Wylys Used Offshore Trusts To Conceal Trades

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Wylys Used Offshore Trusts To Conceal Trades

This week a jury found that the Wyly brothers, Samuel and Charles, utilized a network of offshore trusts to illegally conceal their stock holdings and avoid trade limitations, meaning that Samuel and his brother’s estate may be liable for as much as $550 million. The SEC alleged that the Wylys, who founded Michaels Stores Inc., concealed ownership of shares of companies on which they sat on the boards and broke disclosure regulations by not disclosing the full extent of their offshore holdings.

The Wylys’ attorney maintains that they acted in good faith and that they will continue to fight throughout the next phases of the judicial process. The Wylys claimed that they used the offshore trusts for tax purposes, estate planning and asset protection, never concealed the trusts, and relied on the advice of numerous attorneys.

Samuel Wyly took the stand and testified in his own defense during the trial, and one juror believed that Wyly may have hurt his own cause, stating that Wyly “maybe wasn’t all that sharp.” Ultimately, the jury found in favor of the SEC on all nine claims against the Wylys. The verdict was delivered after two and a half days of deliberating and is another win for the SEC in the Manhattan federal court. The SEC is known for bringing relatively few cases to trial, and this one took more than ten years to get to that stage.

The SEC further alleges that the Wyly brothers made $31.7 million by using inside information they garnered from sitting on the board of Sterling Software Inc. to accumulate shares in 1999 before its $4 billion sale to Computer Associates International Inc. The SEC will seek to force Samuel and his brother’s estate to pay over $550 million of allegedly illegal gains. The U.S. District Judge Shira Scheindlin will determine whether the brothers committed insider trading.

If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.

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