UPDATE: At 2 p.m. today, Jan. 22, U.S. District Judge Middlebrooks denied ex-stockbroker Jamie Solow’s request that he stay his order sending Solow to jail on Monday. The judge did, however, delay Solow’s surrender date one week to allow Solow time to appeal. Solow’s new surrender date is Feb. 1.
By Dan Christensen, browardbulldog.org
A globetrotting former stock broker who’s been living a life of luxury in Fort Lauderdale since a jury found that he defrauded hundreds of small investors who bought his risky, mortgage-backed securities has been ordered to prison indefinitely.
A judge last year ordered Solow to pay nearly $6 million in ill-gotten gains and civil penalties after a nine week civil trial.
The money trail that regulators have followed to collect stretches across the world – from a bank in the tiny South Pacific nation of The Cook Islands where Solow’s wife, Gina, has a $5.2 million certificate of deposit, to Swiss safe deposit boxes stuffed with cash and jewelry.
The Securities and Exchange Commission has filed a separate action seeking to recover funds against Gina Solow.
Federal securities regulators accused Jamie Solow of making “a mockery” of the government’s efforts to make investors whole by coming up with just $2,639.24 from the sale of an old truck and a desk set.
Judge Donald M. Middlebrooks, citing a “time-tested” adage, agreed.
“If it walks like a duck, quacks like a duck, and looks like a duck, then it’s a duck,” the judge said. “Mr. Solow still lives a luxurious lifestyle, enjoying the benefits of the money he has made over the years, yet he refuses to pay the victims of his fraud. Such a situation cannot stand.”
Solow, found to have shifted millions of dollars in assets to his wife, argued he’s broke and that his wife has all the assets. But the judge didn’t buy it.
“If Mr. Solow cannot convince his spouse to return his assets to him, that is a problem of his own making and he is consequently in contempt of court,” the order says.
Solow, ordered to surrender by 2 p.m. on Jan. 25, could be in jail a long time unless he coughs up the money. Solow turned over his passport to the court months ago.
“Mr. Solow shall remain incarcerated until such time as he has complied with the conditions set forth in this court’s May 14, 2008 order,” the judge said in his Jan. 14 order.
The judge ordered U.S. Marshals to arrest Solow at his condo in the exclusive L’Ambiance Beach at 4240 Galt Ocean Mile if he does not pay and fails to surrender.
The judge ordered that Solow be jailed in “the nearest appropriate facility to West Palm Beach.”
Solow’s lawyer, Carl Schoeppl of Boca Raton, did not respond to a request for comment.
“We are pleased with the court’s ruling in favor of the SEC. The ruling makes clear that violators can’t hide assets to avoid repaying their victims,” said SEC lawyer Marsha Massey.
Solow was found liable for investors’ losses in a civil trial in January 2008. A jury decided he’d run a fraudulent trading scheme by peddling complex investments known as inverse floating collateralized mortgage obligations (CMOs) to mostly mom and pop investors.
Regulars have said only sophisticated investors should trade CMOs.
About 750 clients at two Boca Raton brokerage houses – Archer Alexander Securities and Samco Financial Services – lost millions. The scheme also put both companies out of business, the SEC said.
Solow’s best known victim was Florida poet laureate Edmund Skellings. The former Davie resident lost about $300,000, court records show.
Several months after the trial, Middlebrooks ordered Solow to disgorge more than $3.4 million, slapped him with an additional $2.6 million fine and barred him from the securities industry.
“During the trial I saw Mr. Solow blame others for his failings, refuse to accept responsibility for his own actions, and repeatedly testify falsely under oath,” Middlebrooks said at the time.
Court records show Solow made in excess of $10 million as an Archer Alexander and Samco broker in 2003-2004.
Solow and his wife have a $5 million oceanfront home in Hillsboro Beach, a $700,000 beachfront condo in Fort Lauderdale and a winter vacation home in Park City, Utah.
After the trial, and before the final judgment order, Solow and his wife began to liquidate and dissipate his assets. Asset protection lawyers were hired and the couple sold $1.5 million in securities and took out a $5.2 million mortgage on their Hillsboro Beach house, records say.
Gina Solow, who has not worked in 20 years, also traveled to Switzerland “to deposit cash and jewelry in safe deposit accounts,” the SEC said.
Middlebrooks said the couple has gone to great lengths to hide assets owed to victims.
“The Solows (and their attorneys) have worked very hard to give their assets an opaque appearance. They have incorporated the family car. They have incorporated the family home. They have multiple trust accounts, both foreign and domestic,” the order says.