Miserly billionaire Robert Brockman, 79, who is allegedly, ‘behind biggest ever US tax scam’, is faking dementia to avoid trial; Stayed in budget hotels, ate frozen dinners despite being worth $7 billion – Feds
Prosecutors say billionaire Robert Brockman, 79, who is being investigated for tax ivasion, is faking dementia to avoid trial –
BFormer employees and associates describe Brockman as a ‘penny-piching’ billionaire, as it’s revealed he stayed in budget hotels and ate frozen dinners despite being worth $7 billion
Brockman, 79, was charged in Oct 2020 with hiding about $2 billion in income from the IRS in a web of offshore entities over a span of 20 years
Brockman has pleaded not guilty to 39 counts of tax evasion, wire fraud and money laundering, but he has argued in court documents that he can no longer stand trial because he has dementia
Prosecutors, however, believe Brockman may potentially be faking his mental decline
He started seeking medical evaluations for his mental health shortly after a 2018 raid on his attorney’s home in Bermuda
Brockman also remained the chief executive of Ohio-based Reynolds and Reynolds Co., until his indictement
A Texas software mogul accused of being behind the biggest ever US tax scheme is now faking dementia to avoid going on trial.
Federal prosecutors made this claim as Brockman’s former associates reveal he is penny-pinching billionaire who would stay in budget hotels and eat frozen dinners despite being worth an estimated $7 billion.
Prosecutors believe the former CEO of Ohio-based software maker, Reynolds and Reynolds Co, may potentially be faking his mental decline as a dodge from prosecution on vast tax evasion.
Robert Brockman, 79, was charged last year with hiding about $2 billion in income from the IRS in a web of offshore entities in Bermuda and secret bank accounts over a span of 20 years.
Brockman, a Houston resident s founder of Ohio-based sofware manufacturer, Reynolds and Reynolds which provides software used by auto dealerships to help manage their business. He remained CEO until the indictment, last year.
In a class action suit filed more than 20 years ago, a group of former salesmen for the software entrepreneur sued their old boss, claiming that Robert Brockman had deprived them of commissions by directing a portion of customer payments to a Cayman Islands entity.
Brockman twice appealed to the Texas Supreme Court as he tried to avoid answering detailed questions about the offshore entity. Ultimately he settled the case in 2001 under confidential terms.
The lawsuit fied by the salesmen opened the pandora’s box leading to a case the government later called the largest criminal case ever brought against a person accused of evading U.S. taxes.
Federal prosecutors in October charged Brockman with using a web of offshore entities to conceal about $2 billion in income from the Internal Revenue Service.
He has pled not guilty to 39 criminal counts, including tax evasion, wire fraud, money laundering and evidence destruction, mostly from profits he made from his investments through Vista Equity Partners, a private-equity firm he helped launch in 2000. Vista currently manages $73 billion in funds dedicated to software investments.
Brockman’s trial currently hinges on a mental competency hearing that is scheduled for June. He has argued in court documents that he can no longer stand trial because he has dementia.
Authorities had been investigating Brockman over the tax fraud allegations for several years and prosecutors claim he found out about the probe as early as 2016.
Prosecutors allege that Brockman started seeking medical evaluations for his mental health shortly after a 2018 raid on his attorney’s home in Bermuda, according to court documents obtained by the Wall Street Journal.
A doctor found in March 2019 that Brockman had poor short-term recall. Prosecutors claim, however, that Brockman’s doctors have a conflict of interest because they work with the Baylor College of Medicine, of which the billionaire has donated millions of dollars to over the years.
They also argue that Brockman continued to head his software company during this time despite his alleged mental decline.
Court documents reveal he took a cognitive test late last year and had difficulties drawing a clock, with a doctor ruling he had ‘moderate dementia’.
The case involving Brockman accuses him of hiding $2 billion in income from the IRS over two decades using a web of off-shore companies in Bermuda and St. Kitts and Nevis.
The indictment alleges Brockman appointed nominees to manage the off-shore entities for him as a means of hiding his involvement, saying he even went so far as to establish a proprietary encrypted email system and use code words such as ‘Permit,’ ‘Red fish’ and ‘Snapper’ to communicate.
Brockman who lives in this Houston, Texas mansion, has pled not guilty to 39 counts of tax evasion, wire fraud and money laundering.
Fellow billionaire Robert Smith, who is the CEO of a private equity firm that aided in the alleged schemes, is cooperating with the investigation after turning against Brockman to avoid prosecution himself.
Brockman, who has an estimated net worth of $7 billion, was largely unknown outside of Houston before news of his indictment broke last year.
The majority of his fortune is believed to be held in a trust in Bermuda that own most of his software company.
Court documents show the trust has assets worth at least $7 billion.
Even though that wealth would likely see him ranked about 50th on the Forbes 400 list of billionaires, Brockman hasn’t ever appeared on the list.
Prosecutors say he owns a Houston mansion worth an estimated $8 million, an Aspen, Colorado ski cabin, a Bombardier private jet and a a 209-foot yacht.
As the case against Brockman continues, his former associates and employees have painted a profile of a miserly billionaire who believed the IRS unfairly went after taxpayers.
Brockman, who has a reputation for being litigious, would stay at budget hotels and ate frozen dinners on business trips, bought buy used furniture for his offices and banned his employees from smoking so the company could save on health insurance.
Brockman is the sole investor in the first private-equity fund managed by Vista Equity Partners, a firm founded by billionaire Robert Smith.
In a plea deal last October, Smith admitted to willfully evading $43 million in federal taxes from 2005 to 2014 and agreed to cooperate with the continuing investigation.
Under a settlement reached with the Justice Department, he will pay $139 million in fines and back taxes but won’t be prosecuted.
Authorities said Brockman concealed gains he made in Vista’s funds from the Internal Revenue Service. Brockman is charged with seven counts of tax evasion, six counts of failing to file reports disclosing foreign bank accounts and numerous other counts including wire fraud, money laundering and evidence tampering.
The charges state that Brockman, for years directed investments of tens of millions of dollars into Vista’s funds, using secret bank accounts in Bermuda and Switzerland to hide income, but the indictment doesn’t specify how much tax Mr. Brockman skipped by hiding offshore the $2 billion he earned from Vista’s funds.
He has pleaded not guilty to all charges.
Prosecutors said Brockman used encrypted emails with code names, including Permit, Snapper, Redfish and Steelhead, to carry out the fraud and ordered evidence to be manipulated or destroyed.
Prosecutors said Smith, who helped secure the charges against Brockman and famously announced at Morehouse College commencement that he would pay off the college debt of 2019 graduates, accepted responsibility for his own crimes in the tax evasion scheme.
Brockman and Smith have a business relationship dating back to the late 1990s, according to documents filed in connection with Smith’s non-prosecution agreement.
Brockman became an investor in Smith’s private equity fund back in 2000, first with a $300 million commitment, and later increasing it to $1 billion.
As part of his non-prosecution agreement, Smith admitted to using a nominee trustee and corporate manager to hide his control in four off-shore companies.
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