“Diva of Distressed” Tilton Loses Bid to Block SEC

A federal District Court judge says Lynn Tilton, the flashy owner of Michigan-based Dura Automotive Systems Inc., must go through a U.S. Securities and Exchange Commission disciplinary proceeding before challenging the constitutionality of the SEC's process.

Tilton says she and her Patriarch Partners LLC firm have revived more than 240 troubled American companies. In March the SEC accused her and Patriarch of misleading investors about the risks of some $2.5 billion in pooled loans used to bail out struggling companies. The commission says Patriarch collected nearly $200 million in unwarranted fees as a result.

Tilton promptly sued the SEC, claiming its in-house proceeding would violate her constitutional right to a trial. But the federal judge ruled that she can't sue until she completes the administrative process.

Tilton's lawyers, claiming recent decisions by other federal judges, suggest otherwise. They plan to appeal.