| NEW YORK, April 23
NEW YORK, April 23 Texas businessman Sam Wyly
told jurors on Wednesday he relied on the advice of his former
lawyer in determining whether he needed to disclose stock
holdings in offshore trusts at the center of a fraud case
brought by the U.S. Securities and Exchange Commission.
Wyly, who took the stand for the second day during his trial
in New York federal court, said that he relied on the lawyer,
Michael French, and other individuals in preparing securities
filings about his stock holdings.
"He advised me of the filings I was required to make," Wyly
The SEC has accused Wyly, 79, and his late brother, Charles
Wyly, of using a maze of offshore trusts and offshore entities
to conceal stock trading from 1992 to 2004 in four companies on
whose boards they sat.
The companies included Sterling Software Inc, Michaels
Stores Inc, Sterling Commerce Inc, and Scottish Annuity & Life
The Wylys had denied wrongdoing, arguing they were not
legally the beneficial owners of securities held in the trusts
and had no duty to disclose them.
Charles Wyly died in an August 2011 car crash, and an
executor for his estate was substituted as a defendant.
Wyly's testimony on Wednesday could buttress his defense
that he and his brother relied on the advice of French, a
securities law expert, when they failed to disclose ownership of
the securities held in the offshore trusts.
French, a former chief executive of Scottish Re Group Ltd
, testified on Tuesday that he had expressed concerns
about the level of control Wyly had exercised over the trusts.
He told jurors Wyly had directly contacted trustees about
specific transactions, rather than following the process set up
in the trust documents.
But when asked Wednesday by his lawyer, Stephen Susman, if
French had articulated concerns about the level of control he
was exerting, Wyly replied: "No, he did not."
French is appearing as an SEC witness after settling related
charges and admitting wrongdoing.
French also testified that he was "bothered" by Wyly's use
of the trusts to buy personal items.
Among them was a 1910 painting by British realist John
William Godward called "Noonday Rest," which the SEC said an
Isle of Man entity set up for the Wylys bought for 155,000
pounds after Wyly's wife bid on it at a Sotheby's auction.
"I felt like that was not proper," French said.
But Wyly said French never expressed concerns about the
painting's purchase. Wyly said he didn't need the trust to buy
it, since he already had the money.
"Sure, sure, I'd buy it," he said. "Great painting."
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 Phil