Sam and Charles Wyly are slick business partners and brothers. Sam’s first company was University Computing Co to sell data processing services to corporations. Charles liked the idea and served as an officer and director there for eleven years. The two then started a business together called Earth Resources Company, a refining and mining company. This was their first large company together. Some other businesses that have involved these two, and Sam’s son Evan, are Greenmountain.com, Michael’s Stores Inc., Bonanza Steak Houses, Datran, Inc., Scottish Annuity & Life, Sterling Software, and its spin off company Sterling Commerce in addition to Maverick Capital and Ranger Governance (the same idea as Maverick).
The Connections
Tom Loeffler, a former UT regent, was a major player in the 1998 investment in the Maverick Capital Fund. In addition, Tom Hicks was the director when the deal was made. Loeffler, Hicks, and the Wylys are all good friends simply due to their Texas businesses and important positions in the state. The Wylys are a few businessmen of many who have friends with some power in Texas, whether it is working for the state or on the board of UTIMCO. Big oil and gas businesses run rampant in Texas, and they all seem to lead back to those with power. Those working for the state also reap rewards; the GOP seems to be the main recipient of big money in Texas, and Bush was no exception. The Wylys are in ninth place on George W. Bush’s career patron list; Loeffler is tenth and Hicks is fourth. The Wylys are some of the most influential men in Texas “where [they are] part of a small circle of wealthy, politically connected Republicans”1; they were actually little known outside of the state until the 2000 election (see below). They have used their friends in power to make their money, and they do not feel any repercussions. In this case, the students do since the value of all the funds UTIMCO overlooks have not been this low in nearly four years. UT and UTIMCO have both simply been thrown into the mix of wealthy businessmen; most of the decisions made are ill-advised, some even illegal.
In 1998, UTIMCO invested $96 million into the Wylys’ Maverick Capital Fund, and an asset in the fund still remains today. This investment was made after the Wyly brothers donated $210,000 to Bush’s two gubernatorial campaigns, which was the most amount given. In the 2000 Presidential race, Sam donated $250,000 to the Republican National Convention before dishing out $2.5 million on television ads to portray George W. Bush as eco-friendly and put down Senator John McCain. Staying true to donating closer to home, Governor Rick Perry has also received $353,500 from the Wyly businesses, with $263,500 of that amount coming straight out of their own pockets.
“[Sam] is also not a stranger to controversy. In 1979, Mr. Wyly settled Securities and Exchange Commission charges, and he was criticized recently by the California Public Employees Retirement System, one of the nation’s largest pension funds, which said that he and other Wyly family members had favored themselves at the expense of shareholders.”2
Their Backgrounds
Sam and Charles Wyly introduced the world to Michael’s Stores in 1984 with ten stores. The company blossomed into 695 stores in the US and Canada. Sam is a chairman and Charles is Vice Chairman. The conglomerate posted $2.5 billion in revenue at the end of the 2001 fiscal year, and as of March 2002, UTIMCO has $647,405 invested in the company.
Sam, Charles, and Evan were all involved in the Sterling businesses. They all served on the board of directors at each of these software companies. In March of 2000, Sterling Software, Inc. was sold to Computer Associates (the same company who bought University Computers Co), and in a separate but equal occurrence, its spin off company Sterling Commerce Inc. was sold to SBC Communications. Each company was sold for $4 billion. Sam and Charles conveniently had the most amount invested in the latter company when it was sold.
The three Wylys were involved in a controversial case in which they were accused of “granting themselves excessive compensation in a self-interested transaction”3 by one of their shareholders. The decision granted that they keep the stock options for which they were sued but simply cut back the number of years of the holdings (which meant they lost only a fraction of the overall worth). Speaking of court cases, Sam was involved in a lengthy case in which he was trying to have the board of directors of Computer Associates replaced. After he sold Sterling Software and University Computers to them, he maintained a $30 million investment via his creation, Ranger Governance. Since his investment was not doing as well as he pleased, he put forth a major proposal in the summer of 2001 to replace the current CA board with many Texas business men, one of these men is the director of Ranger Governance. Sam lost this case. One year later, he did the same thing with more or less the same people and ended with a slightly different result. The board of directors remained intact, but it was because they had paid Wyly $10 million to bugger off.
The new Wyly endeavor is Greenmountain.com. A company that started as Green Mountain Power, the “green” energy company has been anything but. Environmental organizations such as GreenPeace and Citizen Watch have contested the practices and advocacy of Greenmountain.com. There are numerous causes for concern for the company, such as increasing pollution and dealing with huge companies such as BP, Nuon NV, and PacifiCorp, one of the dirtiest polluters in the country. The board of directors has Evan Wyly and H. Lee Hobson, a partner at Maverick Capital, Richard Hanlon, a director of the Michael’s Stores, and Dennis Crumpler, a former exec at Sterling Commerce. Also, in the late 90’s, Sterling Software was paid $6 million to install software for the network at GreenMountain.com.
The Wylys have a strong background in starting companies, remaining on their board of directors, and making friends with their own investment companies. Wyly businesses have a history of dealing with each other as they have illegally made plenty of money; the law turns a blind eye since they know that they can get money from the Wyly family. These are some of the wealthiest and influential men in Texas, gaining their money through questionable ways. But since they have money, they have ties to UT and UTIMCO.