Software executive charged in biggest tax evasion case in US history

Brockman 79 used a family charitable trust based in Bermuda and other offshore entities to hide assets from the Internal Revenue Service while failing to pay taxes according to a 39-count indictment unsealed on Thursday in federal court in San Francisc

Brockman 79 used a family charitable trust based in Bermuda and other offshore entities to hide assets from the Internal Revenue Service while failing to pay taxes according to a 39-count indictment unsealed on Thursday in federal court in San Francisc

The indictment charges Brockman with crimes including money laundering, evidence tampering and destruction of evidence.

Smith, 57, is cooperating with related tax investigations as part of a deal in which he will admit misconduct but won't be prosecuted, they said.

As the CEO of Reynolds & Reynolds, Brockman oversees one of the largest vendors of software to manage auto dealerships in the USA and overseas. "Sophistication is not a defence to federal criminal charges", said David L Anderson, US attorney for the Northern District of California.

Alan Fleischmann, a spokesman for Smith and Vista Equity Partners, declined to comment.

Robert Smith will have to pay $140 million if he does not want to be prosecuted for tax crimes. 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".

Smith hit headlines a year ago when he vowed to pay off the student loans of the entire graduating class of 2019 at Morehouse College.

Brockman appeared by video conference in federal court in Houston, where he pleaded not guilty.

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

As part of the agreement, he will pay more than $139m in penalties and taxes. The criminal tax probe into Smith was first reported by Bloomberg News in August.

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"The allegation of a US$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.

To keep up the scheme, Brockman used secret, encrypted email systems to coordinate with offshore money handlers, according to the indictment.

Robert Smith, the billionaire co-founder of Vista Equity Partners, said President Brian Sheth may leave the private equity firm, according to people familiar with the matter. 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".

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.

Prosecutors said Mr Smith admitted to using a nominee trustee and corporate manager to his involvement in four offshore firms. This amounted to an estimated $40 million.

Would you rather have money or be poor and have a good family? "Although Smith willfully and knowingly violated the law, Smith has accepted responsibility and agreed to provide complete and truthful cooperation", Anderson said. A spokesman for the US attorney declined to comment on the substance of the news conference or the Smith agreement.

While some of the money in the offshore entity ultimately went into Fund II Foundation, a charity Mr. Smith created in 2014, he withdrew untaxed funds for his personal benefit from 2005 to 2013, according to a statement he signed with prosecutors on October 9. Smith founded it in 2000.

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. "That's the message we intend to send".

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