Tax Haven Abuse: (Wyly case) (Artwork, Jewelry)

The 8/1/06 Report: United States Senate (Permanent Subcommittee on Investigations/Committee on Homeland Security and Governmental Affairs), (Wyly Case) Artwork, Jewelry (excerpted pages 287-288):

(7) Spending Offshore Dollars on Artwork, Furnishings, and Jewelry

During the thirteen years examined in this Report, at least $30 million in untaxed, offshore dollars were spent to purchase furnishings, artwork, and jewelry for the apparent personal use of Wyly family members.1142 Although the nominal owners of virtually all of these items were two offshore corporations, the evidence indicates that the art, furnishings, and jewelry were actually selected, held, and used by individual Wyly family members. These purchases are further evidence that the Wylys were directing the use of trust assets, and that the offshore trusts were benefitting U.S. persons.

Background. From 1992 until 2005, numerous expensive works of art, rare documents and books, furniture, and jewelry were purchased with Wyly-related offshore dollars. These purchases included, for example, a $937,500 portrait of Benjamin Franklin,1143 a $13,000 French bronze chandelier,1144 a $162,000 bureau cabinet,1145 $721,000 in official documents from the presidency of Abraham Lincoln,1146 a $622,000 ruby,1147 and a $759,000 emerald necklace.1148

Although a number of Wyly-related offshore entities supplied funds for these purchases, almost all of the items were nominally owned by either Audubon Assets Ltd. (“Audubon”) or Soulieana Ltd. (“Soulieana”). Audubon, formerly named Fugue Ltd., is wholly owned by the Bessie Trust, a 1994 foreign grantor trust set up to benefit Sam Wyly and his family. Soulieana is wholly owned by the Tyler Trust, a 1994 foreign grantor trust set up to benefit Charles Wyly and his family. Both corporations are shell operations, with no employees or offices of their own. Since 1995, many of their transactions have been handled for a fee by the Irish Trust Company, working in tandem with the Wyly family office. The documents show that the key persons who handled these matters for Audubon and Soulieana during the period under examination were Ms. Boucher and Ms. MacInnis from the Irish Trust Company, and Ms. Hennington, Ms. Robertson, Ms. Alexander, and Ms. Westbrook from the Wyly family office.

View complete report: Tax Haven Abuses: The Enablers, The Tools, & Secrecy