Wyly bros accused of using Cayman to hide profits

| 30/07/2010

(WSJ): Billionaire brothers Sam Wyly and Charles Wyly hid $550 million in trading profits by using an "elaborate sham system" of offshore entities, the Securities and Exchange Commission charged Thursday. The civil suit, following a six-year probe, targets a pair of entrepreneurs in their mid-70s who amassed a fortune over more than four decades through ventures including Michaels arts and crafts stores. The SEC said the Wylys used sham trusts and subsidiaries in the Isle of Man and the Cayman Islands to avoid disclosure of their stakes and sales of stock in public companies where they were directors.

In one instance, the brothers traded on insider information about an upcoming sale of a company to make a $31 million profit, the SEC alleged. "The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," said Lorin L. Reisner, deputydirector of the SEC’s enforcement division.
The Wylys’ lawyer, William A. Brewer III, said the brothers plan a vigorous defense and expect to be vindicated. "After six years of investigations, the SEC has chosen to make claims against the Wyly brothers—claims that, in our view, are without merit," said Mr. Brewer. He added that the Wylys relied on the advice of accountants and lawyers.
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  1. Anonymous says:

    It is all our own fault. (We the people, that is).

    When we complain that we are "used" it is because we allow it. Instead of charging a proper fee ( a reasonable %) so that we can exercise close/r scutiny and supervison (by proper inspectors from the CIMA), the country, or the Caymanian people, charges and receives a pittance (a few thousand dollars), while the people who use the Cayman Islands, "save" (rip-off?) $550 million, and the attorney’s, trust companies, and primarily overseas shareholders, quietly continue to stash away their millions!

    As my mother would say (when I did something wrong and was punished) "serves you right".


  2. Anonymous says:

    This is a clear case of a rogue Trust company not playing by the rules. We cant paint them all with the same brush. The person who ran the Cayman Trust Company should be required to answera lot of questions by CIMA and if there was wrong doing she should be charged!

    This has only served to tarnish our reputation further.

    We really need to stop and think about what we are doing, we are allowing individuals from other countries to come here and take up leadership positions in Cayman and entrusting them with Caymans reputation with almost no consequences when they do wrong.

    I really hope CIMA is investigating the role of the Cayman entities, and that they are prepared to act. I know of a many Caymanians who were employed at the Cayman Trust Company and when they asked questions about the business practices they were promptly let go. Nice huh??


  3. your time is gonna come says:

    There is such a discraceful history of people using this island in the sun for a place to stash their ill-gotten gains.  All we hear about is a never ending litany of tripe from those here who would protect these bastards at any cost.  I have tried to broach the subject with my elders and preachers and others and all I get is a clouding over of the eyes.  Many of our problems in this country stem from the fact that this is the status quo here.  We have a very bad karma, ju ju, golden rule etc. problem here and it is being ignored at this country’s detriment.  We as a country have no moral high ground because of this.  The result is leaders who would prostitute this country at the drop of a hat.  Our ailments stem from the fact that we have failed to be our brother’s keeper internationally.  It is coming back to collectively bite us on the ass.  Hey all you preachers out there how about you pray for all of those around the world who suffer because of places like this.  Open your eyes people.  One way or another it has to be taken to task, like it or not.  Cayman has been used and abused, you gonna give glass eye or are you gonna stand in the face of evil and denounce it?  If not then please evacuate the pulpit because you are unworthy of the post.

  4. ex-pat Eric says:

    This is not new! The Sec has been after them for a while.

    I guess "Know Your Customer" really doesn’t matter as long as you can afford a Cayman Law firm!

  5. KC says:

    Poor old Cayman the same old dirty game being played foreigners make the gain Cayman gets the blame.We are importing our problems and having to pay for it every step of the way.When will we ever learn?