March 15, 2010

Liberty, SEC agree to settle


— By

Staff Writer

Maine businessman Michael A. Liberty and federal regulators have reached an agreement in principle stemming from a 2006 lawsuit that charges Liberty with fraud, according to Liberty's attorney.

The Securities and Exchange Commission filed a civil action more than two years ago, charging that Liberty misappropriated more than $9 million from a private venture capital fund whose largest investors were public pension funds. Liberty has strongly denied the allegations.

Liberty's attorney, Ivan Knauer, said an agreement in principle has been negotiated with the SEC staff, but that the terms are confidential. A senior counsel at the SEC said Monday that the staff is unable to comment on any settlement until it's considered and approved by the five-member commission, as well as by the federal district court.

Early this month, a spokesman for Liberty, Dennis Bailey, was quoted in a Portland Press Herald story as saying he was told the SEC matter was settled. That assessment was imprecise, Bailey now says.

Liberty declined to be interviewed about the matter, saying his lawyer told him not to discuss the case publicly.

No date has been set for the commission's review, according to Kingdon Kase, counsel at the SEC's office in Philadelphia.

Liberty was a prominent developer in Maine in the 1980s. Now living primarily in California, he periodically becomes involved in development and business enterprises in Maine and maintains offices here.

The status of the SEC case gained renewed public interest this month, after Liberty emerged as a partner in an investment group negotiating to buy the Blethen Maine Newspapers, including the Portland Press Herald/Maine Sunday Telegram. Liberty, who has longstanding business ties with another member of the investment group, said recently that he has no development interests in the company's real estate holdings in Portland.

The suit was filed in U.S. District Court in Philadelphia, where the venture capital group was based. Other parties named in the suit have settled with the SEC, without admitting or denying allegations. Two individuals, John R. Regan and Peter E. Ligeti, received fines of $50,000 each.

After a flurry of news stories in Maine following the suit, including denials from Liberty, the case has fallen from public view. Confidential talks have been taking place between Knauer and the SEC staff, and both sides say the process and duration aren't unusual in cases similar to this one.

''Litigation matters generally take a fair amount of time,'' Kase said.

The process will come to a close when a final judgment is approved in federal court. It's unclear what terms of any settlement will be made public.

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

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