SEC v. Palmisano

Joseph Palmisano (defendant) induced 90 people to invest approximately $7.9 million with him to purchase the property of bankrupt or distressed businesses and then sell the property at a profit. Palmisano told investors this was a “no-risk” investment in which their money would be escrowed, and the investment would provide returns of 20–30 percent each year. Palmisano gave investors various written documents to provide evidence of the invested amounts. No registration statement was made with the United States Securities and Exchange Commission (SEC) (plaintiff). Palmisano did not invest the money as promised. Instead, Palmisano used it for personal purposes and to make distributions to some investors. In July 1994, the United States filed an indictment charging Palmisano with criminal conduct related to his scheme; the same day, the SEC filed a civil action against Palmisano. In the criminal case, Palmisano pleaded guilty to 44 criminal counts, including mail fraud, wire fraud, money laundering, and securities fraud and was sentenced to serve 188 months in prison and pay $3.7 million in restitution. Additionally, the property involved in Palmisano’s scheme was forfeited to the United States. Meanwhile, the SEC filed for and obtained summary judgment in the civil case brought against Palmisano, who was ordered to disgorge over $9 million and pay a $500,000 civil penalty. Palmisano appealed, arguing that the sanctions in the civil case in conjunction with the punishment imposed in his criminal trial violated his right to avoid double jeopardy.