Texas entrepreneur Samuel Wyly has filed for bankruptcy on Sunday, stating he does not own the assets to pay roughly $400 million in penalties for an overseas fraud scheme.
According to the Chapter 11 petition, Wyly stated he had assets and debt between $100 million and $500 million. He attributed his debt to the “massive costs of investigations and then litigation” by the Securities and Exchange Commission.
“While the debtor has substantial assets, he does not have the ability to pay the full amount of all asserted claims at the present time,” according to the filing.
A New York judge ruled last month that Wyly, 80, and the estate of his late brother, Charles, must forfeit up $187.7 million plus interest. In May, a civil jury found they were involved in a 13-year fraud scheme in which they used offshore trusts and subsidiaries to conceal stock sales.
It is believed the Wylys accrued upwards of $550 million in untaxed earnings through their system, which lasted over a decade.
The SEC is listed as Wyly’s second greatest creditor, with a claim of $198.1 million, according to court documents. Wyly listed the Internal Revenue Service as his biggest creditor, with disputed debts “unknown.”
Depending on how interest is calculated, the total payment owed by Wyly and his late brother’s estate will fall between $300 million and $400 million.
The Wylys created, grew and sold numerous companies since the 1960s. Their most noted companies include Sterling Software and Michael’s craft stores, which were both sold for $4 billion and $6 billion, respectively.
The SEC stated the Wylys used profits from secret stock sales in several of their companies to purchase real estate in Aspen, Colorado, a horse farm in Texas, jewelry and art. The brothers were also major donors to many Republican candidates and politicians.
In 2010, Wyly appeared on Forbes’ list of the 400 richest Americans, with an estimated new worth of $1 billion.
Outside of the filing papers, there is no official statement on the Wyly bankruptcy at this time.
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