Aug 25, 2015

By Guy Boulton of the Journal Sentinel Aug. 24, 2015 8:19 p.m. (0) Comments A lawsuit filed against the Securities and Exchange Commission by Laurie Bebo, the former chief executive of Assisted Living Concepts, was dismissed Monday by a federal appeals court. Bebo sued the SEC in January after it alleged that she and John Buono, the company's former chief financial officer, directed employees to report fraudulent occupancy rates at some of the company's assisted living centers to avoid violating lease agreements. The lawsuit challenged the SEC's decision to bring the case before an administrative law judge instead of a federal judge and jury. The Dodd-Frank Act gave the SEC additional authority to bring cases involving alleged civil violations of securities law before administrative law judges instead of U.S. District Court. A number of lawsuits have been filed alleging that defendants, known as respondents, do not have the same rights in administrative hearings, such as the right to take depositions or conduct discovery. In the lawsuit filed by Bebo, a U.S. District Court determined that the administrative review process established by Congress stripped it of jurisdiction to hear a constitutional challenge before Bebo had gone through the SEC's administrative process. The U.S. Court of Appeals for the 7th Circuit on Monday affirmed the lower court's decision. In a statement, Mark Cameli, Bebo's lawyer, said the court did not rule on the merits of the constitutional challenge. The court instead said that the challenge must wait until the SEC administrative proceedings have been completed. Bebo "will continue to press her constitutional claims in the administrative proceeding currently pending against her and, if necessary, present the merits of her case to the appropriate reviewing federal court," Cameli said in the statement. The hearing before the SEC administrative law judge was completed in June. Buono, the former chief financial officer, has settled his case with the SEC. Bebo was fired by Assisted Living Concepts in May 2012. The company, previously based in Menomonee Falls, was bought by TPG, a private equity firm, in 2013 and changed its name to Enlivant last year. Now based in Chicago, it operates more than 200 assisted living centers and senior residences. © 2015 , Journal Sentinel Inc. All rights reserved. About Guy Boulton