to his home or to Cimetrix Inc., the Salt Lake City software company of which he is president and chief executive.

Starr, whose agency is in litigation with Bilzerian over a 1993 judgment worth $62 million plus interest, said the purpose of Bilzerian's latest bankruptcy filing was obvious: to block a court-appointed receiver from finding out the nature and amount of his assets, which otherwise might be liquidated and distributed to creditors including the Securities and Exchange Commission.

"There clearly is no purpose to file except to disrupt the receivership," she said. "It sort of fits a pattern."

Bilzerian made a name on Wall Street in the 1980s as a so-called corporate raider, taking over companies such as Singer Co. before being convicted of securities fraud and conspiracy to defraud the government in 1989. He served 13 months in prison and paid a $1.5-million fine.

After his conviction, the SEC filed a civil suit, which Starr said the agency won despite repeated challenges. It has been fighting for payment from Bilzerian ever since. But the court's inability to get a handle on his assets has jammed the process.

Bilzerian's ability to shield his family's enormous home from creditors has made him something of a poster child for organizations opposed to Florida's special exemption. In the early 1990s, the home was even featured in a segment on the television news show "60 Minutes."