| NEW YORK
NEW YORK May 6 A lawyer for the U.S. Securities
and Exchange Commission urged jurors Tuesday to hold Texas
tycoon Sam Wyly and his deceased brother Charles liable for a
"scheme of secrecy" that reaped profits of more than $500
Making her closing argument during a trial in New York
federal court, Bridget Fitzpatrick, a lawyer for the U.S.
regulator, said the Wylys engaged in an "indefensible" use of
offshore trusts to conceal 13 years of stock sales in companies
on whose boards they sat.
"They decided to use the secrecy of the system they created
to break the rules and not get caught," Fitzpatrick said.
But Stephen Susman, a lawyer for the Wylys, urged the jury
to protect the defendants from a "government agency intent on
ruining the reputations of Sam and Charles Wyly."
"There is zero evidence the Wylys knew they were breaking
SEC laws," Susman said.
The closing arguments followed more than five weeks of
proceedings in what has become the largest SEC case to go to
trial this year.
The SEC has accused the Wylys of concealing stock trading
from 1992 to 2004 in Sterling Software Inc, Michaels Stores Inc,
Sterling Commerce Inc, and Scottish Annuity & Life Holdings Ltd
through the use of offshore trusts and entities.
The Wylys have denied wrongdoing, contending they were not
the beneficial owners of the stock held in the Isle of Man
trusts and relied on their lawyers when they did not disclose
the holdings in regulatory filings.
Fitzpatrick told jurors the key question was whether the
Wylys controlled the trusts and if they lied about it.
The Wylys have said trustees had the ultimate say over
investment decisions. But Fitzpatrick said in more than 700
transactions, trustees routinely followed the Wylys'
recommendations in making trades.
"It wasn't just a coincidence and it wasn't just luck," she
said. "It was control."
Susman, however, cited the advice given to the Wylys by an
"army of lawyers" they hired. While several took the stand
during the trial, none could "give you a clear answer on whether
the Wylys had beneficial ownership," he said.
"How're the Wylys supposed to have that figured out?" Susman
Charles Wyly died in a car crash in 2011, leaving Sam Wyly
and his brother's estate to defend the lawsuit, which was filed
in 2010. While Sam Wyly took the stand in his own defense,
Fitzpatrick urged jurors to disregard his testimony, saying he
was "lying to try to help his case."
"Sam Wyly knows what he and his brother actually did on the
Isle of Man - the truth - is indefensible," she said.
The SEC also contends the Wylys earned $31.7 million from
insider trading in Sterling Software after deciding to sell the
company in 1999.
Those claims would be heard separately by U.S. District
Judge Shira Scheindlin, who would also decide what if any
monetary penalty to impose.
Jurors could begin deliberating as soon as Thursday,
following a second day of closing arguments and jury
instructions on Wednesday.
The case is SEC v. Wyly et al, U.S. District Court, Southern
District of New York, No. 10-05760.
(Reporting by Nate Raymond in New York; Editing by Noeleen
Walder and Eric Walsh)