Sam Wyly and his company, Green Mountain Energy, were the darlings of some prominent environmentalists, despite a poor record of performance.
Gene Coyle On Jul 30, 2010, at 6:30 AM, Louis Proyect wrote: > http://www.washingtonpost.com/wp-dyn/content/article/2010/07/29/AR2010072906345.html > SEC charges billionaire Texas brothers who donate to GOP with fraud > > By Zachary A. Goldfarb and Philip Rucker > Washington Post Staff Writer > Friday, July 30, 2010; A01 > > Sam and Charles Wyly, billionaire Texas brothers who gained > prominence spending millions of dollars on conservative political > causes, committed fraud by using secret overseas accounts to > generate more than $550 million in profit through illegal stock > trades, the Securities and Exchange Commission charged Thursday. > > The Wylys, who have been generous contributors to the Republican > Party and GOP candidates, have spent the past several years facing > questions, including from a Senate investigative committee, about > whether they hid millions of dollars in tax shelters abroad. > > Through their lawyer, the Wylys denied all charges. > > According to the SEC, the brothers, who live in Dallas, created an > elaborate and clandestine network of accounts and companies on the > Isle of Man and in the Cayman Islands. The brothers then used > these accounts and companies to trade more than $750 million of > stock in four public companies on whose boards they served, not > filing the disclosures required for corporate insiders, the SEC said. > > In one case, the SEC alleges that the Wylys traded based on > insider information they learned as board members, netting a > profit of $32 million. > > "The cloak of secrecy has been lifted from the complex web of > foreign structures used by the Wylys to evade the securities > laws," Lorin L. Reisner, deputy director of SEC enforcement, said > Thursday in a statement announcing the civil charges. > > The agency is seeking unspecified financial penalties and a > variety of other sanctions, including barring the Wylys from > serving as directors or top executives of public companies. > > William Brewer III, a lawyer representing the Wylys, said they > intend to clear their name. > > "After six years of investigations, the SEC has chosen to make > claims against the Wyly brothers -- claims that, in our view, are > without merit," Brewer said in a statement. "It will come as > little surprise to those who know them that the Wylys intend to > vigorously defend themselves -- and expect to be fully vindicated." > > Charles Wyly, 76, and Sam Wyly, 75, have led a largely reclusive > life, with their public persona defined by their political > activities. Charles Wyly and his wife, Dee, have given more than > $1.5 million to more than 200 Republican candidates, party > committees and conservative political action committees over the > past 20 years, according to an analysis by the Center for > Responsive Politics. Sam Wyly and his wife, Cheryl, gave more than > $970,000 over the same period, the analysis shows. > > The Wylys have given to dozens of Republican candidates, none more > so than the Bush family. The brothers were supporters of the > campaigns of former President George H. W. Bush and his son, > former President George W. Bush. > > In 2000, the Wylys financed a third-party group, Republicans for > Clean Air, that launched a television advertising broadside > against George W. Bush's chief opponent, Sen. John McCain > (R-Ariz.), on the eve of crucial GOP presidential primaries. Later > that year, the brothers each gave $100,000 to fund Bush's > inaugural festivities. > > In 2004, the Wylys helped fund Swift Boat Veterans for Truth, > another third-party organization that ran controversial television > ads attacking the military record of Sen. John F. Kerry (Mass.), > Bush's Democratic opponent. > > "They are among the biggest of the big when it comes to campaign > bank-rollers, and their donors list is a who's who of the > Republican Party over the past decade," said Dave Levinthal, a > spokesman at the nonpartisan Center for Responsive Politics. "It's > almost hard to find prominent Republicans who haven't been a > beneficiary of their financial largess. They've definitely been > very kind, financially speaking, to a number of Republicans." > > Their biggest beneficiaries include three Texas Republicans, Sen. > Kay Bailey Hutchison, National Republican Congressional Committee > Chairman Pete Sessions and former House Republican leader Richard > K. Armey, according to the Center for Responsive Politics > analysis. The Wylys also have given to Senate Minority Leader > Mitch McConnell (Ky.), former New York mayor Rudolph W. Giuliani > and many other members of the GOP. > > Both brothers, according to Forbes magazine, are billionaires who > amassed their fortune by founding a computer company and investing > in a wide range of interests including oil, insurance and > restaurants. In 1979, Sam Wyly faced sanctions by the SEC for > improper regulatory disclosures. > > They have been the subject of probes into potential financial > wrongdoing since then. In 2006, the Senate permanent subcommittee > on investigations completed a report on tax havens that focused on > the Wylys. > > Over 13 years, the Wylys used an "armada" of lawyers, brokers and > other professionals to manage hundreds of millions of dollars in > transactions that amounted to "the most elaborate offshore > operations reviewed by the Subcommittee," according to the panel's > report. > > In announcing its case, the SEC alleged that the Wylys' improper > trades benefited them in many ways. They used the proceeds to buy > art, collectibles, and jewelry worth tens of millions of dollars, > according to the complaint. They spent $100 million to buy real > estate, including two ranches in Aspen, Colo., two condominiums in > Aspen, and a 100-acre horse farm outside Dallas. They also used > the proceeds to cover charitable contributions made by the Wylys, > including $8 million to Sam Wyly's business school alma mater and > a $2.5 million contribution to a church Charles Wyly attended. > > The agency alleges that the Wylys committed fraud and various > other violations of securities laws while sitting on the boards of > four companies over the course of a decade: Michaels Stores, > Sterling Software, Sterling Commerce and Scottish Annuity & Life > Holdings. > > The SEC says that by using offshore accounts to trade shares of > these public companies, the Wylys were able to escape filing the > regulatory disclosures required of board members when they buy or > sell shares. > > By keeping their trading activity secret, the Wylys deprived > outside investors of information they could use "to gauge the > sentiment of public companies' insiders and large shareholders > about the financial condition and prospects of those companies," > the SEC said. > > In one instance, the Wylys used insider information to make an > offshore purchase of shares in Sterling Software, where they > served as chairman and vice chairman, according to the complaint. > They did not disclose the purchase even though they knew the > company was soon going to be sold, according to the SEC. Less than > four months later, Sterling Software was sold, and the Wylys > netted nearly $32 million. > > "The Wylys have always received the advice and counsel of leading > accounting and legal professionals," said Brewer, the brothers' > attorney in the SEC matter. "They have never been given any reason > to believe the financial transactions in question were anything > other than legal and fully appropriate." > > The SEC also charged the Wylys' longtime personal attorney, > Michael French, and their stockbroker, Louis Schaufele III, for > their roles in the alleged scheme. French also served on the board > of three of the companies. > > A lawyer for French did not return calls or e-mails seeking > comment. A lawyer for Schaufele declined to comment. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
