The Supreme Court on Tuesday (March 3), possibly inched closer to a decision that would allow the Securities and Exchange Commission (SEC) to recoup money from fraudsters, according to a report from the Associated Press.
The highest court in the U.S. was hearing a case about a husband and wife who were compelled to hand over $27 million after they were found guilty in a lower court of perpetrating a scheme to get investors in China to back a cancer center in Southern California.
The justices could potentially tack some limits on how the money is collected by the SEC, but the ruling did not seem to indicate the SEC didn’t have the power to get the money back.
“Isn’t it an equitable principle that no one should be allowed to profit from his own wrong?” Justice Ruth Bader Ginsburg said to Gregory Rapawy, the lawyer for Charles Liu and Xin “Lisa” Wang, the Chinese couple.
Rapawy said a ruling shouldn’t leave his clients in a worse position than they were before the scheme. The couple saw profits of $8.2 million from their actions and were forced to pay $27 million. Rapawy said most of the money was used for property development and for marketing.
The couple are basing their case on a unanimous decision by the Supreme Court in 2017 that curbed the SEC’s ability to seek profits from fraud before charges are filed by authorities.
However, the case did not answer the question of whether the courts had the authority to order repayment of the money. The SEC has also continued to seek out profits in other similar cases. In 2019, the SEC told a Florida federal judge to compel alleged Ponzi scheme defendants to give back $892 million in profits. The Supreme Court is expected to rule on the case of the Chinese couple in June.