The SEC’s fraud case against former billionaires Sam Wyly and his late brother, Charles, dragged on for so many years that the attorneys on both sides joked that they had watched each other’s kids grow up. “We’ve been through weddings, births, and graduations by now,” one of the Wyly attorneys says about the 8-year period from the SEC’s initial inquiry to last summer’s jury trial and the nearly $400 million judgment against the Wylys that followed the guilty verdict.
In a case so long and complicated, you’d think there wouldn’t be just one thing that made the case for the SEC. But there was, indeed, one thing—or one person. His name is Michael French. He testified against the brothers.
French, a 71-year-old Dallas attorney, started working with the Wylys in 1980, when he was with the Dallas law firm of Jackson Walker. He left that firm in 1992 to join the Wylys full time. He was a director of both Michaels Stores and Sterling Software, companies that helped make the Wylys billionaires, from 1992 to 2000. And from 1998 to 2007, French held various positions, including CEO, with Scottish Re, a firm that handled much of the Wylys’ offshore financial transactions that the SEC deemed fraudulent.
French and Sam even worked together for a time, recruiting other prominent Dallasites to put funds offshore through Scottish Re. One Dallas business owner who discussed estate planning with French and Sam in the late ’90s and early 2000s says, “French struck me as being less bright and a bit more carefree than I would prefer in an estate planning and tax strategies attorney.”
Sam clearly disagreed. French was so important to the Wylys that he, and not Sam or Charles, testified to the U.S. Senate Permanent Subcommittee on Investigations in 2006, when the committee took an extensive look into the Wylys’ system of offshore trusts and shell corporations. But in 2010, when the SEC sued the Wylys for fraud, French was the one hiring lawyers to do the speaking for him, because the SEC sued him, too, saying French “substantially assisted the Wylys’ fraudulent scheme.”
Whether the financial burden of fighting the government from 2010 to 2014 forced French to settle the case and pay almost $795,000 in fines last spring, just as a jury trial was nearing, is unknown. French, who owns a $1.1 million home on Swiss Avenue, has never spoken publicly about the case. His attorney declined comment for this story on French’s behalf. Whatever his reasons for turning, French’s decision was critical to the SEC’s winning case. His admission of guilt and suggestion that the Wylys had improperly controlled their trusts came up repeatedly in the trial against the Wylys. On the witness stand, Sam said, “Mr. French made his deal with the devil.”
Time will tell. But with the Wylys having recently filed for bankruptcy protection in the wake of the verdict against them, French’s deal might have brought down one of the wealthiest clans in Dallas.