Billionaire Brothers Fraud Charges: From Rags to Riches to SEC Lawsuit

Sam Wyly (AP Photo, file)
Billionaire Brothers Fraud Charges: From Rags to Riches to SEC Lawsuit
Sam Wyly (AP Photo, file)

AUSTIN, Texas (CBS/AP) Brothers Charles and Sam Wyly, born a year apart during the Great Depression, rose to the elite class of billionaires from humble beginnings - their family surrendered its cotton farm when they were kids after the economy collapsed.

They became A-list members of Dallas society and regular political donors, primarily to conservative Republican candidates and causes.

Now, the brothers are named in a federal complaint that accuses them of using offshore havens to hide more than a half-billion dollars in profits over 13 years of insider stock trading.

If the two are convicted, the financial fallout could affect politics, where Texas Republicans could see a huge source of political contributions wither.

In a 78-page federal complaint filed in New York City, the Securities and Exchange Commission said Thursday the Wylys held and traded tens of millions of shares in companies on whose boards they served and "defrauded the investing public" by misrepresenting their ownership and trading of those stocks and using "an elaborate sham system of trusts and subsidiary companies" offshore.

The brothers' attorney, William A. Brewer III, branded the SEC complaint as "without merit."

"They have never been given any reason to believe the financial transactions in question were anything other than legal and fully appropriate," Brewer said.

Charles Wyly, 76, and brother Sam, 75, with their wives, have donated almost $2.5 million to more than 200 Republican candidates and committees at the federal level over the past two decades, according to the nonpartisan Center for Responsive Politics.

The brothers themselves have said they've given about $10 million to Republican candidates and causes since the 1970s.

In Texas politics, they give big, but quietly, Austin-based political consultant Bill Miller said Friday.

The brothers' website credits them for always embracing "the opportunity to participate in our nation's political processes."