By Katy Stech
A federal judge has finalized an order for ex-billionaire and
Texas entrepreneur Sam Wyly to pay a $198.1 million in fines, after
regulators accused him of profiting for more than a decade from
hidden stock trades.
In a court order on Thursday, U.S. District Judge Shira
Scheindlin calculated the amount Mr. Wyly and his deceased
brother's estate owe the U.S. Securities and Exchange Commission to
be $299.4 million. The brother, Charles Wyly, was assessed a fine
of $101.2 million.
Mr. Wyly's lawyer Stephen D. Susman on Friday didn't respond to
an emailed request for comment. Mr. Wyly couldn't be found for
comment.
Judge Scheindlin's ruling came after a jury in May, in a civil
suit brought by the SEC, ruled against Mr. Wyly.
The judge in September had said the SEC's requested punishment
of up to $729 million had been "staggering," indicating at the time
that a lower total of fines was more in order.
SEC officials had accused the Wyly brothers of using a web of
trusts and other entities based in the Isle of Man and Cayman
Islands to sell large portions of shareholdings in four companies
but not disclosing those sales in filings with regulators over a
13-year period starting in 1992.
Lawyers for the Wylys had argued throughout the trial that the
trusts were set up for tax purposes and to facilitate estate
planning, but that the Wylys didn't have control of them.
Mr. Wyly, 80, filed for Chapter 11 protection on Oct. 19, saying
he wouldn't be able to afford such the steep penalty being
contemplated by the judge. The continuing bankruptcy proceedings
could help Mr. Wyly negotiate a repayment plan with the
regulators.
Mr. Wyly also has downsized his lifestyle. Last year, he sold
his New York City apartment and several paintings at a 19th century
European art sale through Christie's Inc. He has let go of both
staffers in his "family office," as well as writers who helped him
author books on entrepreneurship, according to bankruptcy court
papers.
The Wylys built their fortune by founding or acquiring several
companies, including business-software makers Sterling Software
Inc. and Sterling Commerce Inc., arts-and-crafts chain Michaels
Stores Inc. and insurer Scottish Re Group Ltd. Sterling Software
was later sold to CA Technologies Inc. and Sterling Commerce to
AT&T Inc. (T), which later sold it to International Business
Machines Corp. (IBM).
The widow of Charles Wyly, Sam's brother who died in a car
accident in 2011, also has filed for bankruptcy.
Christopher M. Matthews contributed to this article.
Write to Katy Stech at katy.stech@wsj.com.
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