Laurie Bebo, CEO of Assisted Living Concepts, initially got some sympathetic words from the U.S. District Judge who felt constrained to turn away her constitutional challenge to the SEC’s administrative forum:

The Court finds that Bebo’s claims are compelling and meritorious, but whether that view is correct cannot be resolved here. This is so because Bebo’s claims are subject to the exclusive remedial scheme set forth in the Securities Exchange Act. Bebo must litigate her claims before the SEC and then, if necessary, on appeal to the Court of Appeals for the Seventh Circuit.

The Seventh Circuit affirmed. Bebo v. SEC, No. 15-C-3, 2015 WL 905349 (E.D. Wis. Mar. 3, 2015) (no jurisdiction over due process, equal protection, Seventh Amendment, and removal power claims), aff’d, No. 15-1511, 2015 WL 4998489 (7th Cir. Aug. 24, 2015)

But SEC ALJ Cameron Elliott’s Initial Decision held Bebo guilty of fraudulent disclosures regarding lease and financing covenants in Commission filings by her publicly-traded company. Bebo, he said, was an especially bad witness. The Decision is peppered with descriptions: “Inherently implausible;” “Doubly implausible;” “self-contradictory.” She “was generally not a credible witness,” he found. She was “impeached over 25 times.”

“Her evasiveness and discursiveness throughout the hearing especially damaged her credibility.”

Elliot held she violated anti-fraud and other provisions, imposing a $4.2 million fine and a permanent bar.

The ALJ spurned Bebo’s Appointments Clause argument with a single sentence: “This argument is meritless.” Citing Raymond J. Lucia Cos., ‘34 Act Release No. 75837, 2015 WL 5172953, at *21-23 (Sept. 3, 2015). Then he dispatched her Equal Protection and Due Process arguments in a mere five of the Initial Decision’s 81 pages.

In re Laurie Bebo, Initial Dec’n Rel. No. 893, AP File No. 3-16293 (SEC Oct. 2, 2015) is here.