The U.S. Supreme Court ruled in an 8-1 decision this week that the U.S. Securities and Exchange Commission can confiscate money from companies that have obtained it through fraudulent means.
However, the court also implemented a few restrictions on the federal agency’s ability to act on this power.
Justices heard a case involving Charles Liu, who was determined by a federal court to have fraudulently enticed investors into sending him $20 million, ostensibly to help fund cancer treatment centers, The Hill reported.
Liu allegedly kept some of the money for his personal use and sent the rest to other fraudulent operations.
Following an order that required him and his wife to hand over the $8.2 million they had on hand, Liu challenged the decision.
He said that the SEC had exceeded its authority, but that argument was rejected by an appeals court and the nation’s highest court backed up that decision this week.
Justice Sonia Sotomayor, a liberal who was appointed by President Obama, wrote the majority opinion in the case.
Sotomayor wrote that authorities are not given unlimited power to exercise when it comes to recovering such fraudulently obtained funds.
“Equity courts have routinely deprived wrongdoers of their net profits from unlawful activity, even though that remedy may have gone by different names,” Sotomayor wrote.
In an analysis published on SCOTUS Blog, Columbia law professor Ronald Mann wrote that Sotomayor “flatly rejects the practice (followed by the lower court here) of ordering disgorgement of all revenues.”
The justice “acknowledges the possibility that ‘personal services’ expenses should be disallowed as ‘inequitable’ in a case in which defendants operated an ‘entirely fraudulent scheme,’” Mann added.
Justice Clarence Thomas, a conservative appointed by President George W. Bush, was the lone member of the court to dissent from the majority opinion.
Thomas argued that the federal government has no right to any of the money that Liu obtained illegally.
Beyond that, this is hardly the biggest ruling the Supreme Court has handed down in recent weeks.
In a massively controversial decision, the Supreme Court ruled last week that the Trump administration can’t immediately terminate the Obama-era Deferred Actions for Childhood Arrivals (DACA) program.
In a 5-4 ruling, Chief Justice John Roberts sided with Democrats and held that President Donald Trump can’t continue with his plan to end DACA, which has shielded roughly 800,000 young immigrants from deportation.
The opinion was written by Roberts and joined by Justices Ruth Bader Ginsburg, Elena Kagan, Stephen Breyer, and Sonia Sotomayor — the Court’s four liberal justices.
The Obama-era DACA program has shielded just shy of a million children that came to the United States with their parents, who also did not have the legal right to enter the country.
Trump spoke about the ruling via Twitter and announced when he plans to reveal a new list of Supreme Court nominees.