Samuel Wyly
Texas businessman Samuel Wyly. Reuters

A Manhattan jury has found that Texas businessman Samuel Wyly and his deceased brother Charles Wyly committed fraud by running a secret scheme involving offshore trusts that helped them make $550m in illegal trading profits.

Jurors in Manhattan federal court found Samuel Wyly and the estate of his brother liable on all claims brought by the US Securities and Exchange Commission (SEC), Reuters reported.

The trial followed years of investigation by the SEC and other authorities.

The Wylys have admitted to creating several trusts in the Isle of Man to secure tax benefits.

The SEC alleged the trusts were created to cover up trading from 1992 to 2004 in four firms on whose boards the Wylys sat. The firms are Sterling Software, Michaels Stores, Sterling Commerce and Scottish Annuity & Life Holdings, now called Scottish Re Group.

The SEC said the scheme netted the brothers $550m (£326m, €400m).

The Wylys have denied wrongdoing, arguing they were not legally the beneficial owners of securities held in the trusts and had no duty to reveal them.

The SEC also maintains the Wylys raked in $31.7m from insider trading in Sterling Software, after selling the company in 1999.

Those claims will be decided by US District Judge Shira Scheindlin, who will also assess damages.

A trial on remedies is scheduled for 4 August.

Stephen Susman, the Wylys' lawyer, said in a statement: "We are deeply disappointed by the jury's decision. Sam and Charles Wyly acted in good faith. We will continue to fight for justice through the next phases of the legal process."

Charles Wyly died in a car crash in 2011. Sam, 79, was estimated to be worth $1bn in 2010.

The case is SEC versus Wyly et al, US District Court, Southern District of New York, No. 10-05760.