The pictures of the Wyly brothers of Dallas painted by the media now are not very pretty. Two very, very rich Texas brothers -- entrepreneurs and philanthropists -- are under scrutiny by the SEC for securities fraud and by the IRS for tax evasion. All on a fairly massive scale.
Stories like these have a bitter edge for people who are teetering on the edge of bankruptcy, people who are jobless and homeless, and many who believe they won't even get away with forgetting to dot an "i" on their tax forms.
In case you're not familiar with the Charles and Sam Wyly, here's a reminder from Robert Siegel and Peter Overby on NPR yesterday:
SIEGEL: The Wylys have an extensive and interesting history as political donors. What is the political side of the Wyly brothers?
OVERBY: Heavily Republican. They have given millions of dollars to Republican candidates and committees over the years. They were both big fundraisers for President George H.W. Bush. Charles was a fundraiser for President George W. Bush. They both gave dollars $10,000 to Swiftboat Veterans for Truth in the 2004 campaign attacking...
SIEGEL: The group that went after John Kerry.
In other words, a pair of charmers.
Nailing the brothers may get complicated. They've been under investigation by DOJ and the IRS for years. And some Republicans began to return campaign contributions from the Wylys. But prosecuting them gets complicated, according to a report in the Times.
Over a period of seven years, the S.E.C. contends, the two men transferred to the offshore companies options and warrants on millions of shares of Michaels Stores, Sterling Software and Sterling Commerce, companies they founded or controlled. The transfers were made in exchange for annuities that would pay out the value of the securities over time.
Such an arrangement would not be illegal if the trusts were operated independently of the Wylys. But the S.E.C. contends that the brothers directed all of the investment activity of the trusts and transferred proceeds from some transactions — which they characterized as loans — into their own bank accounts in the United States.
The trusts and offshore corporations individually owned small percentages of the shares of each company. But the S.E.C. also asserts that those trusts were in fact controlled by the Wylys, and therefore the aggregate holdings, which were 16 to 36 percent of the companies’ total shares, should have been disclosed.
Other legal scholars say that the S.E.C. could have trouble proving at least parts of its case. Jonathan R. Macey, a professor at Yale Law School who is not affiliated with the case but who was recommended as an insider-trading expert by the Wyly legal team, said he believed the insider trading portion of the S.E.C. charges rested on a novel and suspect legal theory.“The question is whether it is possible to engage in insider trading when the information you are trading on is something that you thought up yourself,” Professor Macey said. “They had an idea to talk to other companies about a merger. It’s a pretty edgy notion.” ...
___
Whatever they're found to have done, the Wylys' case revolves around huge sums of money -- a grandeur of criminal intent on a different scale from the relatively petty grafting Charlie Rangel is accused of. Nonetheless, letting Rangel off with a reprimand -- particularly after all the self-righteous brouhaha about the "swamp" -- seems to be a poor political move at best.
The panel that oversaw a two-year ethics inquiry into Representative Charles B. Rangel’s conduct recommended that the Harlem congressman be punished with a reprimand, rather than a more serious censure or expulsion from office, the chairman of the panel said Friday.The recommendation appears to be carrying significant weight with the full 10-member House ethics committee, which will decide Mr. Rangel’s fate. On Friday, the full committee spent hours behind closed doors debating whether to agree to a settlement that would require the congressman, a Democrat, to admit to wrongdoing in exchange for receiving a reprimand and avoiding a public trial on his conduct.
But the full House has to make the final decision, not the Ethics Committee. There is a suggestion that part of the deal may be Rangel's resignation.
Even some Democrats seemed to grow more uncomfortable with Mr. Rangel’s continued presence in the House. Since the charges were detailed, three Democratic members have called for him to step down, joining three members who had previously asked him to leave the House ....NYT
