Billionaire Charged In $2 Billion Tax Fraud Scheme

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A Texas billionaire was charged for a 20-year long tax fraud scheme in which he allegedly concealed around $2 billion from the IRS, the Department of Justice announced Thursday.

Prosecutors said that the case against Robert T. Brockman, the CEO of Ohio-based software company Reynolds and Reynolds Co, is the largest tax fraud case against an American in history, the Associated Press reported. The 39 count indictment charges Brockman with tax evasion, wire fraud, money laundering, and other offenses, the Department of Justice said in a press release.

Brockman is accused of using entities in Bermuda and Nevis to hide income that he earned from his investments in private equity funds from the IRS. The indictment alleges that Brockman used secret bank accounts in Bermuda and Switzerland to hide his untaxed capital gains income, backdated records, and used secret code words and encrypted communications to talk with his co-conspirator. (RELATED: John McAfee Facing Charges For Tax Evasion)

Between 2008 and 2010, Brockman also allegedly fraudulently acquired around $67.8 million of his software company’s debt securities. The CEO was prohibited from purchasing debt securities without a series of requirements, including prior notice, full disclosure, and amending the associated credit agreements. Brockman used a third party to avoid meeting those requirements and to conceal valuable economic information from sellers, the indictment alleges.

“Complexity will not hide crime from law enforcement,” U.S. Attorney David L. Anderson said. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”

Brockman plead not guilty to all charges during his first hearing Thursday and was released on a $1 million bond, Northern District of California spokesman Abraham Simmons said according to the Associated Press.

Reynolds and Reynolds said in a statement that the allegations against Brockman were outside his work with the company and that the company was not accused of any crimes.

Robert F. Smith, the Chairman and CEO of San Francisco based private equity company Vista Equity Partners, agreed to cooperate in the investigation and pay more than $139 million to settle his own tax fraud case, the Department of Justice said in a press release. Smith made headlines in 2019 when he announced to the graduating class of Morehouse College that he was going to pay off their student loan debt, an estimated cost of around $40 million, according to the Associated Press.

Smith is accused of using a shell company and offshore bank accounts to hide over $200 million in income from the IRS. The unreported income was used to purchase and renovate a California vacation home, purchase two ski properties, and purchase a commercial property in France. Smith also spent around $13 million to build a home in Colorado and fund charity events there.