Economy

Robert Brockman: US tycoon charged over historic tax fraud scheme

Robert Brockman: US tycoon charged over historic tax fraud scheme”

A 79-year-old Texan billionaire has been accused of using a web of entities in Bermuda and Nevis to hide US$2 billion in assets in what prosecutors say is the largest tax evasion case against an American in USA history. Mr. Brockman is the sole investor in the first private-equity fund managed by Vista Equity Partners, a firm founded by billionaire Robert Smith.

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

He set up a tangled web of charitable trusts and offshore entities to hide assets from the IRS while failing to pay taxes for 20 years, according to an indictment filed in a San Francisco federal court.

The 39-count indictment charges Mr.

Brockman, the chief executive officer of Reynolds and Reynolds, an Ohio-based vendor of management software for vehicle dealerships, who appeared in federal court by video conference, pleaded not guilty to all 39 counts and was released on US$1million bond. Brockman and will not be charged with a crime in exchange for his assistance, Mr. Anderson said.

A lawyer for Smith did not immediately respond to a request for comment.

Robert and Dorothy Brockman attend a dinner in 2011 in Houston. "The company is not alleged to have engaged in any wrongdoing, and we are confident in the integrity and strength of our business".

Brockman, a resident of Houston and Pitkin County, Colo., is chairman and CEO of Reynolds and Reynolds, a 4,300-employee company near Dayton, Ohio, that sells accounting, sales and management software to auto dealerships.

But on Thursday, prosecutors alleged that his decades-long tax fraud scheme, the largest in American history, had finally caught up to him. The misconduct lasted from 1999 to 2019, authorities said.

"Complexity will not hide crime from law enforcement", U.S. Attorney Dave Anderson said at the press conference. "We will not hesitate to prosecute the smartest guys in the room".

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Prosecutors described how Brockman went to considerable lengths to maintain secrecy, using an encrypted e-mail system to communicate with nominees, to whom he gave code names including Redfish, King, Bonefish and Snapper. He's also charged with wire fraud for using intermediaries to manipulate debt securities at his company. The debt was syndicated in 2006 through banks including an arm of Deutsche Bank AG, which the indictment says was deceived about Mr. Brockman's trading. Brockman is a beneficiary of the trust. Mr. Smith left his banking job to start the private-equity firm and has been in charge of Vista ever since.

Smith, 57, who is worth more than $5 billion according to Forbes magazine, drew tears of joy past year when he promised the 400-member graduating class of historically Black Morehouse College in Atlanta that he would pay off all of their student loans. The historically Black institution in Atlanta said the donation amounted to $34 million.

Robert Smith, the billionaire who pledged a year ago to pay off the student debt for an entire class of college graduates, will pay $140 million to settle a four-year tax investigation involving assets held in offshore tax havens, Bloomberg reported Wednesday.

Would you rather have money or be poor and have a good family?

But Mr. Anderson said that Mr. Smith "has accepted responsibility and provided "complete and truthful cooperation". "It is never too late to tell the truth".

With a net worth of $7 billion, Smith is the wealthiest Black person in America. The Vista chief put over $200 million of his own profits into one offshore entity and used another to hide his ownership and control of the first entity, the government said Thursday.

Smith admitted creating offshore entities to avoid paying some taxes in the US.

Mr. Smith moved to Switzerland in 2010, when he used untaxed income to buy the winter homes in the French Alps.

"Smith committed serious crimes, but he also agreed to cooperate", he said.

-Laura Saunders contributed to this article. "That's the message we intend to send".



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