"I refuse to approve penalties against a defendant who remains defiantly mute as to the veracity of the allegations against him," U.S. District Court judge John Kane writes in an order (on view below). "A defendant's options in this regard are binary: he may admit the allegation or he may go to trial."
Sullivan joined the alleged Ponzi scheme company, Bridge Premium Finance, in February 2011 as its chief financial officer, according to the SEC's original complaint (also on view below). The company solicited money from "unaccredited and unsophisticated investors" to purportedly make short-term loans to businesses so they could pay their annual commercial insurance premiums, the SEC states. But in reality, it alleges, Bridge Premium Finance was a Ponzi scheme. The company paid the interest and redemptions due to investors "with money raised from other investors," the SEC alleges.
Turnock and Sullivan were caught in August 2012. In January, the SEC filed motions to enter final judgments (also on view below) against the two men that did not require them to admit or deny guilt. The final judgments are harshest on Turnock, the company's owner. The terms would require Turnock and Bridge Premium Finance to pay nearly $12.6 million in penalties, while Sullivan would be on the hook for about $224,000.
But Kane rejected the settlements.This isn't the first time Sullivan has been involved in money-related trouble.
In 1998, he was charged with theft for stealing from a laserdisc and DVD company where he was the bookkeeper. Court records show that he wrote checks to himself and made fraudulent credit card charges totaling close to $924,000. The company shut down and Sullivan pleaded guilty to a single count of felony theft. He was sentenced to ten years in prison, but ended up serving two after a courtroom apology.
In a letter to the court, Sullivan explained his actions: "I started taking the money from my company to try to make myself look better, to impress others, to gain admiration from friends, family and most importantly, my father." However, when Westword asked him about the case in 2010, he said the letter was part of his legal strategy.
Our 2010 story recounted several ex-girlfriends' experiences with Sullivan -- including a pattern of him borrowing money and using their good credit to live the high life. A group of them banded together in an attempt to stop him dubbed "Operation Cock Block."
We reached out to Turnock's attorney, Martin Berliner, who says "it's my understanding that the SEC is going to file a motion for reconsideration" of Judge Kane's denial of the settlement agreements. But Berliner notes that even if Kane agrees to reconsider, he could come to the same conclusion.
Berliner says settlement agreements that don't admit guilt are common because "if you admit the allegations of the complaint, then civil litigants who've lost money can file an action and say, 'They've admitted wrongdoing for the purposes of the SEC case.'"
Ongoing settlement negotiations have prompted Berliner to ask for several extensions to respond to the original complaint, which would entail Turnock admitting or denying guilt. The latest extension expires on Friday and Berliner says he will ask for another.
Continue to read the original complaint against Sullivan and Turnock, the proposed settlement agreements and the judge's denial of those agreements.
Securities and Exchange Commission v. Bridge Premium Finance, Michael J. Turnock and William P. Sullivan II
PLAINTIFF SECURITIES AND EXCHANGE COMMISSION'S UNOPPOSED MOTION TO ENTER FINAL JUDGMENT AS TO DEFENDANT WILLIAM P. SULLIVAN
PLAINTIFF SECURITIES AND EXCHANGE COMMISSION'S UNOPPOSED MOTION TO ENTER FINAL JUDGMENTS AS TO DEFENDANTS BRIDGE PREMIUM FINANCE, LLC AND MICHAEL J. TURNOCK
More from our Follow That Story archive: "Operation Cock Block target Bill Sullivan gets conned in the dating section of Craigslist."
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