“It depends on the gift,” said Judge Rosemary Pooler, one of three hearing the case. “If it’s a bottle of perfume, perhaps you’re right, but if you’re gifted $23 million, perhaps you’re wrong.”

Personal Bank

The SEC says the relatives, as well as the brothers, used the gains from secret offshore transactions “as their own personal piggy bank.” The family doesn’t have a right to “assets of the defendants which are the ill-gotten gains, or are traceable to the ill-gotten gains, derived from the defendants’ fraudulent conduct,” it says.

“Judge Scheindlin said there needs to be a freeze to prevent the dissipation of assets by third parties,” Daniel Staroselsky, an SEC lawyer, told the appeals panel.

“The district court’s finding wasn’t a shotgun,” he said. “There was an afternoon of testimony about how the family benefited.”

Evidence of recent transfers cited by Scheindlin included one trust’s $27 million distribution to Charles Wyly’s children and the use of $10 million to establish a family trust in the Cook Islands.

Wyly family spreadsheets showed it had net assets of $1.4 billion in 2004, according to the SEC.

Bankruptcy Court

Family members last year argued that surrendering what the SEC sought would bankrupt them. And Sam Wyly in October filed his bankruptcy case in Dallas, followed days later by Caroline Wyly, who says she’s the 90 percent beneficiary of her late husband’s estate.

The SEC is now trying to collect the judgment through bankruptcy court.