Sam Wyly, the Dallas erstwhile billionaire, has settled his six-year squabble with the Securities and Exchange Commission for the discounted sum of $198.1 million. In exchange for this, the SEC has agreed to make sure that the cash is used as part of a multi-part agreement that would also help Wyly settle the nearly $2 billion in back taxes he owes the IRS.
In 2010 the SEC charged Wyly and his now late brother Charles with hiding $553 million in profits using a series of trusts the brothers had established on the Isle of Man. In 2014, a jury found the pair guilty of securities fraud, and a federal judge ordered Sam Wyly to pay the SEC $198.1 million and Charles Wyly to pay $101.2 million.
Despite being listed as one of Forbes' 400 richest Americans in 2010 with a net worth estimated to be north of $1 billion, Wyly filed for bankruptcy after losing the trial. The IRS took him to bankruptcy court, where he was ordered to pay more than $1.1 billion in back taxes, in addition to interest and penalties.
During his bankruptcy trial, Wyle memorably told the court that he couldn't manage on the $10,000 a month the court allowed him from his frozen assets for living expenses. After all, he had quite the payroll to meet.
Wyly had monthly bills for landscaping and pool maintenance ($2,500 per month), utilities ($2,500), cable and phone bills ($750), and insurance on his $7.2 million Highland Park home ($4,725), he said, so the allowance the court set for him was "absurdly low" and "unjust." He needed $600,000 a month just to survive, he told the court, thanks in part to the $30,000 monthly mortgage on his wife's bookstore in Aspen and the $7,000 a month he used to provide "humanitarian support provided to elderly family and friends."
The SEC fought back at the time, because it wanted to make sure it got paid.
"Sam Wyly testified that he has always paid his debts," it said in a legal filing. "The SEC continues to believe that Sam and the Estate of Charles Wyly have sufficient global assets to pay any judgment ordered by this Court. Appropriate next steps can be addressed when and if they fail to do so."
Wyly's new agreement with the SEC confirms as much. The money for the settlement, which must be paid by Dec. 12, will come from the same Isle of Man trusts that started all the trouble in the first place.