Wealthy Dallas Brothers Become SEC Fraud Target

Brothers Charles and Sam Wyly, born a year apart during the Great Depression, almost always have been joined at the hip.

FILE ** In this file photo of Sept. 2, 2008 Sam Wyly poses at his Explore book store in Aspen, Colo....

FILE ** In this file photo of Sept. 2, 2008 Sam Wyly poses at his Explore book store in Aspen, Colo. Famed Dallas billionaire investors Sam and Charles Wyly made $550 million in undisclosed profits through 13 years of insider trading in the shares of companies on whose boards they served, according to a Securities and Exchange Commission lawsuit filed Thursday July 29, 2010 .(AP Photo/Ed Kosmicki,File)

(AP)

They were kids when the collapsed economy forced the surrender of the family cotton farm in Lake Providence, La. Later, they starred on the high school football team, studied at Louisiana Tech University in the 1950s, and eventually set sales records at IBM.

They rose to the elite class of billionaires, A-list members of Dallas society and regular donors to philanthropic projects and primarily conservative Republican candidates and causes.

Now, the brothers are together again — named in a federal complaint that accuses them of using offshore havens to hide more than a half-billion dollars in profits over 13 years of insider stock trading.

If the two are found to have cheated investors, the financial fallout could affect politics, where Texas Republicans could see a huge source of political contributions wither.

In a 78-page federal complaint filed in New York City, the Securities and Exchange Commission said Thursday the Wylys held and traded tens of millions of shares in companies on whose boards they served and "defrauded the investing public" by misrepresenting their ownership and trading of those stocks and using "an elaborate sham system of trusts and subsidiary companies" offshore.

The brothers' attorney, William A. Brewer III, said the SEC complaint was "without merit."

"They have never been given any reason to believe the financial transactions in question were anything other than legal and fully appropriate," Brewer said.

Charles Wyly, 76, and brother Sam, 75, with their wives, have donated almost $2.5 million to more than 200 Republican candidates and committees at the federal level over the past two decades, according to the nonpartisan Center for Responsive Politics.

The brothers themselves have said they've given about $10 million to Republican candidates and causes since the 1970s.