By Nate Raymond
NEW YORK (Reuters) - U.S. securities regulators said on Wednesday they want the executor of Charles Wyly's estate held in contempt for failing to pay the $101.2 million owed as a result of the late Texas businessman's fraud.
In a letter filed in Manhattan federal court, the U.S. Securities and Exchange Commission said Donald Miller, Charles Wyly's son-in-law, had taken no steps in his role as executor to pay the sum after being ordered to do so in February 2015.
The SEC said the estate had failed to seek a stay of the judgment pending appeals by it and former billionaire Sam Wyly, Charles Wyly's brother, of a federal jury's verdict two years ago finding them liable for securities fraud.
The commission asked U.S. District Judge Paul Oetken to order Miller to demonstrate why the estate could not pay the sum, and to hold him in contempt if he failed to do so.
The SEC said it would also seek an order requiring the repatriation of sufficient assets from offshore trusts at issue in the case to pay the judgment. Those trusts have a net worth of $350 million, the SEC said, citing Charles Wyly's widow.
Stewart Thomas, the Wyly family's outside general counsel, called the SEC's motions "unnecessary and premature, given that the judgment is not final and is still on appeal."
The SEC sued the Wylys in 2010, contending the brothers earned $553 million in undisclosed profits by trading in four companies they controlled using trusts in the Isle of Man.
The companies included Sterling Software Inc, Michaels Stores Inc, Sterling Commerce Inc and Scottish Annuity & Life Holdings Ltd.
Charles Wyly died in 2011, and his estate was substituted as a defendant. Following the jury's May 2014 verdict, a federal judge ordered Sam Wyly, 81, to pay $198.1 million and Charles Wyly's estate to pay $101.2 million.
The judgment was entered after Sam Wyly, who last appeared on Forbes magazine's 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.
The Internal Revenue Service in bankruptcy court took both to trial, contending Sam and Charles Wyly committed tax fraud by shielding much of their wealth in offshore trusts.
U.S. Bankruptcy Judge Barbara Houser in Dallas earlier this year found Sam Wyly liable and ordered him to pay $1.11 billion in back taxes, interest and penalties.
The case is U.S. Securities and Exchange Commission v. Wyly et al, U.S. District Court, Southern District of New York, No. 10-5760.