SEC Accuses Sam And Charles Wyly, Billionaire Dallas Investors, Of Insider Trading Yielding $550 MILLION
TERRY WALLACE 07/29/10 11:02 PM
DALLAS — Sam and Charles Wyly, Dallas billionaire investors known for their support of conservative candidates and causes, made $550 million in undisclosed profits through 13 years of insider trading, according to a Securities and Exchange Commission lawsuit filed Thursday.
In a 78-page complaint filed in a Manhattan federal court in New York, the SEC said the Wylys held and traded tens of millions of shares in companies on whose boards they served and "defrauded the investing public" by misrepresenting their ownership and trading of those stocks.
"The apparatus of the fraud was an elaborate sham system of trusts and subsidiary companies located in the Isle of Man and the
Using this offshore system, the Wylys were able to sell stock worth more than $750 million in four public companies where they served as corporate directors. They also committed an insider trading violation at one of the companies that resulted in an unlawful gain of over $31.7 million, according to the complaint.
The complaint lists the four companies as Michaels Stores Inc., Sterling Software Inc., Sterling Commerce Inc. and Scottish Annuity & Life Holdings Ltd., which is now known as Scottish Re Group Ltd.
"The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," Lorin L. Reisner, SEC deputy director of enforcement, said in a statement Thursday. "They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders."
The Wylys' defense attorney, William A. Brewer III of
"At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation," Brewer said in a statement issued by his law firm.
In March, Forbes magazine estimated Sam Wyly's net worth at $1 billion. He has given generously to Republican causes and candidates, including the Swift Boat campaign that helped re-elect President George W. Bush in 2004 by tarring his Democratic opponent, Sen. John Kerry.
The Wyly brothers, with their wives, have donated almost $2.5 million to more than 200 Republican candidates and committees at the federal level over the past two decades, according to the nonpartisan Center for Responsive Politics.
Both Presidents Bush received donations from the Wylys. Other recipients included current and former Republican senators: Kay Bailey Hutchison, John Cornyn and Phil Gramm of
Also named as defendants in the lawsuit are the Wylys' investment attorney, Michael C. French of
Attorneys for French and Schaufele had no comment Thursday.
The conservatives love rich greedy guys like these frellows who have billions and spend, actually invest, some of it in buying politicians and supporting conservative causes that ultimately are self serving, that is the people and causes help these greedy guys get more money and pay less taxes. The conservatives hate guys like Buffet, Soros and Gates who give away their wealth fighting desease and ignorance in the world, deseases such as malaria. Why is that?