‘Debt diva’ fraud case dismissed

Lynn Tilton finally got the monkey off her back.

A Securities and Exchange Commission administrative judge on Wednesday dismissed fraud charges against Tilton, aka “the diva of distressed debt,” ending a 2¹/2-year feud against the regulator that had upended her Patriarch Partners firm.

“It is concluded that the violations alleged [by the SEC] are unproven,” Judge Carol Fox Foelak wrote in her 57-page ruling. “Thus, this proceeding will be dismissed.”

Tilton’s regulatory nightmare began in March 2015 when the SEC filed civil charges claiming she masked the poor performance of her portfolio of distressed debt to reap $200 million in illicit fees.

But during a three-week hearing ended last November, Tilton maintained she made full disclosures to her investors — albeit buried amid dense trustee reports and spreadsheets.

“Everyone knew, everyone saw,” Tilton said at one point during the hearing in Manhattan federal court.

Judge Foelak concurred, noting that the disclosure may be unusual but not fraudulent.

“Noncompliance with [generally accepted accounting principles] is insufficient to prove fraud,” ruled Foelak, saying the “total mix of information available” was enough to meet her re- sponsibilities to investors.

Tilton, whose nickname reflects her flamboyant style, was overjoyed at the ruling.

“I am heartened to finally be able to put to rest the rumors and innuendo that have cast a dark shadow on me and my business for so long,” Tilton said. The victory will hopefully “deter the future abuse of power that comes with government overreach,” she added in a statement.

“We said all along that Lynn Tilton was innocent of these charges, had been falsely accused and that we would prove it at trial,” said Randy Mastro, Tilton’s lawyer.

Reps from the SEC declined to comment.