The Sydney Morning Herald: NEW SOUTH WALES, Australia – Robert T Brockman, a Houston software tycoon, was charged with using a web of Caribbean and Bermuda entities to hide $US2 billion ($2.8 billion) in income in what prosecutors called the largest US tax case ever against an individual.

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 (US time) in federal court in San Francisco. Brockman was also charged with money laundering and other crimes.

Brockman was charged with using a web of Caribbean entities to hide $US2 billion in income in what prosecutors called the largest US tax case ever against an individual.

Prosecutors received help from Robert Smith, the CEO of Vista Equity Partners, who set up his private equity fund two decades ago with a $US1 billion investment from Brockman’s trust structure.

Brockman earned about $US2 billion in capital gains made through his Vista investments, according to the indictment.

As part of Smith’s settlement, he admitted that he failed to pay about $US30 million in taxes, with penalties and interest making up the remainder of the expected payout. Smith used untaxed income to buy a vacation home in Sonoma County, California, and ski properties in the French Alps, and to make charitable contributions, Anderson said.

Smith, 57, entered into a non-prosecution agreement and will pay $US139 million, Anderson said.

“Smith committed serious crimes, but he also agreed to cooperate,” he said. “Smith’s agreement to cooperate put him on a path away” from criminal charges.

Smith faced a related four-year criminal tax inquiry involving about $US200 million that moved through Brockman-linked offshore structures.

With a net worth of $US7 billion, Smith is the wealthiest black person in America. The criminal tax probe into Smith was first reported by Bloomberg News in August.

The Internal Revenue Service (IRS) headquarters stands in Washington, DC, US, on Wednesday, May 15, 2013. The widening inquiries into the IRS are focusing less on why employees singled out small-government groups for scrutiny and more on agency executives who didn’t inform Congress earlier – Photographer: Andrew Harrer/Bloomberg

Like many wealthy Americans, Brockman set up offshore trusts that on paper were overseen by independent directors. However, the indictment charges that he conspired over two decades to secretly maintain “complete” control over trust assets while failing to pay capital gains and income taxes.

Brockman created false paper trails to secretly purchase a luxury yacht now known as Albula and to spend $US30 million on properties called the “Frying Pan Canon Ranch” and the “Mountain Queen” vacation home in Pitkin County, Colorado, prosecutors said.

As the CEO of Reynolds & Reynolds, Brockman oversees one of the largest vendors of software to manage auto dealerships in the US and abroad.

Brockman’s investment in the first private equity fund set up by Smith came from an entity held as part of the A. Eugene Brockman Charitable Trust, which was named for Brockman’s late father. Brockman is a beneficiary of the trust.

Meanwhile the Bermuda Police Service issued a statement on Friday, October 16 saying the Attorney General’s Chambers received a request from the US Department of Justice to assist the IRS with the investigation in April 2018.

Detective Superintendent Nicholas Pedro, who heads up the BPS Crime Division confirmed that the BPS Financial Crime Unit “was able to assist in this process by the execution of search warrants, service of production orders, and seizure of evidence locally”.

“This evidence was shared with our US counterparts which proved to be pivotal to their case against two prominent US-based businessmen,” said Mr Pedro.

“Our detectives worked closely with the IRS and DoJ on the progression of this case, aspects of which remain ongoing, and hence cannot be discussed.

“Bermuda, and more specifically, the Bermuda Police Service welcomes the recognition of the role we played in this transnational money laundering and criminal tax evasion matter.

“This complex case highlights the role of Bermuda on the world stage, and the need for our investigators to be highly trained, skilled, and have the requisite resources available to them in order to meet international requirements and standards in the arena of financial investigations.

“We take our role on the international stage as a financial centre of excellence very seriously, and we believe this demonstrates our commitment and resolve to prevent Bermuda being used by criminals to launder criminal proceeds.”

  • Top Feature Photo: Brockman was charged with using a web of Caribbean entities to hide $US2 billion in income in what prosecutors called the largest US tax case ever against an individual – smh.com.au