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Business Crimes BulletinColumns & DepartmentsLitigationWhite Collar Crime

In the Courts

By Dennis Mahoney

Tenth Circuit Lowers Investment Advisor's Disgorgement from $35 to $5 Million

On March 5, a panel of the Tenth Circuit lowered former New Mexico investment advisor Charles Kokesh's disgorgement judgment to one-seventh of its initial $35 million. The Tenth Circuit's ruling comes on the heels of Kokesh's 2017 U.S. Supreme Court victory, in which the High Court greatly reduced the SEC's power to disgorge ill-gotten gains.

A federal jury previously found Kokesh guilty of misappropriating money from four business-development companies from 1995 through July 2007. Following the trial, Kokesh was ordered to pay a $2.4 million penalty and a $35 million disgorgement. Due to the five-year statute of limitations period imposed by Section 2462 of the U.S. Code, which applies to any “civil fine, penalty, or forfeiture,” the penalty only applied to misappropriations committed by Kokesh between 2005 and 2009, when the SEC brought suit. The disgorgement, however, took into account every misappropriation committed by Kokesh since 1995. Kokesh appealed, arguing that the disgorgement order disregarded the five-year statute of limitations.

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