The U.S. Attorney’s Office in San Francisco has filed a $2-billion criminal tax fraud case against Houston tech tycoon Robert T. Brockman. The 39-count indictment accuses the man of using a family charitable trust based in Bermuda and other offshore accounts to conceal assets from the IRS while he failed to pay his taxes.
Brockman, 79, is the CEO of Reynolds & Reynolds, one of the largest vendors of software used to manage car dealerships.
The U.S. Attorney confirmed at a news conference that the $2-billion tax fraud case is the largest-ever tax charge brought against an individual in the U.S.
Brockman pled not guilty to charges including tax fraud, tax evasion, failure to file foreign banking reports, wire fraud, conspiracy, concealment money laundering, tax evasion money laundering, international money laundering, evidence tampering and destruction of evidence. He entered his plea via videoconference at a federal court in Houston. He was able to pay $1 million in bond to secure his release.
Insider allegedly assisted prosecutors with proving the charges
The allegations against Brockman are supported by Robert Smith, the CEO of Vista Equity Partners, a private equity fund. He apparently set up that fund 20 years ago using a $1 billion investment from Brockman’s trust structure.
Smith has admitted that he failed to pay around $30 million in taxes, using the money to buy vacation property in Sonoma County, California, and the French Alps, as well as to make charitable contributions. With penalties and interest, Smith will end up paying $139 million to the IRS. In exchange, the U.S. Attorney has agreed not to prosecute.
Smith had also faced a four-year criminal tax investigation involving around $200 million that allegedly moved through offshore structures linked to Brockman.
According to the indictment, Brockman created offshore trusts that were supposed to be overseen by independent directors. However, he is charged with conspiring to maintain complete control over those assets yet decline to pay the capital gains and income taxes due.
For example, he allegedly created false paper trails to purchase a yacht and to spend $30 million on vacation properties in Colorado, according to prosecutors.
Report your offshore assets and income
For years, the IRS has been threatening to crack down on people who fail to disclose and pay taxes on offshore accounts and income. If you have been avoiding taxes using offshore structures, you may be facing serious consequences if the IRS decides what you have done is tax evasion. Talk to an experienced tax lawyer right away.