Business

Wyly and estate of late brother owe IRS $1.1 billion, judge rules

Sam Wyly, right, with his late brother Charles, in Colorado in 2006.
Sam Wyly, right, with his late brother Charles, in Colorado in 2006.

Former Dallas billionaire Sam Wyly and the estate of his late brother Charles owe the Internal Revenue Service $1.1 billion for using a web of offshore funds to hide assets as the men got rich building companies including the arts-and-craft chain Michaels Stores.

The finding on Monday by U.S. Bankruptcy Judge Barbara Houser in Dallas follows a trial in which the court roundly rejected the 81-year-old entrepreneur’s argument that he was simply following orders from his own employees when he set up the offshore funds.

The IRS was seeking $1.4 billion from Sam Wyly and $834 million from his sister-in-law, with penalties and interest accounting for 80 percent of the totals, the government said in court papers filed Jan. 25. But instead of deciding on those claims as requested last month, when she ruled on the trial, Houser asked the parties to confer and submit “agreed amounts” on the claims to the court.

The IRS argued that it was the victim of a vast fraud revealed in a 2010 SEC suit against Sam and Charles Wyly, brothers and longtime business partners.

Charles Wyly died in a car crash in 2011, leaving his widow, Caroline “Dee” Wyly, caught in the litigation.

In 2014, a federal jury in Manhattan found that the brothers had used a web of offshore trusts for 13 years to hide stock holdings and evade trading limits, allowing them to rake in $550 million in illegal profits.

This report includes material from Star-Telegram archives.

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