DALLAS: SEC charges billionaire brothers Sam & Charles Wyly with fraud: What’s divorce got to do with it?

Self-described “monomaniac” Sam Wyly and his brother Charles are Texas billionaires with ties to Georgie W. Bush and the notorious British Petroleum (“BP”). The brothers are self-made billionaires who consistently make the Forbes list of Billionaires and even the Forbes list of “greenest” billionaires of 2010. They were charged with civil fraud by the SEC last week and it looks like there may be a divorce angle to the story. Here’s some dirt I dug up from a website called Multinational Monitor:

Another apparent monomaniacal Sam Wyly goal — sheltering his wealth — reportedly was inspired by the huge divorce settlement that his first wife obtained in the early 1990s. The Wyly family then embraced offshore tax shelters so aggressively that they appear to have broken U.S. tax laws, according to “Tax Haven Abuses,” a 370-page report by the U.S. Senate Permanent Subcommittee on Investigations.

By the way, these tax havens were used to shelter artwork, jewelry and furniture for personal use by the Wylys. Betcha the jewelry was for his wife. So, who was the wife? Well, it seems Mr. Wyly has had three wives so far and he’s currently married to the third one, Cheryl (they live in a multi-million dollar mansion in Highland Park, Texas, according to Wikipedia). So it’s either wife number one or wife number two that set him on this trajectory that has now led to an indictment by the SEC. Wife number one. Who was she? What was her name? I can’t find anything about her in the press.
Seems that the SEC’s charges stem from the management and control of various off-shore trusts owned by the billionaire Wylys in places like the Isle of Man in the Irish Sea and the Cayman Islands in the Caribbean where Sam and his brother Charles routinely dumped millions and millions of dollars to avoid evade taxes and evade their spouses in the event of a divorce.
The divorce angle notwithstanding, it seems the Wylys have always been under a cloak of suspicion and have been the subject of investigations by various agencies including the IRS and possibly even the Justice Department. And this goes back a few years. Again, Multinational Monitor in 2006:

A federal grand jury in Dallas is investigating allegations that the Wylys abused dozens of offshore tax shelters to bilk Uncle Sam out of tens of millions of dollars. A U.S. Senate probe concluded in August that the brothers used some of these offshore accounts to pump $187 million in tax-sheltered funds into Green Mountain. The Senate investigation, which alleges that Green Mountain has lost money every year of its existence, raises questions about whether Green Mountain would have survived without massive transfusions from the Wylys’ legally dubious tax shelters.

Wow. But their lawyers say this is all a big misunderstanding. And for their sakes I hope it is. Because if it isn’t, and it this goes to the Justice Department, and if they are convicted of criminal fraud as well, well, they could be looking at Bernie Madoff as a possible cell mate. Which, I guess, could be an interesting turn of events.
Now, what about Warren Buffet? He’s clean, right?
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