SEC Wants Texas’ Wyly Brothers to Pay $750M For Securities Fraud

The U.S. Securities and Exchange Commission wants Sam Wyly and the estate of his brother Charles to pay $750M forsecurities fraudinvolving an offshore tax scam. The Texas billionaire siblings were found liable in civil court earlier this year. Now, the case has gone to trial to determine how much the Wylys must pay in damages.

According to the federal jury that issued the verdict, the Wylys are liable for the offshore trusts and other entities on the Cayman Islands and the Isle of Man that garnered them $553 million in profits between 1992 and 2004 via concealed trades. The fraud involved offshore transactions with four of their companies in which they sold shares. The sales should have been noted in regulatory filings but were not listed.

Now, the SEC is saying that it should be entitled to all unpaid taxes on the profits from the scam in addition to interest. Lawyers for the brothers, however, are contending that the proper penalty is $1.38 million and that the law does not support the regulator’s disgorgement theory. They are also arguing that the SEC cannot step into the Internal Revenue Service’s shoes. (During the fraud, the U.S. government was not aware that the Wylys owed taxes because they did not disclose their control of the trusts. )

SEC律师布里奇特·菲茨帕特里克（Bridget Fitzpatrick）承认，该机构的基于税收的诉讼理论是独一无二但合适的，她指出，这些信托是为了获得税收优惠的目的而建立的。SEC最初希望Wylys根据信托基金赚取的每笔利润来支付14亿美元。主持非陪审团审判的美国地方法院法官Shira Scheindlin禁止这项努力。Scheindlin在上个月的另一项非陪审团审判中还清除了内幕贸易指控的兄弟。

OurTexas securities fraud law firmrepresents institutional investors and individual investors. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

SEC告诉法官，路透社，2014年8月4日
SEC Seeks up to $750 Million in Sanctions From Wyly Brothers, The Wall Street Journal, August 4, 2014

More Blog Posts:
Jury Says Wyly Brothers From Texas Committed Fraud, Stockbroker Fraud Blog, May 14, 2014
$550M Securities Fraud Case Between Texas’ Wyly Brothers & SEC Goes to Trial, Stockbroker Fraud Blog, April 2, 2014
FBI Probes Possible High-Speed Trading, Insider Trading Link, Institutional Investor Securities Blog, April 1, 2014