Ossining penny stock fraudster Edward Bronson has been ordered to turn himself in to prison officials after repeatedly flouting a judge’s directives to begin paying off $12.3 million to the U.S. Securities and Exchange Commission.
“Mr. Bronson has been repeatedly warned that failure to comply with the court’s disgorgement orders would result in a finding of contempt and imprisonment,” U.S. District Judge Kenneth M. Karas ruled on Jan. 27.
“It is clear that Mr. Bronson has once again failed to make a timely payment. Accordingly, he is to report to the U.S. Marshals Service in the White Plains courthouse by no later than 12 noon so he can be designated to a prison.”
The SEC sued Bronson and his companies in 2012 for selling unregistered securities and withholding financial information from investors. He was found guilty in 2017 and ordered to pay the SEC $12.3 million.
But for three years he avoided paying the judgment.
A year ago, Karas found Bronson in contempt of court and ordered him to negotiate a payment plan with the SEC.
Bronson agreed last July to pay $1.1 million a month. The first payment was late, according to court records, and then he stopped paying and claimed he lacked the financial capacity to satisfy the obligation.
The SEC has argued that Bronson has concealed income and that there is evidence that he has spent exorbitantly on personal expenses.
Karas ordered Bronson last November to surrender his passport, make a $500,000 payment by Dec. 23 and resume the $1.1 million monthly payments on Jan. 13.
Bronson paid the $500,000, according to court records. But by Jan. 13 he had paid only $300,000 toward the $1.1 million obligation.
His attorney, Ryan O’Quinn, asked Karas on Jan. 14 for more time. Bronson expected to receive funds to make the remaining $800,000 payment by Jan. 21, O’Quinn said in a letter to the judge, and because Bronson “is working in good faith to make this payment, incarceration is not necessary.”
The SEC responded that Bronson had provided no proof that he could pay the $800,000.
Karas granted a few more days but stated the consequences if Bronson failed.
Bronson had “forfeited the ‘good faith’ defense long ago,” Karas said in an order, “based on his failure to honor his promise to make prior payments and based on his suspect testimony at the last hearing. So, he either makes the remainder of the payment he currently owes by noon on Jan. 19, 2022, or he will go to prison.
“Moreover, he is NOT to miss a single payment by a single day going forward, or he will go to prison.”
Bronson’s attorney notified the SEC on Jan. 19 that two payments had been made: $100,000 and $700,000.
But on Jan. 27 the SEC discovered that the $700,000 payment was rejected for insufficient funds.
The SEC asked Karas to imprison Bronson, and this time the judge ordered him to surrender.
Bronson surrendered at 9 a.m. Jan. 28, and O’Quinn filed a notice of payment for the entire $1.1 million.
