SAN FRANCISCO (CN) — Federal authorities charged billionaire tech mogul Robert Brockman on suspicion of hiding approximately $2 billion from the Internal Revenue Service — charges that could result in one of the largest tax fraud prosecutions against an individual in U.S. history.
During a press conference on Thursday, law enforcement officials led by U.S. Attorney for the Northern District of California David L. Anderson and IRS Criminal Investigations chief Jim Lee revealed the indictment of Houston software tycoon Brockman, the 79-year old CEO of Reynolds & Reynolds. The company sells software to automobile dealerships worldwide.
Prosecutors accuse Brockman of using a charitable trust in Bermuda and other offshore entities to conceal billions in cash and assets from the IRS in a bid to dodge paying taxes.
According to the indictment, while it appeared the trusts Brockman put his assets into were controlled by independent directors, he used a complex scheme complete with encrypted emails and codenames to maintain control over the assets. He hid over $2 billion over 20 years using the scheme, authorities said.
Brockman faces seven counts of tax evasion, six counts of failing to file Foreign Bank Account Reports (FBARS), 20 counts of wire fraud and an assortment of other conspiracy, money laundering and destruction of evidence charges.
Anderson called the scheme complex and meticulous in nature, but that complexity of a criminal act is not a proper shield against criminal charges.
“Complexity will not hide crime from law enforcement,” Anderson said during Thursday’s press conference. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”
Prosecutors say Brockman used false paper trails to cover up a handful of big purchases, including properties known as “Frying Pan Canon Ranch” and the “Mountain Queen” vacation home in Pitkin County, Colorado, as well a luxury yacht.
Officials say that given the scope of the allegations and response by law enforcement, Thursday’s indictment stands as one of the largest tax fraud prosecutions in the history of the United States. Lee called the scheme unlike anything he has ever seen in his career.
“Dollar amounts aside, I can tell you that I have not seen this kind of greed or concealment and cover-up in my 25 plus years as a special agent of IRS-CI,” Lee said.
Also Thursday, prosecutors announced they have reached a nonprosecution agreement with Robert Smith, the CEO of Vista Equity Partners, regarding his role in the scheme. They said that while Smith also committed significant tax-related crimes, his cooperation with the Brockman investigation led prosecutors to take criminal charges for him off the table.
“Today’s NPA announcement provides an opportunity to emphasize the importance of cooperation with a federal criminal investigation,” Anderson said. “It is never too late to do the right thing. It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.”
Brockman is set to make his first official court appearance Thursday in San Francisco where the indictment against him was unsealed by officials.
Lee noted that while there are several crucial takeaways from Thursday’s announcement, he hopes that the actions announced by law enforcement will send a clear message to taxpaying Americans that there are clear and serious consequences if they don’t play by the rules.
“The men and women of IRS-CI do their jobs to ensure that all the hardworking, honest American taxpaying citizens who are paying their fair share, know that there is a consequence for being willfully noncompliant,” Lee said.Follow @@CarsonAndLloyd
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