Wednesday, October 28, 2020
Robert F. Smith, is known as a "brilliant investor who built Vista Equity Partners into a private equity powerhouse and a generous philanthropist lauded for paying off student debt of Morehouse College's entire graduating class last year."
However, on Thursday, federal prosecutors claimed that Smith concealed income and evaded taxes for 15 years.
Smith avoided prosecution by cooperating in a case against Robert Brockman, who was has been accused of using a "web pf Caribbean entities to hide $2 billion in income in what prosecutors called the largest U.S. tax case ever against an individual."
Smith admitted that he repeatedly made false filings with the IRS, even after he attempted to enter an amnesty program in 2014. Smith has signed a non-prosecution agreement and has also agreed to pay more than $139 million in back taxes, interests and penalties.
"Smith admitted that he used $2.5 million in untaxed funds to buy and renovate a vacation home in Sonoma, California, paying for it in 2005 with private equity funds deposited into accounts in the British Virgin Islands and Banque Bonhote in Switzerland."
"In 2014, Smith directed Excelsior to contribute $182 million in shares in a Nevis-based entity, Flash Holdings LLC. The shares went to Fund II Foundation, a U.S.-based charity that he co-founded. Smith falsely claimed that he’d been required to make that charitable contribution as part of his original agreement with Brockman. Had it been true that the offshore assets had always been designated for charity, it could have supported the view that Smith didn’t owe taxes on them."
There are also many other instances where Smith used funds to build homes and other properties using money he concealed from the IRS.
See Neil Weinberg & David Voreacos, Billionaire Robert Smith Admits He Cheated On Taxes For 15 Years, Financial Adviser Magazine, October 16, 2020.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.