Billionaire Robert Brockman Charged in $2B Tax Fraud Scheme

Daniel Fowler
October 18, 2020

The 79-year-old was charged with money laundering, conspiracy, wire fraud, and tax evasion, amongst other charges, in a 39-count indictment. As part of a settlement with the Justice Department, Smith will pay $139 million in taxes and penalties, abandon his $182 million protective refund claim and pay interest, but will avoid prosecution.

Representatives for Smith, Vista Equity Partners, and the United States attorney in San Francisco declined to comment to Bloomberg on the nature of the agreement. An attorney for Mr. Smith declined to comment.

Brockman, a resident of Houston and Pitkin County, Colorado, 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.

A spokesman for Reynolds and Reynolds told The Washington Post that the company "is not alleged to have engaged in any wrongdoing, and we are confident in the integrity and strength of our business" noting that Brockman's actions occurred "outside of his professional responsibilities".

Smith helped finance Brockman's 2006 acquisition of Reynolds and Reynolds and held a stake in the company until 2014. In an email from July 2008, Brockman wrote to his handler to refrain from using the copy machine and laser printer paper because it "encoded the manufacturer of this paper as well as the year and month of manufacture.", "Brockman wrote". "These allegations should disgust every American taxpayer, as well, because the law applies to all of us when it comes to tax and paying our fair share", he said.

"I have not seen this pattern of greed or concealment and cover-up in my 25-plus years as a special agent", Mr.

"The allegation of a $2 billion tax fraud is the largest-ever tax charge against an individual in the United States", David Anderson, the USA attorney in San Francisco, said at a news conference. The misconduct lasted from 1999 to 2019, authorities said. "Smith committed serious crimes, but he also agreed to cooperate", said US Attorney David Anderson. "We will not hesitate to prosecute the smartest guys in the room". Brockman, who seemed to have a penchant for assigning monikers to people and places, called himself "Permit", the IRS "the house", and assigned his handlers fish-themed code names like, "Redfish, "Bonefish", and "Snapper".

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The indictment states that Brockman conspired with a person described as Individual 1, who was put in charge of St. John's Trust Company, an entity in Bermuda that was owned by Brockman but was set up in a way to hide any ties it had to him.

Smith is the founder of Vista Equity Partners, a San Francisco-based private-equity fund that had a single investor: Brockman.

Brockman and Smith have a business relationship dating back to the late 1990s, according to documents filed in connection with Smith's non-prosecution agreement.

He founded the tech investment firm Vista in 2000 and Forbes reports that it now has more than $50 billion in assets and is "one of the best-performing private equity firms, posting annualized returns of 22% since inception". The historically Black institution in Atlanta said the donation amounted to $34 million.

Federal prosecutors said Smith was hiding the proceeds by using foreign trusts and corporations to defraud the IRS. The Justice Department doesn't typically announce such leniency deals with individuals, Mr. Neiman said.

Smith, 57, who is worth more than $5 billion according to Forbes magazine, drew tears of joy a year ago 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 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. In 2010, Smith moved to Switzerland for a time and bought two ski properties and a commercial property in the French Alps, all with untaxed money in the Swiss account.

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