There are some overlooked costs as a result of the IRS budget cuts.
Shannon Stapleton — Reuters
By Reuters
April 16, 2015

(REUTERS) — The Internal Revenue Service is seeking to recoup $3.22 billion from Texas businessman Samuel Wyly and the estate of his late brother Charles Wyly, after the brothers allegedly hid income by setting up sham overseas trusts.

According to claims filings on Wednesday with the U.S. bankruptcy court in Dallas, the IRS believes Samuel Wyly owes $2.03 billion in back taxes, interest and penalties, while his brother’s estate owes $1.19 billion.

The IRS filed its claims after a Manhattan federal judge on Feb. 26 ordered Samuel Wyly and Charles Wyly’s estate to pay $299.4 million to the U.S. Securities and Exchange Commission, after a jury last May found them liable for securities fraud. Both defendants are appealing that judgment.

Stewart Thomas, a lawyer for Charles Wyly’s family, called the IRS claims “unfair and absurd” in a statement on Thursday.

“The IRS has known about these transactions for over 20 years, but they never informed the Wylys that they owe a penny of additional tax,” he said. “Now they seek billions of dollars in interest back to 1992. This is unjust.”

A lawyer for Samuel Wyly declined to comment.

U.S. authorities accused the Wyly brothers of using offshore trusts to conceal profits from trading, including in the crafts chain Michaels Stores (MIK).

Samuel Wyly filed for bankruptcy protection in October. Charles Wyly died in an August 2011 car crash.

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