Texas Tech Mogul Charged With $2 Billion Tax Fraud

 

 

The US Department of Justice has taken up a landmark case wherein it's charged Robert "Bob" Brockman, a Texas-based tech mogul who owns Reynolds and Reynolds, an automotive technology and software company, with concealing income to the tune of $2 billion from the Internal Revenue Service (IRS) and avoiding required taxes as a result. Brockman has been hit with 39 indictments in what marks as one of the biggest-ever tax fraud cases, consisting of seven counts of tax evasion; six counts of failing to file foreign bank account reports; two counts each of concealment money laundering and tax evasion money laundering; one count each of international concealment money laundering and evidence tampering; and 20 counts of wire fraud.

Brockman is alleged to have hidden approximately $2 billion in income over two decades, precisely between 1999-2019, through the use of secret bank accounts in foreign countries. It's alleged that Brockman made use of offshore entities based in Bermuda and Nevis to hide income earned on his investments in private equity funds and that he directed untaxed capital gains income to secret accounts in Bermuda and Switzerland. The DoJ accuses Brockman of taking measures such as backdating records and using encrypted communications and code words to communicate with an unnamed co-conspirator to facilitate the alleged tax evasion.

Also, Brockman is accused of engaging in a fraudulent scheme to obtain about $68 million in debt securities issued by his software company, Reynolds and Reynolds. He's accused of circumventing contractual restrictions of purchasing debt securities issued by his company by making use of a third-party entity to acquire the securities, and to that, is further accused of factoring material, non-public information into his decisions of purchasing the company's debt. Lastly, Brockman is alleged to have "persuaded another individual to alter, destroy, and mutilate documents and computer evidence with the intent to impair the use of such evidence in a grand jury investigation."

Brockman's case comes just on the heels of a settlement that one of his associates, the billionaire Robert Smith, reached with the DoJ. Smith agreed to cough up about $140 million in tax arrears and acknowledge wrongdoing to settle a four-year tax investigation involving assets he held in offshore tax havens. His tax troubles traces its origin to a $1 billion investment in the first fund of his well-known private equity firm Vista Equity Partners, a $1 billion investment that came from an offshore entity tied to Brockman, who himself is now being prosecuted just on the heels of Smith's settlement.

“The allegation of a $2 billion tax fraud is the largest ever tax charge against an individual in the United States,” David Anderson, the U.S. attorney in San Francisco, said in a press conference that formally announced the charges against Brockman.

Brockman, an apparent billionaire, isn't well known and has largely flown under the radar in his business dealings. This is unlike Robert Smith, who's estimated to be worth $5.2 billion by business magazine Forbes and has long maintained a status of being the wealthiest African American in the US. Smith has long been favored in the press, and more so drew widespread praise when he last year spent $34 million to pay off the student debt of an entire graduating class of Morehouse College, a historically black men's college in the state of Georgia.

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