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.”

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