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Samuel "Sam" Wyly was born and grew up in one of the poorest communities in the United States. He was able to attend college only because of a scholarship program. After receiving his MBA in 1957, Sam Wyly moved to Dallas to work for IBM.

Sam Wyly became a very successful businessman and was a major contributor to conservative campaigns and candidates. In September 2006, Forbes ranked him as the 354th wealthiest American, when the magazine had then estimated Wyly's net worth to be $1.1 billion.

His older brother, Charles Wyly, Jr., was nearly equal in wealth. The two brothers were close with their business affairs, and like the Koch brothers, were often referred to as the "Wyly brothers". Sam and Charles had been inseparable, from their childhood growing up in a Depression-era farmhouse in rural Louisiana; to their playing days on a high school football team that won the state championship; to their five decades in business together, building two billion-dollar companies, Sterling Software and Michaels Stores --- even to their joint choice of Aspen, Colorado as a summer vacation spot.

Wyly and his brother Charles had personally given about $10 million to Republican causes and candidates between 1968 when Sam directed Richard Nixon’s election effort in the state of Texas, until 2006.

In 2004, Sam Wyly donated $20,000 to the Swift Boat Campaign that raised questions about Senator John Kerry's military record in Vietnam, helping scuttle Kerry's challenge to George W. Bush.

The Wyly brothers had both been Bush Pioneers, those who gathered $100,000 or more for Bush's two presidential campaigns.

Back in 1979, Sam Wyly had settled charges that the Securities and Exchange Commission had against Sam for making undisclosed payments to associates to buy up company bonds as part of a plan to stave off bankruptcy. He settled without acknowledging any wrongdoing.

Decades later in August 2006, the Dallas Morning News reported that both Sam and Charles Wyly were under investigation by: (1) the SEC, (2) a grand jury in Dallas, and (3) a grand jury in New York...all for the Wyly brothers' use of potentially illegal offshore tax shelters.

The Senate investigation, headed by Senator Carl Levin, alleged that the Wyly brothers used the offshore trusts to buy $30 million worth of artwork, jewelry, furniture and other items for their personal use. A $937,500 portrait of Benjamin Franklin and other items were "legally" owned by two offshore corporations, but the report said evidence showed that the family held and used these assets in the U.S.

As usual, the Wyly brothers denied any wrongdoing, and stated that they just followed the advice of their financial advisers.

The Wyly brothers had told the Senate Permanent Investigations subcommittee (pdf Senate document here) who were investigating the offshore tax shelters, that they would invoke their Fifth Amendment right against self-incrimination --- so they were not called to testify.

Four years later on July 29, 2010, the Securities and Exchange Commission charged Charles and Sam Wyly with fraud for violating federal laws regarding insider trading. They allegedly, through entities located in offshore tax havens, hid more than a half a billion dollars in profits over a 13 year period from insider stock trading and fraud.

The SEC alleges that the brothers knowingly sought to bypass securities disclosure laws through a complex system of offshore trusts and shell corporations. It also claims the Wylys engaged in an insider trade, buying up shares of Sterling Software, the company they had spent a decade building into a giant, right before the firm was put up for sale. The SEC says that trade netted the brothers more than $31 million in profits that it wants returned.

And when the other allegedly improperly disclosed trades made offshore were added, the SEC was seeking a total of $550 million. To put that in perspective, that’s the amount the SEC got from Goldman Sachs in 2010, the largest penalty ever imposed on a Wall Street firm. It’s also half of what Forbes estimated was Sam Wyly’s total net worth in 2011, when the magazine ranked him the 393rd richest man in the world.

Again, the Wyly brothers had denied the claims.

The International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity, just launched their largest investigative project in its 15-year history, drawing on a leaked cache of 2.5 million records, and has cracked open the secrets of more than 120,000 offshore companies and trusts, as well as about 130,000 individuals --- and they mentioned the Wyly brothers in an expose they recently wrote titled: "Mega-Rich Use Tax Havens to Buy and Sell Masterpieces".

