Citing ‘Walks Like A Duck,’ Federal Judge Orders Florida Securities Fraudster Jailed For Hiding Assets From SEC

A federal judge has ordered a Florida man to surrender to U.S. Marshals Jan. 25 after finding him in contempt of court for hiding assets from the SEC overseas.

Should Jamie L. Solow fail to surrender by 2 p.m., U.S. District Judge Donald M. Middlebrooks said, marshals will be dispatched to arrest him. Middlebrooks already has issued an order authorizing marshals to enter his Fort Lauderdale luxury condominium to take him into custody and transport him to a federal detention facility.

Middlebrooks also banned Solow from traveling outside the jurisdiction of U.S. District Court for the Southern District of Florida between now and the surrender date and ordered marshals to notify the court immediately if Solow does not surrender.

“The Eleventh Circuit adheres to the ‘time-tested adage: if it walks like a duck, quacks
like a duck, and looks like a duck, then it’s a duck,'” Middlebrooks said in his contempt ruling.

“Mr. Solow still lives a luxurious lifestyle, enjoying the benefits of the money he has made over the years, yet he refuses to repay the victims of his fraud. Such a situation cannot stand,” Middlebrooks said.

The “duck,” according to Middlebrooks, was an attempt to insulate Solow against a judgment of more than $3.4 million in a securities-fraud case by transferring assets to his wife in a Cook Islands Trust. The Cook Islands are a group of small islands totaling 92.7 square miles in the South Pacific Ocean, northeast of New Zealand.

Possible air route between Miami and Rarotonga, Cook Islands. Source: TimeAndDate.com, using map based on NASA image.

For its part, the SEC said that, between January 2008 (the month in which Solow’s jury trial commenced) and April 2008 (several months after the jury’s verdict against him), “Solow and his wife liquidated securities accounts totaling over $1.5 million.

“Some of those funds were used to pay ‘asset protection attorneys’ retained by Mrs. Solow a mere four days after the jury verdict was entered against her husband,” the SEC said.

In March 2008, “Solow signed a $5.2 million mortgage on his residence in Hillsboro Beach,” the SEC said. “The proceeds of the mortgage were used to fund a CD now held by a Cook Islands trust for the benefit of Mrs. Solow. Notwithstanding these transfers, Solow claims to be a ‘ward of his wife.'”

Middlebrooks said the asset-protection scheme clearly was designed to permit Solow to live in the lap of luxury while leaving victims holding the bag.

“Mr. Solow would like the Court to believe that his best efforts to pay the disgorgement
obligation ended with the liquidation of an old truck, a desk set and a small income tax refund totaling $2,639.24,” Middlebrooks said.

“Mr. Solow lives in a beachfront condominium in Fort Lauderdale; owns a beachfront house on Hillsboro Mile; spends extended winter vacations at his family home in Park City, Utah; and enjoys the representation of sophisticated defense counsel in these proceedings,” Middlebrooks said. “According to Mr. Solow, all of these expenses are paid through the largesse of his wife. However, the record shows that this largesse is derived entirely from assets acquired with Mr. Solow’s earnings. The Court finds that Mr. Solow has purposefully sought to insulate these assets from the Court’s reach.”

Gina Solow, Solow’s wife, brought no assets into the marriage, had no inheritance and last had a job in 1989, Middlebrooks said.

“Notwithstanding the fact that Mrs. Solow has brought no income or assets into the marriage, she now pays for all of Mr. Solow’s living expenses,” Middlebrooks wrote. “At the hearing, Mr. Solow testified that he had ‘no clue’ as to the extent of the assets held by his wife. I find Mr. Solow’s claim of complete lack of knowledge of his wife’s financial dealings incredible.”

Middlebrooks’ 40-page ruling was blistering, citing one example after another of attempts to hide assets. The judge, however, did allow that “Mr. Solow may purge his contempt by making good faith reasonable efforts to retrieve his assets and apply them toward the Final Judgment.”

The SEC has sued Gina Solow separately to claw back the alleged fraudulent transfers.