The children of craft store kingpins Charles and Sam Wyly say they shouldn’t suffer for their fathers’ transgressions, but the U.S. Securities & Exchange Commission says that they shouldn’t be allowed to spend the proceeds of the brothers’ fraud, the Dallas Morning News reported today. The Wyly brothers used gains from secret, illegal, offshore transactions “as their own personal piggybank,” the SEC had said ahead of appeals hearing yesterday, where the family sought to lift a judge-imposed freeze on its assets. U.S. District Judge Shira Scheindlin’s order against 16 people, including both men’s wives and 10 children, unfairly applies to “any asset that was acquired or commingled with funds received from the Wyly brothers at any time during the past 10 years,” the family said. The appeals panel, which also included judges Jose Cabranes and Christopher Droney, didn’t immediately rule. The SEC won the freeze on the family assets as it seeks to collect a $300 million penalty levied on the Wyly brothers after a trial in which a federal jury found they perpetrated an offshore stock-trading fraud for 13 years. The SEC said the fraud yielded them $550 million in illegal profits.