Charles Wyly never had to pay back a single dime to the government. On Sunday, August 7, 2011, Charles Wyly, who had still maintained his vacation home near Aspen, Colorado, died on a highway when his Porsche 911 Targa was t-boned by a sport utility vehicle (a Ford Freestyle) --- according to the Colorado State Highway Patrol.

Five months later in 2012, the SEC had won an unprecedented court ruling in a $550 million decision against his brother Sam Wyly, that allows the SEC to seek payback of any illicit gains from his late brother's state.

Sam Wyly still uses his seven-bedroom, 7,000-square-foot, $7.6 million downtown Aspen condominium as a summer spot, and so far, has survived the Great Recession...or as Mitt Romney had said, "is doing just fine".

But according to that 2006 report from the U.S. Senate Permanent Subcommittee on Investigations, Sam Wyly's condos were also part of more than $80 million in U.S. real estate purchased using funds that Sam and Charles had transferred to their network of offshore trusts --- a network that stretched from the Cayman Islands in the Caribbean to the Isle of Man in the Irish Sea.

The Senate’s Democratic investigators say $1 billion in Wyly money was shipped offshore between 1992 and 2005 --- much of that was in the form of stocks, stock options, and warrants that the Wylys had received as compensation for their roles as directors of Michaels Stores and Sterling Software.

The trusts took possession of the stock and in exchange, the Wylys got annuities that paid them a set amount of money over a long term. That setup ("plan") bought the brothers a massive tax deferment. The Senate subcommittee’s chairman, Carl Levin (D-Michigan), says the Wylys’ offshore system helped them avoid paying $300 million in federal taxes over 13 years.

Levin’s investigators also implied that the Wylys intended to undermine and circumvent U.S. tax laws with their offshore network of 58 trusts and dummy corporations. But despite pouring through more than 1.5 million pages of Wyly documents and issuing subpoenas to most of the Wyly associates who oversaw the offshore network, the Senate's subcommittee investigators failed to deliver anything that could convince the IRS to take action against the Wylys.

The meter had first started running for the Wyly brothers on November 16, 2004. That Tuesday, two weeks after George W. Bush thumped John Kerry in the presidential election, the Manhattan District Attorney’s Office opened its investigation into the Wylys’ offshore network. The SEC investigation opened around the same time. But, a year later, the Manhattan DA’s investigation was dropped after the Wylys filed securities disclosures re-stating some of their holdings in Michaels Stores. In those filings, the brothers declared that they were just the "beneficiaries" of offshore trusts that controlled a significant percentage of Michaels’ stock.

The restatement didn’t end the SEC investigation. Six years later, after Barack Obama was elected and had installed his own SEC commissioner, the agency filed suit against the Wylys. There was some discussion of a settlement, but it was very brief.

According to Sam Wyly's longtime attorney, William Brewer of the Dallas-based Bickel & Brewer, “My clients declined to resolve the case on any basis that in any way would damage the reputations they had established over the course of a lifetime.”

And the Wylys had the money to protect that reputation.

“Some SEC settlements happen when people simply don’t have the resources to fight,” says Wayne State University Law School securities law expert Peter Henning, one of the few academics who has closely followed the SEC’s arcane case against the Wylys. “But the Wylys do. They can match the SEC dollar for dollar, lawyer for lawyer.”

Maybe that’s why Sam Wyly is so unruffled today (See Sam Wyly's current Forbes profile.)

And the way Sam sees it, they did set up a system of offshore trusts that was intended to defer their tax burden and spread out their assets --- "so that creditors, litigators, the
government, or whoever couldn’t take away everything they’d spent a lifetime earning. And they saw nothing wrong with that." (He disputes that is was "fraud", but rather a "plan".)

Near a landing at the top of a stairwell in Sam Wyly's Aspen condominium is a battle flag that was flown by a Texas infantry regiment in the Civil War. Sam’s maternal great-great-grandfather, Edward Sparrow, was a Confederate senator who fought with Louisiana regiments and had also built a plantation called Arlington, which the Wyly family still owns.

Next to the Confederate flag is a small photo of Wyly with George H.W. Bush.

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