Billionaires' Lawyer Named By SEC in Alleged $550M Insider-Trade Scheme
A lawyer for billionaire brothers Samuel and Charles Wyly has been named, along with the two Wylys and a stockbroker, in an alleged $550 million insider-trading fraud.
The defendants are accused in a Securities and Exchange Commission complaint of using offshore trusts and subsidiaries to conceal illicit trading profits from transactions concerning four companies at a time when the brothers were on their boards, according to the Associated Press and Reuters. One of the companies is Michaels Stores Inc.
All of the defendants, including attorney Michael C. French, 67, live in Dallas. The case is being pursued in federal court in New York.
A copy of the SEC’s 78-page complaint is provided by Scribd.
It accuses French, along with the other defendants, of “using an elaborate sham system of trusts and subsidiary companies located in the Isle of Man and the Cayman Islands” to conceal the Wylys’ ownership and control of some $750 million worth of stock they were allegedly voting and trading while serving as board members of the companies concerned.
French is accused of substantially assisting the claimed scheme and, along with the Wylys, knowingly or recklessly disregarding disclosure laws, and using “fraud, deception and material misrepresentation to conceal their actions.”
Additionally, “French utilized his roles as the Wylys’ lawyer and fellow director on three of the four issuers’ boards to cover the Wylys’ scheme with a false cloak of legality that was essential both to its concealment and its execution,” the complaint contends. It seeks injunctive relief, disgorgement of profits and interest, civil penalties and a prohibition against future board service by the defendants.
French’s lawyer could not be reached for comment but partner William Brewer III of Bickel & Brewer in Dallas says in a written statement that the brothers “intend to vigorously defend themselves, and expect to be fully vindicated,” He calls the claims today “at best … a misapplication of the law.
And, he adds, “At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation.”
