Deceptive practices can cause business owners a lot of trouble. The same is true for Houston spouses who try to conceal assets during divorce. A marital property settlement can be reopened as a “reconstituted community estate,” provided there is evidence a spouse committed fraud, according to a 2011 Texas law.
The former wife of one-time billionaire investor Samuel Wyly filed papers in a federal court recently to challenge the couple’s high asset divorce agreement. Victoria Lee Wyly, now known as Torie Steele, and Samuel Wyly divorced in 1991. The complaint alleges the man, behind the success of Michaels Stores Inc., and other companies, failed to disclose off-shore or otherwise hidden stock holdings at the time of the couple’s split.
In the divorce, Samuel Wyly agreed to pay his ex-wife more than $4 million, plus additional support, which by last October exceeded $41,000 per month or about $500,000 annually. Steele said her former husband stop paying support in November after filing Chapter 11 bankruptcy in the wake of a federal government lawsuit.
Samuel Wyly and now-late brother Charles were accused by the U.S. government of fraud connected to offshore stock trades. The government claimed the investors reaped $550 million illegally. The bankruptcy filing followed, shortly after Wyly lost the case and a judge declared the defendants could owe the Securities and Exchange Commission up to $400 million.
Wyly’s ex-wife, a Dallas County resident, believes the bankruptcy was an attempt by her ex to avoid spousal support. She has requested a jury trial to determine the value of the stocks Samuel Wyly reportedly hid during the divorce. Torie Steele claims she is entitled to half the hidden stocks’ value.
The Texas Family Code states the value of a reconstituted estate, including all formerly-undisclosed marital property, should be divided fairly. A court may award a wronged spouse a share of the estate, money or a combination of both.
Source: Bloomberg Business, “Former Billionaire Wyly Sued by Ex-Wife Over Stock Holding” Erik Larson, Jan. 27, 2015