%1

Texas tycoon Sam Wyly is set to face off against the Internal Revenue Service at trial tomorrow over more than $2 billion the agency says he owes for using offshore trusts to engage in one of the largest tax frauds in U.S. history, Reuters reported yesterday. The trial in federal bankruptcy court in Dallas comes nearly a year after Sam Wyly and his late brother Charles' estate were ordered to pay the Securities and Exchange Commission $299.4 million for engaging in a massive securities fraud through those same trusts. In the SEC case, a Manhattan jury in 2014 found the Wylys liable for scheming to hide from investors $550 million in trading profits in the stocks of four companies on whose boards they sat. Following the SEC's victory, Sam Wyly, who last appeared on Forbes' list of the 400 richest Americans in 2010 with a net worth of $1 billion, and Caroline "Dee" Wyly, Charles Wyly's widow, filed for bankruptcy in October 2014. Charles Wyly died in a car crash in 2011. Read more.

For more information on fraud cases, be sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. 

A federal judge says Yellowstone Club's founder Tim Blixseth is "unrepentant" and should remain in jail for contempt until he accounts for the millions of dollars he owes to creditors of the ultraluxurious ski and golf resort, Dow Jones Daily Bankruptcy Review reported today. U.S. District Judge Sam Haddon on Wednesday said that Blixseth, a former billionaire real estate developer, has deliberately misled the court and has failed to account for the proceeds from the $13.8 million sale of the Tamarindo resort in Mexico. "To this day, Blixseth has not fully and completely accounted for the Tamarindo sale proceeds," Judge Haddon wrote in a 40-page opinion. "He remains in contempt and, from the record, remains unrepentant."

Creating cards for automated teller machines and forged documents, two private bankers who worked at JPMorgan Chase, Jonathan Francis and Dion Allison, and their accomplices withdrew about $400,000 from the accounts over two years, the New York Times reported today. The New York attorney general, Eric T. Schneiderman, warned in June that bank tellers and other employees have easy access to customer data, and had committed fraud using the data on multiple occasions. In this case, prosecutors for the Brooklyn district attorney’s office charged in an indictment, the bankers could not only gain access to but also issue ATM cards for the 15 accounts, without the account holder’s consent.

The former director of the Newark Watershed Conservation and Development Corp., pleaded guilty yesterday to soliciting nearly $1 million in bribes from businesses in return for overinflated and no-work contracts, NJ.com reported yesterday. Linda Watkins-Brashear, who presided over the non-profit agency as it slid into bankruptcy and dissolution amid charges of corruption and mismanagement, pleaded guilty to conspiracy and filing a false income tax return in Newark federal court before U.S. District Judge Jose Linares. Watkins-Brashear, who led the agency that kept the tap water flowing for half a million northern New Jersey water customers from 2007-2013, faces up to 23 years in jail and $350,000 in fines in pleading guilty. She also must forfeit the $999,000 that was kicked back to her. 

The relatives of former billionaire entrepreneur Samuel Wyly can’t expect a thaw any time soon in an order freezing their assets in connection with a jury’s finding that the family’s patriarch ran an offshore stock-fraud scheme, Bloomberg News reported on Friday. The order, temporarily locking up the assets of Wyly, his late brother Charles and 16 family members, doesn’t violate federal bankruptcy law, an appeals court ruled on Friday in a win for the U.S. Securities and Exchange Commission. The Wylys face a demand from the government that they forfeit money illegally reaped from the 13-year fraud operation.

William "Butch" Dickson will spend nearly five years in federal prison for trying to take more than $9 million through bankruptcy fraud, the Associated Press reported on Friday. U.S. District Judge Tom Lee on Thursday sentenced Dickson, who formerly ran a mortgage company in Jackson, Miss., called Community Home Financial Services, to 57 months in prison. Dickson pleaded guilty in September to one count of concealing assets after a bankruptcy filing and one count of fraudulently removing such assets. He tried to ship more than $9 million from his company to Central America.

The former chairman of U.S. law firm Dewey & LeBoeuf is nearing a deal with New York prosecutors to avert a retrial on fraud charges stemming from the firm's collapse, and prosecutors have extended plea offers to three other defendants, Reuters reported yesterday. A potential deferred prosecution agreement for Dewey leader Steven Davis was confirmed by his lawyer after a court hearing in New York state court yesterday. If approved, the deal would mark a step toward resolving a criminal case stemming from the largest law firm failure in U.S. history. Assistant District Attorney Peirce Moser also offered plea deals at the hearing to former Dewey executive director Stephen DiCarmine and chief financial officer Joel Sanders, as well as client relations manager Zachary Warren. Only the offer to Sanders included prison time. Moser also moved to dismiss several counts of falsifying business records against the defendants, streamlining any retrial.

Manhattan prosecutors will not retry Steven Davis, the former chairman of defunct U.S. law firm Dewey & LeBoeuf, after an earlier trial ended in a hung jury, Reuters reported on Friday. Prosecutors do plan to retry former Dewey Chief Financial Officer Joel Sanders, according to his attorney, Andrew Frisch. It was not immediately clear, however, whether the other former Dewey executive who was tried alongside Davis — Executive Director Stephen DiCarmine — would face a second trial. The three men were accused of using illegal accounting adjustments to mask the firm's teetering finances between 2008 and 2012 and convince lenders and investors, including Bank of America Corp and HSBC Holdings PLC, that the law firm was still healthy. They were charged with grand larceny, scheming to defraud and violating New York's securities law, the Martin Act. The case ended in a mistrial on Oct. 19, with a jury reporting it was deadlocked on most of the counts after more than three weeks of deliberation. It had earlier acquitted the three defendants of several lesser counts of falsifying business records.

The trustee liquidating Bernard Madoff's firm on Friday began distributing another $1.19 billion to victims of the swindler's Ponzi scheme, Reuters reported. Trustee Irving Picard said that the payout will boost distributions to more than $9.16 billion. Next week marks the seventh anniversary of the uncovering of Madoff's decades-long fraud. Madoff, 77, pleaded guilty in March 2009 and is serving a 150-year prison term. The latest payout will go to holders of 1,071 accounts at the former Bernard L. Madoff Investment Securities LLC. Picard said that he will make individual distributions ranging from $1,298 to $202 million. Once they are made, 1,269 of the 2,238 Madoff accounts with valid claims will have been fully satisfied, and everyone owed $1.16 million or less will have been paid in full, the trustee said.