SEC lawsuit: Wyly brothers scored $500 million with securities dodges
The Securities and Exchange Commission sued Dallas’ Wyly brothers, accusing them of a 13-year fraud that earned them profits of more than $500 million.
The suit filed in New York culminates more than five years of investigation into Sam and Charles Wyly, two of North Texas’ biggest businessmen and charitable benefactors.
The suit alleges the Wylys used offshore accounts to shuffle money back and forth to evade securities laws. They also failed to disclose ownership of shares and used insider information to make trades that made them millions of dollars, the suit claims.
“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” said Lorin Reisner, deputy director of the SEC’s Division of Enforcement, in a statement. “They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders.”
William Brewer III, the lead counsel for the Wylys, said the claims are without merit and are a “misapplication of the law.”
While running Michaels, a chain of arts and crafts stores, the Wylys disclosed in the past five years that federal grand juries had sent the company subpoenas related to an investigation of the Wylys’ offshore accounting. The civil suit seeks multimillion-dollar financial penalties and asks the Wylys to return their profits.