Justices could limit recovery in securities fraud cases

WASHINGTON – The Supreme Court seems willing to make it tougher for the government to recover ill-gotten gains from people convicted of securities fraud.

Most of the justices — including newly confirmed Justice Neil Gorsuch — suggested during arguments Tuesday that such recoveries are subject to a five-year statute of limitations.

The court is deciding whether venture capitalist Charles Kokesh must return $35 million from investor funds he used to pay himself and others at his New Mexico-based operation from 1995 to 2006.

A federal appeals court ruled Kokesh must pay the full amount. But lawyers for Kokesh say the five-year window would reduce his payment to just $5 million.

Government officials argue that recovering all illicit profits regardless of how old they are is a critical part of enforcing securities laws.