“To accept the Wylys’ explanation requires the court to be satisfied that it is appropriate for extraordinarily wealthy individuals to hire middlemen to do their bidding in order to insulate themselves from wrongdoing so that, when the fraud is ultimately exposed, they have plausible deniability,” Houser said in her 459-page ruling.
Too Complicated
The judge, however, did rule that Dee Wyly didn’t participate in any fraud.
“There is simply no persuasive evidence in the record that Dee understood how these very complicated estate planning transactions worked,” Houser said.
Stewart Thomas, general counsel for the Wylys, said they were pleased with the ruling on Dee, as well as the court’s rejection of an IRS gift-tax claim, but “they are surprised and disagree with the court’s fraud finding as to Sam and his brother Charles.”
The IRS was seeking $1.4 billion from Sam Wyly and $834 million from his sister-in-law, with penalties and interest accounting for 80 percent of the totals, the government said in court papers filed Jan. 25.
The judge gave the parties 30 days to confer and submit a “agreed amounts” on the IRS claims to the court. Failing an agreement, each side is to submit its own proposal, Houser said.
The case is In re Samuel Evans Wyly, 14-35043, U.S. Bankruptcy Court, Northern District of Texas (Dallas).