covering their assets

Wyly Brothers Used Magic Cloak to Conceal $550 Million Fraud, SEC Alleges

Respected Dallas billionaires Sam and Charles Wyly and two of their employees, Michael French and stockbroker Louis Schaufele III, have been charged by the SEC with hiding $550 million in profits using an “elaborate sham system” of offshore accounts. What kind of “elaborate sham system,” you ask? According to the complaint filed yesterday in Manhattan, the brothers and their accomplices set up seventeen offshore trusts in places like the Cayman Islands and the Isle of Man to hide their assets and trading. And then they apparently covered them with some kind of magic cloak.

The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” Lorin Reisner, the deputy director of the SEC’s Division of Enforcement, announced proudly in a press release yesterday. The 78-page complaint also alluded to the cloak:

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.

Emphasis ours, because WHAT! This cloak had the power to make things look secret and legal? Where is it now, does the SEC have it? And where can we get one? We ask only because we’d like to use it for jaywalking.

SEC Charges Corporate Insider Brothers With Fraud [SEC]
Wyly Brothers Face SEC Fraud Charges [WSJ]

Wyly Brothers Used Magic Cloak to Conceal $550 Million Fraud, SEC Alleges