As the wife of the late Dallas billionaire and philanthropist Charles Wyly, Caroline Dee Wyly witnessed her husband’s fortune contribute to reshaping the Dallas Arts District. The AT&T Performing Arts Center named a theater in their honor after the couple donated $20 million, and their generosity reached Republican politicians whom the family claims received more than $10 million for conservative causes since the 1970s.
Wyly shared an $8 million Dallas home with her husband in a neighborhood surrounded by notable people, including former President George W. Bush and Dallas Mavericks’ owner and television personality Mark Cuban. They spent five decades in the 5,000-square-foot home at the 5900 block of Deloache Avenue, raising a family of three daughters and a son as her late husband amassed a fortune buying, enlarging and selling retail enterprises such as the arts-and-crafts store chain Michaels, the Bonanza and Ponderosa steakhouses, Green Mountain Energy and Sterling Software. He died in a car accident in 2011.
At 83 years old, she no longer sees well nor is allowed to drive. She spends most of her time alone in her home surrounded by space heaters and window AC units. Her husband’s estate is being claimed by the federal government, her daughter Jennifer Lincoln says.
Now the government plans to take her family home.
The U.S. Department of Justice wants a Texas-based federal court to let it foreclose on Wyly’s $8 million property. The home already has a federal tax lien against it, but if the home is sold, the Justice Department claims the proceeds could go toward paying the $20 million in back taxes it claims Wyly owes.
“My father was the most honest man,” Lincoln says. “This is completely unjust.”
Wyly wasn’t available to chat, and the Department of Justice couldn’t discuss particulars of the most current move, only to confirm what’s already been reported by Law360: that this is another move in a yearslong fraud and tax-avoidance case entering a new phase since Wyly filed for bankruptcy shortly after a jury found her husband’s estate and her brother-in-law Sam Wyly guilty of securities fraud in 2014. They were ordered to pay $300 million.
The brothers disputed the securities lawsuit. Sam Wyly told The Dallas Morning News in an article about his brother’s death in August 2011, “I think it’s good politics to beat up on big companies and rich people.”
Sam Wyly claims that he and his brother Charles honed their business skills working for their parents’ weekly newspaper, the Delhi Dispatch in Delhi, Louisiana. The New York Times reported that they had lived with their family in a shack without electricity or plumbing for an unspecified period of time. Charles learned how companies operated and Sam tackled the grand strategy. They went to work for IBM in the early ’60s before starting their own software company, University Computing. They began buying and founding other companies and quickly developed a reputation as investors “with an appetite for risk and occasional ruthlessness in taking over companies and cutting payroll costs,” as the Times reported in Charles Wyly’s 2011 obituary.
They made $4 billion when they sold Sterling Software in 2000 and another $6 billion six years later when they sold Michaels about the same time the Securities and Exchange Commission began investigating the brothers’ trusts and shell companies in tax havens located on the Isle of Man and the Cayman Islands. Then a Senate subcommittee reported in 2006 that the brothers had spent hundreds of millions in untaxed dollars to fund lavish lifestyles.
The SEC claimed the brothers were using shell companies to hide their stock ownership in companies where they served as board members and brought a lawsuit against them in 2010, seeking to impose penalties and seize $550 million. Sam Wyly told the Times, “My reputation is more important to me than anything” but told the Morning News, “I can tell you one thing. They gonna lose. They gonna get nothing.”
The SEC didn't lose, and neither brother’s reputation was enough to prevent the government from collecting what it felt it was owed.
In 2014, the SEC won its lawsuit and a $299 million judgment against the Wylys. The Internal Revenue Service quickly followed suit and sought $1.4 billion in back taxes, fees and penalties from Sam Wyly and another $800 million from Caroline Wyly, whose 77-year-old husband died a few years prior to the ruling when another car collided with his Porsche in Aspen, Colorado, his daughter Lincoln says.
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
Sam and Caroline Wyly filed for bankruptcy. In early 2016, U.S. Bankruptcy Judge Barbara Houser ordered Sam Wyly to pay $1.1 billion in back taxes, interests and penalties.
Caroline Wyly’s husband’s estate was hit with $250 million in tax liens. Wyly had filed for Chapter 11 bankruptcy, but the court converted it to a Chapter 7 bankruptcy in November 2016, meaning her assets could be sold off to pay creditors.
The bankruptcy court allowed the Department of Justice to file a tax lien against Wyly’s home on Feb. 7 and to file suit to foreclose on the tax lien. The government claims that her Chapter 7 bankruptcy case is still pending and that property taxes are owed to Dallas County, city of Dallas, Dallas Independent School District, Dallas County Community College an Parkland Hospital. The Secretary of Treasury claims Wyly owes income tax and interest of more than $19 million and gift tax and interest of more than $21 million.
Lincoln claims that her mother is having a hard time paying what the government wants because her mother wasn’t involved in her husband’s business dealings. “She is living a nightmare,” she says.