Bankrupt ex-billionaire Samuel Wyly told a judge it’s too soon for regulators to fret over what he’ll do with as much as $50 million from the planned sale of his family’s Colorado ranch, the site of six custom-built mansions.
The U.S. Securities and Exchange Commission and the Internal Revenue Service, which seek more than $2 billion from Wyly, have objected to his proposal, arguing he hasn’t guaranteed the proceeds won’t disappear offshore.
Wyly, who helped build companies including arts-and-crafts retailer Michaels Stores Inc. before running afoul of the SEC, has said he has about a 1 percent stake in the ranch, with the rest owned by a trust on the Isle of Man.
In a filing Tuesday in federal bankruptcy court in Dallas, Wyly said the plan should be approved because the details of any sale agreement, including the treatment of the proceeds, would need additional court approval anyway.
“No one on the debtor’s team is going to sit by idly if any dissipation of estate assets were to be threatened,” Wyly’s lawyer, Josiah Daniel, said in the filing.
The 244-acre ranch near Aspen and Snowmass is used by the Wyly family for vacations and as a permanent home by one of his daughters, according to court papers. Wyly argues it must be put up for sale soon to take advantage of the “prime selling season” for properties in the area, high in the Rocky Mountains.
A federal jury in Manhattan in May found Wyly and his late brother Charles Wyly perpetrated an offshore stock-trading fraud that generated $550 million in illegal profit over more than a decade. Wyly filed for bankruptcy in October.
The SEC argues the ranch’s offshore ownership is just another example of Wyly’s opaque finances, and that he’s hiding his ownership of the offshore trust.
The SEC is seeking about $200 million from Wyly after winning the fraud suit, while the IRS says he owes more than $2 billion in back taxes. The agencies also seek a total of more than $1 billion from Charles Wyly’s estate, which was placed into bankruptcy by his widow, Caroline.
The property, Rosemary’s Circle R Ranch near Woody Creek, Colorado, isn’t listed in court papers as part of Wyly’s estate and he has denied ownership of the trust that bought the ranch for $11 million in 1999, the SEC said.
Wyly is seeking court approval to lend as much as $745,000 to the entity that holds the title, arguing it needs money to maintain the property and make it presentable to potential buyers.
Wyly also wants to pay the ranch’s manager an incentive of $200,000 to remain at the property during the sale process. The SEC has objected to that payment.
Wyly gave two SEC representatives a tour of the property on March 11 for a “physical inspection of the entirety of the ranch and all of its improvements,” he said the filing.
Wyly’s children live in customized homes on the ranch without paying for maintenance, utilities, snow removal, cleaning or the Internet. The SEC said they should now pay rent.
The bankruptcy case is Samuel E. Wyly, 14-bk-35043, U.S Bankruptcy Court, Northern District of Texas (Dallas).