Robert Brockman: US tycoon charged over historic tax fraud scheme

Andrew Cummings
October 16, 2020

"The allegation of a $2 billion tax fraud is the largest ever tax charge against an individual in the United States", David L. Anderson, the US attorney for the Northern District of California, said at a news conference. Smith dedicated critical crimes, however he additionally agreed to cooperate.

His tax troubles arose from a $1 billion investment in Vista's first fund two decades ago by an offshore foundation tied to Robert Brockman, a Houston software businessman, people familiar with the matter have said. Although those individuals were employed by Brockman, according to the grand jury indictment, Brockman "completely controlled these entities and made all substantive decisions in their regard".

"Complexity will not hide crime from law enforcement", Mr. Anderson said.

He faces seven counts of tax evasion, six counts of failing to file reports disclosing foreign bank accounts, and numerous other counts including wire fraud, money laundering and evidence tampering.

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".

The indictment alleges Brockman appointed nominees to manage the off-shore entities for him as a means of hiding his involvement, saying he even went so far as to establish a proprietary encrypted email system and use code words such as "Permit", "Red fish" and "Snapper" to communicate.

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

In response to the DOJ, Brockman is charged with conspiracy, 7 counts of tax evasion, 6 counts of failing to file global checking account experiences, 20 counts of wire fraud affecting a monetary establishment, 2 counts of concealment cash laundering, and 1 rely every of worldwide concealment cash laundering, proof tampering, and destruction of proof.

Mr. Smith on Thursday admitted to willfully evading $43 million in federal taxes from 2005 to 2014 and agreed to cooperate with the continuing investigation.

He spent millions of it to buy and renovate a vacation home in Sonoma, Calif., to purchase two ski properties and a piece of commercial property in France and to make improvements to a residence in Colorado, the statement said. Under a settlement reached with the Justice Department, he will pay $139 million in fines and back taxes but won't be prosecuted.

Mr. Smith's cooperation with the government "put him on a path away from indictment", Mr. Anderson said.

But starting in 1999, prosecutors say, Brockman began carefully stashing money overseas and covering his tracks to avoid investigators.

Billionaire Robert Smith will pay about $140 million and acknowledge wrongdoing to end a four-year US tax investigation involving assets held in offshore tax havens, people familiar with the matter said.

Forbes lists Smith as number 461 on its billionaires list, with a net worth of more than $5 billion. The criminal tax probe into Smith was first reported by Bloomberg News in August.

Prosecutors say Mr. Brockman created false paper trials to secretly purchase millions of dollars in luxury items, including a yacht and $30 million for vacation properties. These were allegedly used to hide income from his investments in private equity funds, managed by a firm in San Francisco, California. Brockman is a beneficiary of the trust.

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