Yesterday, U.S. District Judge Shira Scheindlin ruled that Sam Wyly and the estate of his late brother, Charles, must pay $187.7 million in disgorgement following the SEC's May 2014 jury verdict against them. On May 12, 2014, a federal jury in Manhattan found that the Wyly brothers were liable for fraud and violations of the reporting requirements for corporate insiders related to their use of a system of offshore trusts to conceal their transactions as directors of publicly-traded companies. The Wylys are the founders of Michaels Stores Inc.

 

According to a Reuters report, Judge Scheindlin estimated that with interest, which has yet to be determined, the judgment against the Wylys would ultimately reach between $300 million and $400 million. Judge Scheindlin described the judgment as a "staggering" amount--equal to about 10 percent of the total SEC enforcement awards in 2013. The court found that the large sanction was warranted, however, because of "the extensiveness of this scheme, the brazenness of Wyly's conduct, and his position of wealth and importance in the community." 

 

The judgment followed a bench trial in August before Judge Scheindlin to determine damages. Andrew Ceresney, the SEC's Director of Enforcement, stated that the case, which the SEC filed in 2010, showed that "no matter how complex or well-disguised their schemes may be, we will uncover the wrongdoing and aggressively hold individuals accountable for their securities law violations."