Dallas businessman Wyly, facing liability in SEC fraud case, files for bankruptcy protection

MarketsAssociated Press

Prominent Dallas businessman Samuel Wyly is filing for bankruptcy protection as he and the estate of his brother face up to $400 million in penalties after being found liable for hiding stock holdings overseas.

Wyly filed a bankruptcy petition in federal district court in Dallas on Sunday.

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The one-time owner of the Michaels arts-and-crafts store chain says his biggest liabilities are to the IRS — the amount is unknown — and $198 million to the Securities and Exchange Commission.

A judge in New York ruled last month that Wyly and the estate of his brother, Charles, must surrender up to $400 million after a civil jury found that they had engaged in a 13-year fraud that involved creating a web of trusts and subsidiaries to hide assets overseas.