Wealthy Dallas brothers Charles and Sam Wyly were charged by the Securities and Exchange Commission on Thursday with violating federal laws by conducting a massive, 13-year-long fraud.

The case focuses on stock transactions of companies that the brothers controlled or were officers in.

The Wylys, according to allegations in a civil lawsuit filed by the SEC in New York, reaped $550 million in ill-gotten gains from securities trades made through an "elaborate sham system of trusts and subsidiary companies located in the Isle of Man and the Cayman Islands."

Using this offshore system, the Wylys sold stock worth more than $750 million in four public companies in which they served as corporate directors, the suit claims.

The lawsuit also alleges that the Wylys made more than $31.7 million through insider trading in one of the companies. The charges come after a five-year investigation by the SEC that the brothers tried to settle in its earliest stages.

The Wylys' defense attorney, William Brewer III of Dallas, told The Associated Press that the charges are "without merit" and said the Wylys "intend to vigorously defend themselves -- and expect to be fully vindicated."

"At worst, the claims appear to represent an after-the-fact justification for a misguided six-year investigation," Brewer said in a statement issued by his law firm.

Attorneys for two other defendants, Dallas attorney Michael French of Dallas and stockbroker Louis Schaufele III of Dallas, had no comment Thursday, the AP reported.

The SEC alleges that the Wylys used elaborate schemes to trade stocks in four public companies they controlled major ownership interests in and were directors of, without disclosing their interests or roles as required by federal laws designed to protect investors.

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