Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

SEC charges billionaire brothers with fraud

charles_sam_wyly.top.jpgCharles Wyly Jr. (left) and his brother Sam Wyly By David Ellis, staff writer


NEW YORK (CNNMoney.com) -- Two billionaire brothers face federal fraud charges for selling stock in companies which they helped oversee and then trying to conceal some $550 million in gains.

In a complaint issued late Thursday, the Securities and Exchange Commission said Sam and Charles Wyly Jr. attempted to hide their ownership and trading of stock in these firms by creating an elaborate system of off-shore trusts and subsidiary companies.

The SEC said the Wylys served as corporate directors at four different firms that were publicly traded at the time: Michaels Stores, Sterling Software, Sterling Commerce, and Scottish Annuity & Life Holdings, now known as Scottish Re Group Limited.

Over a period of 13 years, the brothers went to great lengths to hide their scheme, including making misleading statements to brokerage firm intermediaries, according to the SEC.

"The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," Lorin Reisner, deputy director of the SEC's Division of Enforcement said in a statement.

Attempts to reach the Wylys' attorney were not immediately successful.

Thursday's announcement is not the Wylys' first brush with the law. In 1979, Sam Wyly came under investigation by the SEC over a bond deal his company was involved with. He would ultimately settle the case without admitting or denying the allegations.

The Wylys' personal wealth was also at the center of a reported federal and state investigation from 2005 into whether Bank of America was helping wealthy clients hide their fortunes from the IRS.

In 2001, Sam Wyly made headlines following a drawn-out battle to win control of the software maker Computer Associates.

Throughout their respective careers, both men also established deep connections within the political world. Sam Wyly served as chairman of a presidential advisory commission under Presidents Nixon and Ford. Charles Wyly also served on a presidential advisory council on the issue of management improvement.

Between 2002 and 2010, members of the Wyly family made more than $178,000 in political campaign contributions through an entity called Ranger Governance, according to the nonprofit research firm MapLight.org. To top of page

Index Last Change % Change
Dow 18,473.75 -19.31 -0.10%
Nasdaq 5,110.05 12.42 0.24%
S&P 500 2,169.18 0.70 0.03%
Treasuries 1.56 -0.01 -0.51%
Data as of 6:10am ET
Company Price Change % Change
Freeport-McMoRan Inc... 12.68 0.30 2.42%
Bank of America Corp... 14.53 0.16 1.11%
Apple Inc 96.67 -0.67 -0.69%
Gilead Sciences Inc 81.05 -7.50 -8.47%
Chesapeake Energy Co... 5.35 0.21 4.09%
Data as of Jul 26
Sponsors

Sections

HSBC banker arrested at JFK airport as he prepared to leave the country. He and former trader face federal charges they manipulated currency trades. More

Bernie Sanders takes credit for forcing for forcing Hillary Clinton and the entire Democratic Party to get a lot tougher on Wall Street. But how likely is that to happen? More

A cutting-edge Chinese tech firm that you've probably never heard of just snapped up top U.S. electronics maker Vizio for $2 billion. More

Only 3% of employers offer so-called "vacation stipends" that help pay for their employees' vacations. But those that do make taking time off a must. More