USA tech mogul Robert Brockman charged in record tax evasion scheme

Cornelia Mascio
Ottobre 16, 2020

Brockman, a Houston software tycoon, was charged with using a web of Caribbean entities to hide US$2 billion in income in what prosecutors called the largest USA tax case ever against an individual.

"The allegation of a $2 billion tax fraud is the largest ever tax charge against an individual in the United States", said U.S. Attorney David L. Anderson during a Thursday news conference. A spokesman for Reynolds and Reynolds said in 2013 that the event was a proposed refinancing deal involving Vista Equity Partners, Smith's company.

Prosecutors in the Brockman matter, who were investigating "a major and very large tax fraud" in the US, believe $1.5 billion of revenue was fraudulently concealed, according to Bermuda court records. He's also charged with wire fraud for using intermediaries to manipulate debt securities at his company.

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 appeared in federal court from Houston via Zoom on Thursday. 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.

"Mr Brockman has pled not guilty, and we look forward to defending him against these charges", said his attorney, Kathryn Keneally, in an email.

Prosecutors say that Smith used about $2.5 million in untaxed funds to buy and upgrade a vacation home in Sonoma, California; purchase two ski properties in France; and spend $13 million to buy a property and fund charitable activities at his property in Colorado.

As part of Smith's settlement, he admitted that he failed to pay about $30 million in taxes, with penalties and interest making up the remainder of the expected payout.

Smith, 57, entered into a non-prosecution agreement and will pay $139 million, Anderson said.

"Smith committed serious crimes, but he also agreed to cooperate", he said. "Smith's agreement to cooperate has put him on a path away from indictment". The Justice Department and Internal Revenue Service have been investigating whether Smith failed to pay US taxes on about $200 million in assets that moved through offshore structures tied to Brockman, those people said.

Smith, chief executive officer of the private equity firm Vista Equity Partners, informed some executives and investors of the pending agreement on Wednesday, the people said. The criminal tax probe into Smith was first reported by Bloomberg News in August. Reynolds and Reynolds, which is headquartered in OH, provides supplies, software products and consulting to automobile dealerships nationwide.

Brockman's investment in the first private equity fund set up by Smith came from an entity held as part of the A. Eugene Brockman Charitable Trust, which was named for Brockman's late father.

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