Wyly, who took the stand for the fifth and final time during his
trial in New York federal court, criticized the regulator's
settlement with Michael French, Wyly's longtime lawyer who agreed in
March to pay nearly $795,000 and admit wrongdoing rather than face
"Mr. French made his deal with the devil," Wyly said, according to a
transcript. "I mean, he has agreed to testify to the things you
wanted him to testify to, and he has done so."
The remarks came shortly before the SEC finished questioning its
last live witness, Robert Estep, a former partner with the law firm
Jones Day who also advised the Wylys and their companies.
The SEC has accused Wyly, 79, and Charles Wyly, his brother, of
earning more than $550 million in undisclosed gains by using a maze
of offshore trusts and entities to conceal stock trading in four
companies on whose boards they sat on from 1992 to 2004.
The companies included Sterling Software Inc, Michaels Stores Inc,
Sterling Commerce Inc, and Scottish Annuity & Life Holdings Ltd, now
called Scottish Re Group Ltd.
The Wylys have denied wrongdoing, arguing they were not legally the
beneficial owners of securities held in the trusts and had no duty
to disclose them. An executor for Charles Wyly's estate has been
substituted as a defendant after he died in a 2011 car crash.
The settlement agreement with French came amid a push by the SEC
under a new policy unveiled in June 2013 by SEC Chair Mary Jo White
to seek admissions of wrongdoing in some of its cases.
The SEC before the trial had disclosed also demanding an admission
of wrongdoing during settlement talks with Samuel Wyly, but no deal
[to top of second column]
On Tuesday, French, who testified as the SEC's star witness over
four days of trial proceedings, was questioned by a lawyer for Wyly,
Harry Susman, about the deal he cut with the SEC.
French as part of the settlement admitted to assisting the Wylys in
asserting control over the Isle of Man trusts. He also told them
that by serving as a conduit between the Texans and the trustees, he
helped them hide their control over the trusts.
But Susman asked French if it was correct the SEC did not require
him to admit he did anything improper with regards to his own use of
offshore entities to make undisclosed stock trades.
"As I say, I don't remember anything like that in the admissions,"
Defense lawyers are expected to call four witnesses before the case
heads to the jury. Closing arguments are expected to begin May 5.
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)
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