DOJ charges Texas billionaire in $2 billion tax fraud scheme

Marco Green
October 16, 2020

Technology executive Robert Brockman has been charged in the biggest tax evasion case in U.S. history after fellow billionaire Robert Smith turned against him to avoid prosecution himself, the Justice Department said on Thursday (Oct 15). Brockman was alleged to have committed crimes including tax evasion, wire fraud, and money laundering.

At a press conference in San Francisco, US Attorney David Anderson said Brockman was also charged in a securities fraud scheme, after he bought and sold debt securities in his own company, "breaking a promise to investors that he would not buy or sell his own company's debt". Newsweek reached out to Reynolds and Reynolds for comment.

Prosecutors in the Brockman matter, who were investigating "a major and very large tax fraud" in the USA, believe $1.5 billion of revenue was fraudulently concealed, according to Bermuda court records.

Brockman also "engaged in multiple instances of obstructive conduct", including directing an associate to destroy documents and electronic media using shredders and hammers, according to the indictment.

Brockman was expected to appear before a federal judge on Thursday.

He will pay $140 million to tax authorities as part of the arrangement, the Justice Department said in a statement Thursday.

"Mr Brockman has pled not guilty, and we look forward to defending him against these charges", said his attorney, Kathryn Keneally, in an email. Smith used untaxed income to buy a vacation home in Sonoma County, California, and ski properties in the French Alps, and to make charitable contributions, Anderson said.

Billionaire businessman Robert Smith, who made headlines past year by promising to pay off school loans taken on by hundreds of Black students, has reached a deal with USA authorities to stave off prosecution for tax fraud. "Although Smith willfully and knowingly violated the law, Smith has accepted responsibility and agreed to provide complete and truthful cooperation", Anderson said. "Smith's agreement to cooperate put him on a path away" from criminal charges.

He founded the tech investment firm Vista in 2000 and Forbes reports that it now has over $50 billion in assets and is "one of the best-performing private equity firms, posting annualised returns of 22 per cent since inception". The Justice Department and Internal Revenue Service have been investigating whether Smith failed to pay USA taxes on about $200 million in assets that moved through offshore structures tied to Brockman, those people said.

Bloomberg News first reported the tax investigation into Smith in August.

In 2013, a charitable trust set up by Brockman's late father withdrew a pledged $250 million donation to Centre College, a small liberal arts school in Danville, Kentucky, where Brockman attended class and once served as chairman of the board of trustees.

As the CEO of Reynolds & Reynolds, Brockman oversees one of the largest vendors of software to manage auto dealerships in the US and overseas.

Other reports by Click Lancashire

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