See also: Bill Sullivan, Operation Cock Block target, Charged In Ponzi Scheme
"The undisputed facts establish that Mr. Sullivan knew of the scheme at BPF at least by April of 2012, but continued to act in furtherance of BPF's operations," U.S. Senior District Court Judge John Kane wrote.
Sullivan has a history of money-related problems. In 1998, he was charged with stealing close to $1 million from a laserdisc and DVD company that employed him. Our 2010 story recounts the experiences of several of his ex-girlfriends, who said Sullivan had a habit of dating several women at once and borrowing money from them to live the high life.
In this case, Sullivan began working for Bridge Premium Finance in 2011, according to court documents. The company solicited money from investors that the federal Securities and Exchange Commission called "unsophisticated" to purportedly make short-term loans to businesses so they could pay their annual commercial insurance premiums. But the SEC alleged that the company was really a Ponzi scheme that was using money from investors to pay other investors the redemptions and interest they were due.The company was owned by a man named Michael Turnock, who hired Sullivan to do part-time accounting work for several of his businesses, including Bridge Premium Finance, according to Kane's ruling. In February 2012, Sullivan overheard Turnock "discussing the use of a new investor's payment to cover an existing note-holder's redemption because BPF did not have enough money to meet the redemption request."
Shortly thereafer, the ruling says, Sullivan became Bridge Premium Finance's chief financial officer. In April 2012, Sullivan "realized that BPF's assets could not cover its $6 million liability to investors," the ruling says. Though he expressed concerns to Turnock and others, Sullivan "nonetheless continued day-to-day operations at BPF as normal," accepting deposits from investors and telling them everything was okay.
The SEC started investigating Bridge Premium Finance in May 2012. Sullivan knew about the investigation, the ruling says, but kept working for Turnock. He also helped Turnock clean out his bank accounts. In early July, the ruling says, Sullivan accepted money from Turnock to establish a new insurance brokerage business.
In mid-July, the SEC interviewed one of Bridge Premium Finance's investors as part of its investigation. Afterward, that investor called Sullivan. According to the ruling, Sullivan told him, "Your money is all gone. This is a Ponzi scheme."
Sullivan resigned from Bridge Premium Finance on July 23 but continued to work for Turnock's other ventures, the ruling says. Sullivan asked Turnock to write a letter saying he had nothing to do with the fraud, which Turnock did. However, Kane didn't buy it."Mr Sullivan himself contradicts the letter's contents," Kane wrote in the ruling. "He admits that he knew of the fraud and completed day-to-day tasks for BPF in direct contravention of the letter's assertion that Mr. Sullivan shouldn't be 'held accountable for something in which [he] had no knowledge of or involvement in.'"
The ruling notes that Sullivan tried to argue that he was "overwhelmed" by the realization that Turnock might be operating a Ponzi scheme and felt he didn't have enough information to question him. Kane also found that was untrue. "Mr. Sullivan did have enough information to question Mr. Turnock's motivations," the ruling says. "He testified that he asked Mr. Turnock, 'How can this be?' and 'Where did the money go?'"
On September 19, Kane granted the SEC's request for summary judgment against Sullivan, siding with the feds. The next step is for the SEC to request a specific punishment for Sullivan, which could include paying a fine. The SEC has not yet done so.
Read Kane's ruling below.
Follow me on Twitter @MelanieAsmar or e-mail me at [email protected]
