A federal judge on Wednesday barred financier Victor Posner and his son, Steven Posner, from serving as officers or directors of public companies and ordered them to repay $3.86 million taken from a company they acquired illegally.
The decision by U.S. District Judge Milton Pollack in Manhattan stemmed from the Securities and Exchange Commission’s 5-year-old civil lawsuit against the Posners, whom the agency accuses of plundering public companies they have controlled.
Pollack’s decision forces the one-time clients of former junk-bond trader Michael Milken to relinquish voting control of their dwindling empire. They don’t have to sell their stock, but they can’t make any corporate decisions.
The Posners are considering whether to appeal, said Lawrence A. Blatte, an attorney for Victor Posner. He declined further comment.
The Posners formerly headed DWG Corp., the parent of the Arby’s restaurant chain, and Sharon Steel Corp. They hold stakes in several smaller public companies.
“The Posners have repeatedly abused their positions in public companies, engaged in self-dealing, enriched themselves at the expense of public shareholders, and generally conducted themselves in ways that are the antithesis of what one expects of a corporate fiduciary,” Pollack wrote in a 54-page ruling that accompanied a 17-page opinion.
Pollack’s decision would ban the Posners from three small companies they still run: Salem Corp., a builder of equipment for the coal and metals industries; NVF Co., a maker of industrial fibers and laminated plastics; and APL Corp., a wood-cabinet maker that is in Chapter 11 bankruptcy proceedings.
The Posners sold their Fischbach stake in 1990. Earlier this year, they were thrown out of the biggest company they had been running: DWG Corp., which also owns Royal Crown Cola Co.
Their ouster from DWG, a company Victor Posner had controlled for 26 years, settled a suit brought by the company’s stockholders. Victor Posner drew an annual salary of $3.6 million from DWG while the company reported losses year after year.
Five years ago, Victor Posner was fined $75,000 for income tax fraud and ordered to pay back taxes and penalties estimated by the Internal Revenue Service at $4.2 million. Prosecutors had charged Posner with cheating the government by inflating the value of land he donated to a college.
Instead of sentencing Posner to prison because of the fraud, a federal judge ordered him to spend at least $3 million to study and work with the homeless in South Florida and to give at least 5,000 hours to community service.
