Federal securities officials want former Portland developer Michael A. Liberty to pay all of a nearly $6 million fine that he accepted in a settlement, six years after he said he was too deeply in debt to shell out the full amount.

Liberty, who pleaded guilty Monday in a separate Maine case to making illegal campaign contributions, is challenging the Securities and Exchange Commission’s demand that he pay the remaining $5.4 million of the fine for allegedly defrauding investors, including three government pension funds. He had previously paid $600,000 after convincing a court that he was unable to pay all of it.

Liberty, who grew up in Gray and now lives in Florida, agreed to settle the SEC allegations in 2010 without admitting or denying guilt. The SEC said Liberty improperly diverted more than $9 million of a $100 million venture capital fund established by Liberty to himself or associates, including $4.5 million for his personal benefit.

The fund also lost $18 million in failed investments that the SEC said were improperly directed by Liberty. Investors in the fund included the pension funds for public employees in the city of Philadelphia and the states of Pennsylvania and Connecticut.

In the unrelated campaign funding case, federal prosecutors have recommended that Liberty, 56, be fined up to $40,000 and be sentenced to six months in jail after he admitted that he arranged for employees, family members and others to make campaign contributions in a 2012 presidential primary, then reimbursed them as a way to evade individual limits on political contributions. The presidential candidate was not disclosed. Liberty made personal contributions to former Massachusetts Gov. Mitt Romney’s presidential campaign in 2011 and 2012.

VERACITY OF REPORT ON LIBERTY FINANCES

Liberty is best known in Maine for his real estate developments in the 1980s, including two office towers at 100 Middle St. in Portland and the Chandler’s Wharf waterfront condominiums. But his proposal for a huge office and retail project on Long Wharf led to a referendum to restrict the waterfront to marine-uses-only development, and Liberty was often portrayed as a symbol of development run amok in the city.

In the SEC case, after agreeing in 2010 to the fine of nearly $6 million, Liberty told the SEC his net worth was negative $29 million, so the judge in the case cut the fine to $600,000, with a stipulation that Liberty’s financial reports had to be truthful.

In September, the SEC filed a motion saying that Liberty hid money and lied about being deeply in debt. The motion said Liberty was spending lavishly during the period he claimed a negative net worth. He also bragged at the time to potential investors that his stock in Mozido, a Texas-based startup founded by Liberty that focused on mobile phone payment technology, was worth $127 million, the SEC said.

“The commission now seeks to ensure that violating the securities laws does not remain profitable for Liberty,” the SEC said in its filing with a federal court in Philadelphia. The venture capital fund that Liberty founded, Keystone Venture, was based in Pennsylvania and had raised $100 million, much of it from the pension funds, for investments in technology companies.

Liberty’s Philadelphia lawyer, Jay Dubow, said “the SEC is just wrong” in its allegations and that Liberty was telling the truth about his financial condition at the time.

In a counter-filing, Dubow said Liberty hired a forensic accounting firm that “engaged in a meticulous and time-consuming process” to develop a report for the court on his financial situation and that Liberty gave the company access to his financial records. The report said Liberty had about $2 million in annual living expenses and “frequently borrowed funds from friends and other sources” to cover loans and expenses.

CHILDREN’S TRUST USED TO HIDE MONEY?

According to the SEC filing, Liberty doesn’t have personal bank accounts and instead uses limited liability companies to pay his personal expenses, along with Xanadu Partners, a fund that the SEC says Liberty set up as a trust for his children. That allows Liberty to conceal how much money he has and protect it from creditors, the SEC alleges.

The SEC says Liberty steered millions into Xanadu and then told his financial officers to keep his involvement with the account secret because of “legal issues I’ve had,” according to an email that the commission said Liberty sent to a business associate. The SEC said Liberty never disclosed his funds in Xanadu to the SEC at the time of the settlement, but deposited nearly $25 million in Xanadu accounts over the course of a little more than two years, ultimately spending it or transferring it to banks, including several in Maine.

Liberty’s financial filing with the court said Xanadu had no value, the SEC alleges, but his lawyers said that is because the fund was established for his children and Liberty received no financial benefit from it.

The SEC said it was difficult to track Liberty’s spending.

“The expenses in the Xanadu checking account range from the mundane (Rite-Aid, Toys ‘R Us, Starbucks, Best Buy, Publix) to luxury travel (tens of thousands of dollars at the Beverly Hills Hotel, St. Regis and Mandarin Oriental, among other brands), to cars (over $25,000 paid to Mercedes Benz),” the SEC said. “Liberty spent tens of thousands of dollars on restaurants and food at a time he proclaimed to be insolvent.”

The filings note that in May 2009, while Liberty was asserting to the SEC that his net worth had deteriorated, he and his wife spent over $33,000, a typical amount, on the Visa card issued to Xanadu. In June of that year, he charged $45,000 on the Xanadu Visa, including for two separate stays at the St. Regis Hotel in Atlanta and a $2,700 canoe.

The SEC called Liberty’s use of the Xanadu accounts “a shell game,” pointing out that millions were moved from those accounts to banks.

“What was all this money used for?” the SEC filing asked. “That question remains unanswered, but what is certain is that Liberty utterly failed to provide the commission with fair and complete disclosure of his finances.

“Liberty exclaims in his email that ‘Money never sleeps, baby!’ and it’s clear that neither do his various accounts,” the SEC filing said.

ATTORNEY DEFENDS LIBERTY STATEMENTS

Dubow said Liberty disclosed all of the financial entities he owned or had money in at the time of the settlement, and that the spending referenced by the SEC occurred after the settlement was reached. Dubow’s court filing said that in the financial reports submitted to the court at the time of the settlement, Liberty freely admitted that he spent a lot on living expenses.

Dubow also said the value of the Mozido stock that Liberty mentioned reflected investments that had been made in the company, not the actual market value of the stock if Liberty had tried to sell it.

The SEC is expected to file a response in December, Dubow said, and after that the judge could rule on the SEC motion or schedule a hearing. Besides the $5.4 million, the SEC is also seeking unspecified civil penalties.