LOS ANGELES
A corporate takeover specialist and convicted felon has been indicted on federal charges for his alleged years-long avoidance of a judgment – now exceeding $180 million – to the U.S. Securities and Exchange Commission (SEC) while running a cannabis and lifestyle brand company purportedly helmed by his social media influencer son – a company whose investors he allegedly cheated, the Justice Department announced Friday.
The nine-count indictment returned on Thursday charges the following defendants with one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud and securities fraud, and four counts of wire fraud:
- Paul A. Bilzerian, 74, a resident of St. Kitts and Nevis and a former U.S. citizen who was convicted in 1989 in the Southern District of New York of securities fraud and was sentenced to four years in federal prison for that crime.
- Ignite International Brands Ltd., a formerly publicly traded, Canada-based cannabis company that previously operated out of Los Angeles and whose CEO was Bilzerian’s son, a social media influencer identified in the indictment as “D.B.”
A third defendant charged:
- Scott Rohleder, 61, of Morrisville, North Carolina, Bilzerian’s long-time accountant who held various roles at Ignite, including chief financial officer, is charged with one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud and securities fraud, three counts of wire fraud, and three counts of assisting with the preparation of false tax returns.
“This indictment alleges a long-running pattern of criminal behavior to avoid a regulator’s judgment, mislead investors, and cheat the IRS,” said United States Attorney Martin Estrada. “My office will continue to use all tools available to protect investors and ensure the security of our nation’s economy.”
Defendants are presumed innocent unless proven guilty.
If convicted of all charges, Bilzerian and Rohleder would face a statutory maximum sentence of five years in federal prison for each conspiracy count and up to 20 years in federal prison for each wire fraud count.
Rohleder faces up to three years in federal prison for each tax fraud count.
Bilzerian’s SEC Case Overview
- 1989: SEC filed a civil action against Bilzerian for the same securities violations that led to his criminal conviction.
- 1993: SEC won civil judgments totaling $62.3 million.
- Since 1993: Bilzerian has evaded payment of these judgments.
- 2000: A federal court found him in contempt and appointed a receiver to collect assets.
- Current Status: The SEC has only recovered $547,000, while the total owed now exceeds $180 million with interest.
Bilzerian’s Alleged Scheme (2018-2024)
- Conspiracy: Bilzerian, Rohleder, and Ignite allegedly worked to prevent the SEC from collecting on judgments.
- Shell Companies: Bilzerian used multiple shell companies to conceal his assets and funnel millions into Ignite, hiding his involvement.
- False Financial Disclosures: Bilzerian claimed to be indigent, omitting significant assets to avoid paying the SEC.
Ignite Operations
- Public deception: Although Bilzerian and Rohleder controlled the company’s operations, including day-to-day management, strategy, and executive decisions, Ignite was in fact run by Bilzerian’s son, D.B.
- Misleading Public Statements: They concealed Bilzerian’s role in the company and falsely labeled him and Rohleder as “unpaid consultants.”
Fraudulent Revenue Reporting
- False Sales Figures: In 2020, the company inflated revenue by including unsold inventory, raising share prices and market value by $84 million.
- Backdated Sales: When questioned, Bilzerian sold $4.63 million in products to his own shell company, backdating the sale to falsify revenue.
Tax Fraud
- DB’s Tax Returns: Rohleder falsified D.B.’s tax returns, misclassifying an $8.5 million mansion as a rental property and manipulating stock sales to lower tax rates, resulting in a tax loss of $1.5 million to the IRS.
“This indictment sends a strong message that no matter how criminals try to hide, the FBI will aggressively investigate those who commit such financial fraud and shirk their obligation to make American taxpayers whole” said Akil Davis, Assistant Director in Charge of the FBI Los Angeles Field Office. “These individuals will now face justice for fraudulently profiting from this elaborate scheme and hopefully the public’s trust in a fair market will be restored.”
“The allegations against Mr. Bilzerian and his co-defendants paint a picture of a long-running, complex scheme to avoid their financial obligations,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Playing a shell game with money may work in the short term, but IRS Criminal Investigation is the best in the business at finding and following the trail that money always leaves and, especially when our skillsets are paired with those of our fellow law enforcement agencies, there is little chance of evading indictments such as this one.”
The SEC today filed civil charges against Bilzerian, Rohleder, and Ignite in connection with the facts alleged in this criminal case.
The FBI and IRS Criminal Investigation are investigating this matter.
Assistant U.S. Attorneys Alexander B. Schwab of the Corporate and Securities Fraud Strike Force and David H. Chao of the General Crimes Section are prosecuting this case.