One of Bilzerian's first business deals was an investment in a Tampa Bay-area radio station, WPLP, which he made with two Army colleagues from the Vietnam War who had experience in the broadcasting industry. However, the station performed poorly, and after its bankruptcy in 1980 disputes broke out between Bilzerian and his two fellow investors, leading to a lawsuit by him against them. In contrast, he was more successful in his real estate investments. In 1984, he moved to Sacramento, California where his father-in-law and another business associate lived.
While living in Sacramento, in 1985 Bilzerian embarked on his first two high-profile takeover attempts, one of New York clothing manufacturer Cluett Peabody & Company, and the other of Pittsburgh construction company H. H. Robertson. Bilzerian raised his bid for the remaining 76% of Cluett Peabody in October. In response, Cluett Peabody's board of directors adopted poison pill provisions, earning them public statements of derision from Bilzerian. Cluett Peabody eventually accepted a competing merger offer by WestPoint Pepperell (now WestPoint Home) for $41 per share (in cash or equivalent value of WestPoint Pepperell common stock); Bilzerian and his fellow investors agreed separately to sell their stake to WestPoint Pepperell for $39.45 per share.
Bilzerian moved back to Florida in 1986. That July he and fellow investors William and Earle I. Mack (sons of New Jersey real estate developer H. Bert Mack) launched a takeover bid against the Hammermill Paper Company, purchasing about 3.3 million Hammermill shares at an average price of roughly $47 per share, and then offering $900 million ($52 per share) to purchase the remainder of the company. Bilzerian's offer was ultimately rejected when Hammermill sold out to International Paper instead at $64.50 per share, but Bilzerian and his fellow investors still made a profit of nearly $60 million from the deal.
In 1985, Bilzerian began what would ultimately be a successful takeover attempt against the Singer Corporation, a defense electronics manufacturer. In October 1987, it came to light through SEC-mandated disclosures that a group of investors led by Bilzerian had purchased 2.1 million Singer shares in the preceding two months. Singer seemed an unlikely target for a takeover: early reports cast doubt on the idea that the government would permit a hostile takeover of a defense contractor, and the company had already moved its headquarters from Connecticut to takeover-hostile New Jersey in an attempt to fend off a previous takeover by T. Boone Pickens. In January 1988, Pickens provided $150 million in additional financing, allowing the Singer deal to go through.
Bilzerian's unexpected success was attributable to several factors. Singer chairman Joseph B. Flavin had died in early October, leaving the company without strong leadership to fight off the takeover attempt. The Black Monday crash less than two weeks later spooked competing investors. Finally, the Omnibus Budget Reconciliation Act of 1987 included provisions to disallow sales of assets in certain acquired businesses to be treated as capital gains for tax purposes, making future takeover bids less attractive; however, takeover bids like Bilzerian's which were already outstanding on the date of the Act's passage were exempted from this tax increase.
Bilzerian's high-profile takeover attempts led to SEC scrutiny of his deals, specifically as to whether investment groups he controlled had concealed the extent of their holdings in the companies which they targeted for takeovers. In May 1988, the SEC began a probe against Edward J. DeBartolo, Sr. to determine whether DeBartolo had illegally aided Bilzerian's hostile takeover attempts through "stock parking", in which one party purchases shares in coordination with another in order to keep legal ownership separated and avoid either party's holdings exceeding disclosure thresholds. Then, in December 1988 Rudy Giuliani announced that Bilzerian had been indicted in Manhattan by a federal grand jury on charges including securities and tax fraud. The charges concerned his takeover attempts against Cluett Peabody, H. H. Robinson, Armco, and Hammermill.
In January 1989, Bilzerian pleaded not guilty to the charges amidst growing public controversy. There were, broadly speaking, two different camps of opinion on Bilzerian's actions. Much of the public had a negative view of corporate takeovers in general and saw Bilzerian's activities as "greenmail", profiting by deceiving companies into believing they faced a hostile takeover attempt and scaring them into buying their stock from him at a high price. However, others saw Bilzerian as guilty of nothing but making a profit in genuine-but-failed takeover attempts which benefited all investors. In an article in New York magazine, Christopher Byron questioned the entire basis of the case against Bilzerian, describing it as fueled by "Puritan envy". He further stated that the Department of Justice's primary motivation for the case was not the prosecution of wrongdoing but rather the need to justify its earlier unpopular plea bargain with Boyd Jeffries of Jefferies & Company, which would see Jefferies avoid any jail time at all in exchange for the opportunity to "drag some headline-sized names through the mud".
