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Regulator seeks tough penalty for tax evasion case

Published on NewsOK Modified: August 6, 2014 at 4:35 pm •  Published: August 6, 2014

NEW YORK (AP) — The Securities and Exchange Commission wants to make an example of two Texas brothers found by a jury at a civil trial to have acted fraudulently to evade taxes, but a defense lawyer said Wednesday that the more than $750 million sought by the government is "hotly contested."

A Manhattan federal judge will be left to decide on a figure in the penalty phase of a trial against Sam Wyly and the estate of his brother Charles, who a jury found avoided taxes from 1992 to 2002. The government said they paid no taxes on more than $500 million earned through offshore trusts designed to dodge taxes.

Attorney Stephen D. Susman told Judge Shira A. Scheindlin that the SEC's analysis of how much money must be handed over was "entirely overblown," and that the most that could be ordered to be surrendered was less than $24 million.

Besides, he added, there's not enough money to pay up if the SEC gets what it wants and the "amount of disgorgement is hotly contested."

Susman said Charles Wyly's estate has about $30 million in the United States while Sam Wyly has about $70 million plus a $12 million annuity. The lawyer said, though, that more than $380 million rested in offshore accounts.

Those offshore accounts were the focus of a trial earlier this year in which a jury found that the brothers tried to hide some of the assets they controlled in four public companies that were sold for billions of dollars.

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