Bankrupt ex-billionaire Samuel Wyly won a judge’s approval to sell his family’s Colorado ranch, the site of six custom-built homes.
The bankruptcy judge in Dallas Wednesday also said Wyly could provide a loan to pay for the ranch’s upkeep before it’s sold. The property will be listed for $50 million, according to a real estate agent.
The U.S. Securities and Exchange Commission and the Internal Revenue Service, which are seeking more than $2 billion from Wyly after he lost a lawsuit, had objected to the sale proposal before Wyly confirmed the proceeds would be held in escrow until a judge determines who gets the money.
“Nothing is going to happen to the cash proceeds of this sale,” Wyly’s lawyer Josiah Daniel assured the judge. He said the loans for the ranch’s maintenance would be recovered for the bankruptcy estate when the property is sold.
Wyly, 80, declined to comment after Wednesday’s hearing.
In the lawsuit brought by the SEC, a federal jury in Manhattan last year found Wyly and his late brother perpetrated an offshore stock-trading fraud that generated $550 million in illegal profit over more than a decade. Wyly filed for bankruptcy in October.
Isle of Man
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.
The SEC said that the ranch’s offshore trust is just another example of Wyly’s opaque finances and that he’s hiding his ownership.
“There’s no determination that the ranch is part of the estate,” U.S. Bankruptcy Judge Barbara Houser said Wednesday. “I’ve got to have jurisdiction over the entity to tell the entity what it can and can’t do.”
SEC lawyer Angela Dodd said the offshore trust should pay the ranch expenses.
“We are depleting onshore assets when offshore assets should be used,” she said, pointing out that while Wyly claims to be only a 1 percent owner, he’s paying all of the ranch’s expenses.
The 244-acre property about 10 miles (16 kilometers) from Aspen is used by the Wyly family for vacations and as a permanent home by one of his daughters, according to court papers. Wyly has said 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.
Dennis Faulkner, financial adviser to the estate, testified that the operating budget is $645,000 a year after recent reductions. Expenses include property taxes and salaries for a full-time ranch manager and ranch hand.
Craig Morris, co-owner of Aspen Snowmass Sotheby’s International Realty and the agent who will get the listing, described the ranch as “eclectic but irreplaceable.”
“It’s essentially a small town,” he said.
Morris said a sale could take as long as two years and as much as $10 million could be lost if the property were allowed to fall into disrepair.
The bankruptcy is Samuel E. Wyly, 14-bk-35043, U.S Bankruptcy Court, Northern District of Texas (Dallas).