Robert Brockman, the billionaire and chief executive officer of Ohio-based software company Reynolds and Reynolds, has been charged with 39 counts of tax evasion, wire fraud, money laundering, and other offenses related to a $2 billion tax fraud scheme.
In a press conference, officials from the U.S. Department of Justice said he hid capital gains income over 20 years through a web of offshore entities in Bermuda and Nevis and secret bank accounts in Bermuda and Switzerland. Prosecutors also said Robert Smith, the founder and chairman of Vista Equity Partners, would pay $139 million to settle a criminal investigation into suspected tax violations.
Smith helped finance Brockman’s 2006 acquisition of Reynolds and Reynolds and held a stake in the company until 2014. He is cooperating in the investigation.
Prosecutors said the alleged tax fraud is the largest such case ever brought against an American.
The head of the Internal Revenue Service’s criminal tax agency, Jim Lee said Brockman and Smith’s alleged conduct was brazen, intentional, and underlined by greed.
“Smith’s agreement to cooperate has put him on a path away from indictment,” Lee said.
Smith made headlines in 2019 after announcing during a commencement address at Morehouse College that he would pay off the student loan debt of nearly 400 graduating seniors. According to prosecutors, he used $2.5 million in untaxed income to buy ski properties in the French Alps and upgrade a vacation house in Sonoma, California.
Brockman, who appeared in federal court via Zoom, pled not guilty to all 39 counts and was released on $1 million bond.
“Mr. Brockman has pled not guilty, and we look forward to defending him against these charges,” his attorney said.
According to the indictment, Brockman in 2007 ordered a nominee of one of the offshore entities he controlled to buy software called “Evidence Eliminator.”
He allegedly told the same nominee, “We need to also remember that all copy machine/laser printer paper has encoded into it the manufacturer of that paper as well as the year and month of manufacture. For that reason, I always set aside some packets of copy paper with dates on them — for potential future use.”
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