Former Assisted Living Concepts CEO requests Supreme Court review

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Former Assisted Living Concepts CEO requests Supreme Court review
Former Assisted Living Concepts CEO requests Supreme Court review

Former Assisted Living Concepts CEO Laurie Bebo, accused of fraud by the U.S. Securities and Exchange Commission, is trying to take her case to the U.S. Supreme Court.

Feb. 3, Bebo filed a petition for writ of certiorari asking the justices to rule whether federal courts can hear constitutional challenges to decisions made by administrative law judges employed by the SEC. The Supreme Court receives about 7,000 petitions for review every year, according to the Administrative Office of the U.S. Courts, and typically only accepts those that “could have national significance, might harmonize conflicting decisions in the federal circuit courts, and/or could have precedential value.” Four of the nine justices must agree to hear the case for it to be considered.

Bebo's filing is the latest action in a legal case that began in 2014 when the SEC filed fraud charges against Bebo and ALC's then-CFO, John Buono. The commission alleged that the two directed employees to include phony residents in occupancy rate and coverage ratio calculations for eight properties from 2009 to 2012.

Buono settled his case with the SEC in 2015, but Bebo filed a lawsuit against the commission, maintaining that its internal proceedings, using an administrative law judge instead of a federal judge and jury, would deprive her of her rights to equal protection and due process. The 7th U.S. Circuit Court of Appeals, however, dismissed the lawsuit in August, saying it lacked jurisdiction. The appeals court also said that Bebo could not raise a constitutional challenge in the fraud case against her until the SEC's in-house process was complete.

An SEC administrative law judge heard Bebo's case in June and in October ordered her to pay a $4.2 million civil penalty and permanently barred her from serving as an officer or director of any issuer that has a class of securities registered with the SEC or is required to file reports with the commission. In December, however, the SEC agreed to review the administrative law judge's decision. At that time, the SEC told Bebo that she had until Jan. 7 to file the opening brief of her administrative appeal, but on Dec. 24, the commission granted Bebo's request for an extension. The new deadline for her opening brief was Jan. 27. The SEC's response is due Feb. 29, with Bebo's reply brief due March 14.

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