Alan B. Levan, chairman and CEO of Fort Lauderdale-based BBX Capital Corp., won a five-year court fight with the U.S. Securities and Exchange Commission over public disclosures of loan quality by BBX’s corporate predecessor BankAtlantic Bancorp.
A six-week federal trial ended Monday with a jury verdict that rejected remaining civil fraud claims brought by the SEC against Levan and the old BankAtlantic Bancorp, which sold its branch-office network and other assets to regional bank holding company BB&T in 2012.
Levan, who was in federal court in Miami when the verdict was read, told The Real Deal he felt “fantastic” in a phone interview on his way back to Fort Lauderdale for a celebration with employees of BBX. But he also said the outcome of the case is “bittersweet because there was no case here from the very beginning … It took this jury only five hours to completely dismiss this meritless case.”
Levan said he expressed some bitterness to a team of SEC attorneys in federal court Monday. “After the verdict was read, I went over to the SEC bench and said to the three lawyers, ‘I hope you’ve got your resumes prepared. You guys are the scum of the earth.’ Then the bailiff ushered me out of the courtroom.”
The federal jury trial that ended Monday was the second pitting the SEC against Levan and BBX.
The judge in the first trial told the jury that Levan lied about the quality of BankAtlantic’s loan portfolio during a July 2007 conference call with stock analysts. The judge ordered Levan to pay a $1.3 million fine and BBX to pay a $4.5 million fine. He also banned Levan from serving as an officer or director of BBX or any other public company for two years.
But the fines were rescinded, and Levan rejoined BBX as chairman and CEO, after he and the company successfully appealed the trial judge’s partial summary judgment that Levan lied during the 2007 conference call.
The Eleventh Circuit Court of Appeals ruled that the trial judge should have allowed the jury to decide for itself whether Levan lied in a three-sentence statement during the conference call.
So, a second jury trial started March 27 – more than five years after the federal agency sued Levan and his company in January 2012 for allegedly violating securities laws in disclosures of loan quality.
The focus of the second trial was Levan’s three-sentence statement during the July 2007 conference call.
The jury in the first trial had rejected the SEC’s allegations that BankAtlantic made false statements about the quality of its loans in written documents filed with the SEC. His attorneys argued in the second trial that Levan simply summarized these written disclosures in his three-sentence statement during the July 2007 conference call.
Eric Bustillo, the regional SEC director in Miami, was unavailable for comment on Monday’s verdict. In an email, an SEC spokesman said, “While we are disappointed with the outcome, we respect the jury’s verdict.”
“This is really regulation run amok. The SEC Enforcement Division is just out of control,” Levan told TRD. “Eric Bustillo and his band of lawyers should be truly embarrassed for having spent 10 years and millions of dollars” on this case.
“They contacted us in 2007 and commenced their investigation,” he said, “and there’s not a single thing that came out of this six-week trial that they didn’t have in their hands in 2007 and ‘08.”