Asset Protection The U.S. Supreme Court has clarified that U.S. courts may not impose civil contempt as punishment “no matter how reprehensive the conduct” when coercion is impossible. The U.S. Supreme Court has consistently ruled that “impossibility of performance” is a defense to a civil contempt order.157 The Florida Supreme Court has also confirmed that, because “... incarceration is utilized solely to obtain compliance, it must be used only when the contemnor has the ability to comply.”158 The Lawrence and Anderson cases, however, suggest that the impossibility defense will be rejected where impossibility is reactionary and self-serving. If a debtor with control over trust assets self-imposes restrictions on his ability to reach trust assets (to avoid a creditor), the court may jail the debtor (to coerce recovery of trust assets). In Anderson, where the FTC attempted to recover funds obtained through a fraudulent telemarketing scheme (discussed in Section 6.5), the court jailed the debtors for six months, rejecting “self-induced impossibility” as a defense to civil contempt.159 The Lawrence court also rejected the defense, despite the Supreme Court precedent to the contrary.160 The Lawrence case led to a few similar rulings such as SEC v. Bilzerian. In Bilzerian, a brazenly offensive debtor transferred assets to a Cook Islands Trust after being found liable for $62,000,000 in securities fraud 157
See e.g. U.S. v. Rylander, 460 U.S. 752, 758(1983). Bowen v. Bowen, 471 So. 2d 1274, 1277 (Fl. 1985). 159 In re Lawrence 227 B.R. 907, 916 (Bankr. S.D. Fl. 1998). 160 Id. 158
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