Texas Tycoon Tax Fraud Trial Underway in Dallas

The IRS has accused Texas tycoon Sam Wyly of a tax fraud scheme spanning many years that allegedly defrauded the government of taxes on more than $1.1 billion held in offshore trusts. Wyly is currently on trial in a federal bankruptcy court in Dallas.

The IRS is seeking $2.2 billion in back taxes, interest and penalties from Sam Wyly and Dee Wyly, the widow of his brother Charles Wyly. The IRS claims that the Wylys used offshore trusts set up in the Isle of Man to avoid paying taxes on $1.1 billion since 1992.

The Wylys content that they relied on family attorneys to advise them on setting up the offshore trusts and to advise them on taxes. In his testimony, Sam Wyly said that the family decided to establish the offshore trusts for the purposes of estate planning, asset protection, tax deferral and litigation protection.

In 2014, the Wylys were ordered to pay the Securities and Exchange Commission (SEC) almost $300 million for engaging in securities fraud through the offshore trusts. A Manhattan jury found Sam and Charles Wyly liable for attempting to conceal $550 million in profits made from trading stock of four companies in which the brothers had ownership interests.

Following that verdict, Sam Wyly and Dee Wyly filed bankruptcy. Charles Wyly died in a car accident in Colorado in 2011. The IRS is seeking $1.4 billion in back taxes, fees and penalties from Sam Wyly and $800 million from Dee Wyly.

Wyly testified that he filed for bankruptcy protection to force the IRS to “put up or shut up.” He said that the IRS had audited his tax returns for years but would never tell him if he owed any additional taxes, and that he didn’t want a tax burden hanging over the heads of his children. Sam Wyly is 81 and in poor health.

The Cogdell Law Firm is a boutique law firm focusing on large, complex business and criminal financial-related litigation, including white collar criminal defense, securities fraud, health care fraud investigation, criminal appeals and state criminal defense. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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