Billionaire Brothers Fraud – Sam & Charles Wyly Scheme

By: Bill Waters
08/02/2010 06:40 AM ET

Billionaire brothers fraud scheme. Billionaire Sam Wyly and his brother, Charles, used an “elaborate sham system” of offshore entities. The brothers hid more than $550 million in trading profits that made each a billionare.

In a civil suit, the Securities and Exchange Commission charged the brothers on Thursday after a six-year investigation. The entrepreneurs, now in their mid-70s, amassed a fortune over more than four decades through ventures including Michaels arts and crafts stores.

“The Wylys used sham trusts and subsidiaries in the Isle of Man and the Cayman Islands to avoid disclosure of their stakes and sales of stock in public companies where they were directors. In one instance, the brothers traded on insider information about an upcoming sale of a company to make a $31 million profit,” the SEC stated.

“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” stated Lorin L. Reisner, deputy director of the SEC’s enforcement division.

“The brothers plan a vigorous defense and expect to be vindicated. “After six years of investigations, the SEC has chosen to make claims against the Wyly brothers – claims that, in our view, are without merit,” stated Wylys’ lawyer, William A. Brewer III. “The Wylys relied on the advice of accountants and lawyers he added.

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