The S.E.C. and Government Fraud

This blog, by a former federal prosecutor, (and currently, an Augusta, Georgia criminal defense lawyer), focuses primarily on issues involving fraud, corruption, and other federal and state white collar crimes. But news reports of a civil fraud complaint filed by the Securities and Exchange Commission have also caught my eye.

Various news reports indicate that the SEC has filed a fraud complaint against two Texas billionaire brothers, Sam and Charles Wyly. The complaint accuses them of concealing $550 million in gains from the sales of stock. Allegedly, the brothers tried to hide stock ownership and trades through the use of off-shore, (Cayman Island), trusts and other entitities.

Now, I realize that not many of you will feel sorry for anyone who is a billionaire, particularly one who is accused of fraud! However, it is important to point out the lawyer for the Wyly brothers has maintained his clients' innocence. The attorney has also indicated that this complaint filing by the SEC comes only after years and years of endless, fruitless investigations by the government.

The Wyly brothers are well known both for their innovative skills in technology, energy, and investment, and for their incredible philanthropic work. Sam Wyly is also author of the book, 1,000 Dollars & An Idea, depicted above, which is an inspirational account of his achievements.

Look, I have no clue about the efficacy of this particular case. But frankly, it wouldn't surprise me to see that the Wylys' attorney is correct. As a former federal prosecutor, I know how government agents and agencies work. If they investigate somebody, and expend significant resources over a long period of time, then the bureaucratic tendency is for them to want to charge "somebody with something," even if it is not always justified.

It will be interesting to see what happens next in this case!