U.S. SEC seeks to double $200 mln damages award against businessman Wyly

Fri Nov 7, 2014 6:25pm EST
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By Joseph Ax and Nate Raymond

NEW YORK Nov 7 (Reuters) - The U.S. Securities and Exchange Commission will ask a federal judge to more than double the money Texas businessman Sam Wyly must pay from $200 million to $455 million for his involvement in an offshore fraud scheme, a lawyer for Wyly said on Friday.

U.S. District Judge Shira Scheindlin in New York has already ordered Wyly and the estate of his late brother Charles to pay $187.7 million plus interest to the SEC, which the regulator has said should total just under $300 million.

Sam Wyly, 80, who last appeared on Forbes' list of the 400 richest Americans in 2010 with a net worth of $1 billion, is responsible for around two-thirds of damages and has filed for bankruptcy in Dallas, saying he cannot afford the SEC's claim as well as potential tax claims from the Internal Revenue Service.

Scheindlin will preside over a hearing Wednesday at which the SEC will have an opportunity to convince her that the damages should be even higher.

During a hearing in Dallas bankruptcy court on Friday, Terrell Oxford, a lawyer for Wyly, said in written testimony read in court that the SEC is expected to seek $195 million plus interest from Sam Wyly, for a total of approximately $455 million.

The SEC is likely to ask that Scheindlin increase the award against Charles Wyly's estate, as well.

Meanwhile, lawyers for Wyly also disclosed at the hearing that preliminary settlement talks involving the Wyly family, the SEC and the IRS had taken place earlier on Friday.

"We began to get to know each other," said Josiah Daniel, another Wyly lawyer, adding that the parties discussed "in broad strokes" how a resolution might be reached through the bankruptcy proceeding.   Continued...