(Bloomberg) — Samuel Wyly and the estate of his brother Charles will soon find out if they have to pay the U.S. regulators as much as $700 million after a jury found them liable for a 13-year scheme to use a web of offshore trusts to hide stock holdings and make illegal trades.
U.S. District Judge Shira Scheindlin in Manhattan Monday heard closing arguments on how much the Wylys must turn over in illegal proceeds. The Securities and Exchange Commission asked Scheindlin to order the Wylys to pay $329 million plus interest. Their lawyer estimated the total could be $700 million.
You change a few numbers around and its a hundred million here and a hundred million there, attorney Stephen Susman, who represents the Wylys, told Scheindlin today, as he attempted to minimize the amount the family must pay.
TheSECalso sued the wives and children of the two brothers. Sam Wyly and Charless widow have both filed for bankruptcy protection in response to the SECs claims.
Susman and another Wyly lawyer, Steven Shepard, argued that theSECfailed to prove a link between the the brothers use of the offshore trusts and the illegal proceeds sought by theSEC.
Auto Accident
A federal jury in May found that Sam Wyly and Charles, who was killed in an auto accident in 2011, perpetrated a fraud that made them at least $550 million in illegal trading profits.
Sam Wyly, a former billionaire, spent $100 million fighting the case. He testified in his own defense at the trial, a move that did him little good, according to one of the jurors who was interviewed after delivering the verdict.
The jury found that the Wyly brothers, who bought a small chain of craft stores and turned it into the publicly traded Michaels Stores Inc., used the complex web of trusts to hide their holdings of stock in companies on whose boards they sat.
TheSECprevailed on all nine of its claims against the Wylys that were presented to jurors. Scheindlin ruled against a claim of insider trading, which wasnt submitted to the jury.
The Wylys claimed they used the offshore trusts for tax purposes, estate planning and asset protection. They said they never concealed the offshore trusts and relied on the advice of an army of lawyers they trusted to ensure they complied with the law.
The case is Securities and Exchange Commission v. Wyly, 10- cv-05760, U.S. District Court, Southern District of New York (Manhattan).
