Fighting Words From Wylys On Fraud Charges

Aug 23 2010 | 1:21pm ET

Hedge fund billionaire Samuel Wyly and his brother and business partner, Charles, say they could easily settle the fraud charges against them.

“I could write them a check, but that’s not the point,” the Maverick Capital founder tells The New York Times.  “It’s not about the money.”

Which is not to say the the Wylys, who are accused of setting up an “elaborate sham system” of offshore companies and family offices to skirt disclosing their holdings in public companies on which they served as directors, haven’t tried. The Securities and Exchange Commission investigation has been ongoing for six years, and numerous attempts to hammer out a settlement have failed. But following a pair of meetings this summer which showed both sides far apart, the Wylys appear to have dug in their heels.

“I can tell you one thing,” Samuel Wyly, who also founded hedge fund Ranger Capital, told the Times, “they gonna lose. They gonna get nothing.”

And then, the billionaire leaned back in his chair and let out a chortle: “Tee-hee-hee-hee!”

According to the SEC, the Wylys diverted proceeds of their $550 million fraud, which includes insider-trading, according to the SEC, to Maverick and Ranger. The regulator also accuses the two of making “hundreds of false and materially misleading statements to conceal their scheme.”

While Samuel Wyly acknowledges that the SEC allegations have been “a disaster,” he notes, “there’ve been worse.” The brothers blame their troubles on bad advice from lawyers and accountants, tracing it back to the end of Samuel Wyly’s marriage to ex-wife Torie Steele in 1991.

“We relied on people we thought were fine attorneys and accountants,” Charles Wyly told the Times. He said the brothers “never bothered with the details.” The SEC has also charged a lawyer and a banker who worked with the Wylys in their fraud lawsuit.

The Wylys, big Republican donors, predict the firestorm will die down after November’s mid-term elections.

“I think it’s good politics to beat up on big companies and rich people,” Samuel Wyly says. But soon, “the election will be over, and this will be forgotten about, or lost, be shut down, be gone, will be nothing.”


In Depth

Q&A: Neil Azous Talks Global Macro Investing

Nov 24 2014 | 12:41pm ET

Neil Azous is the founder and managing member of Rareview Macro, an advisory firm...

Lifestyle

Griffin Selling Chicago Apartment

Nov 26 2014 | 11:40am ET

Citadel Investment Group’s Kenneth Griffin is making clear to his estranged wife...

Guest Contributor

Why The Big Money Is Going To Europe

Nov 14 2014 | 6:03am ET

Peer-to-peer lending was invented with the individual investor in mind. But despite...

 

Sponsored Content

    For Hedge Funds, Mastering Data Is Key To Success

    Nov 4 2014 | 9:45am ET

    Data management is important to every business, but for hedge funds, it is critical. FINalternatives recently asked Peter Sanchez, CEO of Northern Trust Hedge Fund Services, how fund managers can deal with the demands of managing data while at the same time remain transparent and abide by operational best practices. Read more…

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

November 2014 Cover

Building a better market

Reg NMS created a huge bifurcation in equity markets and while much of what has followed has been positive, in terms of lower fees and greater liquidity, many traders would like to see the market come...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.