Date: Sept. 27, 2024 Contact: newsroom@ci.irs.gov LOS ANGELES — A corporate takeover specialist and convicted felon has been indicted on federal charges for his alleged years-long avoidance of a judgment – now exceeding $180 million – to the U.S. Securities and Exchange Commission (SEC) while running a cannabis and lifestyle brand company purportedly helmed by his social media influencer son – a company whose investors he allegedly cheated, the Justice Department announced today. The nine-count indictment returned on Thursday charges the following defendants with one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud and securities fraud, and four counts of wire fraud: Paul A. Bilzerian, a resident of St. Kitts and Nevis and a former U.S. citizen who was convicted in 1989 in the Southern District of New York of securities fraud and was sentenced to four years in federal prison for that crime; and Ignite International Brands Ltd., a formerly publicly traded, Canada-based cannabis company that previously operated out of Los Angeles and whose CEO was Bilzerian’s son, a social media influencer identified in the indictment as “D.B.” A third defendant charged – and arrested today – is: Scott Rohleder of Morrisville, North Carolina, Bilzerian’s long-time accountant who held various roles at Ignite, including chief financial officer, is charged with one count of conspiracy to defraud the United States, one count of conspiracy to commit wire fraud and securities fraud, three counts of wire fraud, and three counts of assisting with the preparation of false tax returns. “This indictment alleges a long-running pattern of criminal behavior to avoid a regulator’s judgment, mislead investors, and cheat the IRS,” said United States Attorney Martin Estrada. “My office will continue to use all tools available to protect investors and ensure the security of our nation’s economy.” According to the indictment, the SEC in 1989 brought a civil action against Bilzerian based on the same securities violations that led to his criminal conviction in the Southern District of New York, for which defendant was sentenced to four years in prison. In 1993, the SEC obtained civil judgments totaling approximately $62,337,600 against Bilzerian. Since then, Bilzerian has evaded enforcement of the judgments. In 2000, a federal court found Bilzerian in contempt of the SEC judgments and appointed a receiver to collect his assets to satisfy them. The SEC has only recovered approximately $547,000 toward satisfaction of the judgments, which now – with interest – exceed $180 million. From December 2018 to September 2024, Bilzerian, Rohleder, and Ignite allegedly conspired to impede the SEC from collecting on the judgments. To do so, Bilzerian operated numerous shell companies, including International Investments Ltd., in the United States while concealing his interest in and control over those companies by using various nominee owners. To continue to deploy his wealth in the United States while evading the SEC judgments, Bilzerian – with Rohleder’s help – funneled millions of dollars of his assets through his shell companies to fund Ignite while concealing his role in the company’s ownership and management. Meanwhile, to avoid paying the SEC judgments, Bilzerian falsely represented that he was indigent, including by providing false financial disclosures that omitted his considerable assets. On paper, Ignite’s CEO was Bilzerian’s son D.B. – a professional poker player who gained notoriety on social media for his glamorous and ostentatious lifestyle. In fact, Bilzerian exercised de facto control of the company. Together with Rohleder, Bilzerian oversaw Ignite’s operations, strategy, marketing, and fundraising, to the point of holding daily management meetings. Bilzerian also exerted significant influence in decisions to hire and fire Ignite’s executives and members of its board of directors. Despite Bilzerian’s prominent leadership role at Ignite, the defendants concealed his involvement, including by omitting his name in publicly filed disclosures. After learning that federal law enforcement had become aware of Bilzerian’s involvement in Ignite, the company also issued a press release that misleadingly characterized Bilzerian and Rohleder as “unpaid consultants” for Ignite. The defendants also allegedly misled Ignite’s investors by making materially false statements about the company’s revenues for the fourth quarter of 2020, inflating sales figures by including unsold inventory stored by a different business. In January 2021, after Ignite issued a false and misleading press release about its sales, its share price increased from 42 cents to $1.20 per share, representing a gain of approximately $84 million in market capitalization. Months later, when Ignite’s auditor could not verify the sale of the unsold inventory, Bilzerian caused Ignite to “sell” approximately $4.63 million in vape products to a shell company he controlled. Bilzerian and Rohleder backdated the sale to make it falsely appear that it occurred in 2020. In later reporting the “sale” to Ignite’s investors, the defendants concealed Bilzerian’s ownership of the shell company and the fact that the shell company was not a vape product distributor, meaning it could only sell the inventory by competing with Ignite. Finally, Rohleder allegedly assisted in the preparation of D.B.’s tax returns, which included false and fraudulent representations that caused a tax loss of approximately $1,536,949 to the IRS for the tax years 2018 to 2020. Rohleder did so by falsely characterizing D.B.’s Las Vegas mansion, which he purchased in 2018 for $8.5 million, as a rental property. When listing D.B.’s personal address on the tax returns, Rohleder used an address corresponding to a hangar at Harry Reid International Airport. Rohleder also lied to D.B.’s tax preparer by stating that D.B.’s November 2018 sale of Ignite stock was a “long-term” capital gain (to be taxed at a lower rate) instead of being a “short-term” capital gain, which would have resulted in a higher tax bill. “The allegations against Mr. Bilzerian and his co-defendants paint a picture of a long-running, complex scheme to avoid their financial obligations,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Playing a shell game with money may work in the short term, but IRS Criminal Investigation is the best in the business at finding and following the trail that money always leaves and, especially when our skillsets are paired with those of our fellow law enforcement agencies, there is little chance of evading indictments such as this one.” “This indictment sends a strong message that no matter how criminals try to hide, the FBI will aggressively investigate those who commit such financial fraud and shirk their obligation to make American taxpayers whole” said Akil Davis, Assistant Director in Charge of the FBI Los Angeles Field Office. “These individuals will now face justice for fraudulently profiting from this elaborate scheme and hopefully the public’s trust in a fair market will be restored.” An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court. If convicted of all charges, Bilzerian and Rohleder would face a statutory maximum sentence of five years in federal prison for each conspiracy count and up to 20 years in federal prison for each wire fraud count. Rohleder would face up to three years in federal prison for each tax fraud count. The SEC today filed civil charges against Bilzerian, Rohleder, and Ignite in connection with the facts alleged in this criminal case. The IRS Criminal Investigation (IRS-CI) and FBI are investigating this matter. Assistant United States Attorneys Alexander B. Schwab of the Corporate and Securities Fraud Strike Force and David H. Chao of the General Crimes Section are prosecuting this case. IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
