NEW YORK - Two Texas brothers acted fraudulently by trying to hide assets they controlled in four public companies that were sold for billions of dollars, a jury determined Monday in a civil trial.
The Manhattan jury returned its verdict against 79-year-old Sam Wyly and the estate of his brother, Charles, whom the Securities and Exchange Commission had accused of earning more than $500 million illegally by using offshore accounts to trade securities.
Damages will be assessed by U.S. District Judge Shira Scheindlin after additional submissions by lawyers.
Wyly, who testified on his own behalf during the trial, was not in the courtroom for the verdict. Two other family members cried as the verdict was announced by the jury forewoman.
The Wylys earned more than $14 billion by selling companies including the arts and crafts retail chain Michael Stores Inc. and two technology companies. After the sales, Sam Wyly was on the Forbes list of billionaires for a time while the brothers donated millions of dollars to mostly conservative Republican candidates and causes. Charles Wyly died in a car accident in Aspen, Colorado, three years ago.
In a statement after the verdict, defense attorney Stephen Susman said he was "deeply disappointed."
"Despite this setback, we maintain that Sam and Charles Wyly acted in good faith. We will continue to fight for justice through the next phases of the legal process," he added.
SEC Enforcement Director Andrew Ceresney said the agency was gratified.
"We proved that the Wylys used a system of offshore trusts to conceal their transactions as directors of publicly traded companies," he said. "We will continue to hold accountable, and bring to trial when necessary, those who commit fraud no matter how complex their scheme or how hard they try to hide it."
In closing arguments, SEC attorney Bridget Fitzpatrick had urged jurors to find that the brothers acted fraudulently by taking steps to hide their offshore dealings in the companies they controlled. She said they also failed to file proper documentation.
She accused Wyly of lying multiple times when he claimed he was happy to disclose information publicly and never hid assets in the Isle of Man, where offshore trusts were used to trade in the securities of the companies.
Susman had told jurors that Wyly trusted employees to make required document filings and relied on experts in the law and taxes to guide his decisions.