A federal jury in New York decided Monday afternoon that two Texas billionaire brothers committed fraud by trying to hide assets they controlled in four public companies.
The Securities and Exchange Commission is seeking more than $500 million from 79-year-old Sam Wyly and the estate of his late brother, Charles.
The SEC has been on a losing streak in court as of late, most notably with another Dallas billionaire, Mark Cuban. The Wyly brothers have a much lower profile than Cuban, but they've been big donors in Dallas and with conservative political causes nationwide.
The Wyly brothers made more than $14 billion by selling companies, including arts and crafts retail chain Michaels Stores, Inc.Many know the Wyly brothers for their philanthropy and donations to the arts and law enforcement.
Charles died in a car accident in Colorado three years ago, after the SEC battle was already joined.
Now, the government has successfully prosecuted the two for earning more than $500 million illegally by using offshore accounts to trade securities.
Cuban was found not liable on insider trading charges in October. Vindicated in court, Cuban angrily bashed the SEC, saying it lied about evidence and targeted him because of his fame.
Others questioned the agency’s trial capabilities following a series of losses.
"They had a black eye when they had the Mark Cuban verdict, and this one is something that they needed,” said John Teakell, a former federal prosecutor and now defense attorney in Dallas.
Teakell says the SEC had a much stronger case this time.
"The evidence included his former attorney, who testified for the government in regard to transactions and items that related to their supposed hiding of interest or control in this trust,” said Teakell. “And they had some other documents, some other evidence that supported that."
The Wylys’ attorney released a statement that reads in part, “We are deeply disappointed" and "…will continue to fight for justice through the next phases of the legal process."
The judge in the case will rule on the damages after a separate trial in August.
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