The brothers used their offshore entities to buy expensive jewelry and artwork that was kept in the possession of Wyly family members, according to the SEC. They also used the offshore funds to buy four properties in Aspen, Colo., and a 100-acre horse farm outside Dallas, as well as to contribute to charity, it said.

Billionaire brothers Sam Wyly and Charles Wyly hid $550 million in trading profits by using an "elaborate sham system" of offshore entities, the Securities and Exchange Commission charged Thursday.The civil suit, following a six-year probe, targets a pair of entrepreneurs in their mid-70s who amassed a fortune over more than four decades through ventures including Michaels arts and crafts stores.The SEC said the Wylys used sham trusts and subsidiaries in the Isle of Man and the Cayman Islands to avoid disclosure of their stakes and sales of stock in public companies where they were directors. In one instance, the brothers traded on insider information about an upcoming sale of a company to make a $31 million profit, the SEC alleged."The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws," said Lorin L. Reisner, deputy director of the SEC’s enforcement division.
By Kara Scannell, July 30, 2010 WSJ

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