After two days of deliberations in June, the jury found Bilzerian guilty on nine counts including conspiracy, making false statements, and securities and tax law violations. In September, Judge Robert Joseph Ward sentenced Bilzerian to four years in prison and a fine of $1.5 million. Bilzerian was permitted to remain free pending appeal. Bilzerian's appeal came before the Court of Appeals for the Second Circuit, which in January 1991 ruled against him, finding no merit in his argument that his trial had been unfair. His sentence was set to begin in December 1991 at the Federal Prison Camp, Eglin in Fort Walton Beach, Florida. Bilzerian was released from prison in January 1993 to serve out his sentence under house arrest. Bilzerian has also maintained that the Court of Appeals for the Second Circuit refused to address two unanimous United States Supreme Court decisions that mandated that Bilzerian's conviction be reversed. After Bilzerian's release from prison, he went on to become president of a Utah-based software company called Cimetrix. However, in 2002, the government confiscated Bilzerian's ownership in Cimetrix and eventually drove the company from several years of high sales growth and profitability to the verge of bankruptcy.
Simultaneously with the criminal charges, the SEC announced in May 1989 that it would file a civil suit against Bilzerian in an effort to force him to disgorge the profits from the takeover attempts. In 1993, a federal judge ruled in favor of the SEC and ordered Bilzerian to disgorge $33.1 million of profits, plus interest. The total amount to be disgorged was thus $62 million. In January 1994, Bilzerian also filed an appeal against the civil judgment in the Court of Appeals for the District of Columbia. However, in July the court rejected his civil appeal as well.
Due to the size of the fines against him, Bilzerian first filed for bankruptcy in 1991. Bilzerian emerged from that bankruptcy having paid roughly $400,000 in settlement of debts exceeding $300 million. In 1999 he tried to put his house up for sale in the prestigious Avila neighborhood of Tampa, Florida, and at one point even Mike Tyson was reportedly interested in buying. He filed for bankruptcy again in January 2001, declaring his assets of $15,805 against $140 million in debts. Under Florida Bankruptcy Law, the value of his primary residence was protected from creditors. The SEC alleged that Bilzerian was using bankruptcy as a tactic to block creditors from finding out the true value of his assets. Later in the month, a federal judge ordered Bilzerian imprisoned for contempt of court due to his failure to disclose his assets.
On June 11, 2001, while Bilzerian was in prison, FBI agents raided his family's residence on the strength of a sealed warrant and seized computers, files, and a Beretta firearm. The raid appeared to be related to SEC contentions that Bilzerian had concealed his ownership of assets during bankruptcy proceedings by transferring them to trusts and shell corporations. Bilzerian was released from prison in January 2002 pursuant to an agreement under which his wife, Terri Steffen would sell the residence and split the proceeds with the SEC. Bilzerian was critical of the deal, describing it as the SEC using him "as a hostage to extort money" from his wife. In May 2004, Steffen sold her residence for $2.55 million to a partnership controlled by a Belgian businessman; SEC attorneys approved the unusually low price. According to court documents filed in 2006, Steffen's parents purchased a 99% interest in that partnership three weeks later.
Bilzerian was born in Miami, Florida, but grew up in Worcester, Massachusetts. He is an Armenian American. His father, a civil servant, and his mother later divorced, leading to troubled teenage years for Bilzerian; he would later describe himself as a "juvenile delinquent". Called into the principal's office of his high school one day in 1968 for violating the dress code by wearing blue jeans, Bilzerian impulsively responded by dropping out of school. However, after serving in the Vietnam War and earning a Vietnamese Gallantry Cross, Bronze Star Medal, and Army Commendation Medal, he turned his life around, earning a Bachelor of Arts with honors from Stanford University in 1975. Bilzerian entered Harvard Business School that same year. He was unsure about his choice to attend, having passed on offers of admissions to several law schools in order to enroll at HBS. After his graduation, Bilzerian married Stanford classmate Terri Steffen in 1978, and moved with her to St. Petersburg, Florida.
Bilzerian has two sons, Adam and Dan Bilzerian. Adam attended Gaither High School, where he represented his school in tennis. Angered by the government's treatment of his father, Adam abandoned his dream of becoming an Army Green Beret. After graduating from Vanderbilt University, he moved to Saint Kitts and Nevis in 2007 and became a citizen there, relinquishing his United States citizenship in the process. Both Adam and Dan went on to careers as professional poker players; Norman Chad nicknamed them the "Flying Bilzerian Brothers" for their performance in the 2009 World Series of Poker. Adam also wrote a book about his experiences, which the Midwest Book Review's Small Press Bookwatch reviewed favorably as "a well-versed list of grievances with the powers that be in America, making for an intriguing read through and through".
In June 2014, a Bloomberg News report incorrectly stated that Paul Bilzerian had become one of the licensed service providers who processed applications for the same Saint Kitts and Nevis citizenship-by-investment program which his son had used. The report also stated that Bilzerian had gone on to process a citizenship-by-investment application for Bitcoin investor Roger Ver, and that the two men had co-launched a website through which customers could use Bitcoins to pay for the fees and the real estate purchase in the citizenship-by-investment program. The government of Saint Kitts and Nevis responded in a statement the following week that Bitcoin was not an acceptable payment method for participation in the program.