A billionaire who vowed to pay off student loans for an entire college graduating class is said to be facing a criminal tax probe
The billionaire investor Robert Smith is the subject of a federal investigation into potential tax crimes, Bloomberg reported Friday, citing unnamed sources. Federal authorities have spent four years investigating whether he failed to pay taxes on $200 million in assets that were moved through offshore entities, Bloomberg added, citing its sources. Smith has not been charged with a crime, according to Bloomberg, which said he might be found not to owe taxes on the assets even without any kind of deal with prosecutors. The founder and CEO of Vista Equity Partners hit headlines last year when he pledged to pay off the student debt of the entire 2019 graduating class at Morehouse College. Vista and the Justice Department did not immediately respond to Business Insider's requests for comment on the Bloomberg report. Visit Business Insider's homepage for more stories.
Robert Smith, the billionaire who made headlines last year after saying he would wipe off the student debt of the entire Morehouse College 2019 graduating class, is facing an investigation into potential tax crimes, according to a report from Bloomberg on Friday. Bloomberg cited four unnamed sources, some of whom said the Justice Department and IRS agents had been investigating him for the past four years. Federal authorities are said to be examining whether Smith — a billionaire tech investor and philanthropist who is the founder and CEO of Vista Equity Partners — owes taxes on $200 million in assets that were moved through offshore entities. Read more: Stock-market wizard William O'Neil famously turned $5,000 into $200,000 in just a few years. Here's the 7-part model he uses to sniff out winning stocks. A key factor in the investigation, Bloomberg reported, is whether Smith was the beneficial owner of Caribbean entities that received proceeds from Vista's private-equity fund. Some of those proceeds flowed through offshore entities into an American charitable foundation presided over by Smith, who is its founding director, the report said. Neither Vista nor the Justice Department immediately responded to Business Insider's requests for comment on the Bloomberg report. Read more: MORGAN STANLEY: Buy these 22 stocks that are slashing costs as sales take a hit from COVID-19 — putting them in position to smash the market as the economic recovery continues Smith has not been charged with a crime, according to Bloomberg, which said that the investigation might find him not to owe taxes on the assets but also that one source said Smith was seeking leniency in exchange for cooperation with multiple investigations. Bloomberg said one of those investigations was focused on a Smith associate, Robert Brockman. Brockman, a businessman from Houston, has a host of connections with Smith involving offshore entities, trusts, and foundations, Bloomberg said. You can read Bloomberg's full report on the investigation into Smith here.SEE ALSO: Warren Buffett advised Airbnb CEO Brian Chesky to 'get rich slow.' The home-sharing platform just filed to go public during a pandemic. Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
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Read the full letter private equity titan Robert F. Smith sent to investors about his $139 million tax evasion settlement
Summary List Placement Billionaire private equity titan Robert F. Smith has apologized to his investors after...Summary List Placement Billionaire private equity titan Robert F. Smith has apologized to his investors after a $140 million settlement of an investigation into his personal finances, describing it as a "humbling experience." The Department of Justice said this week that the backer of Smith's first private equity fund led Smith to use an offshore trust, which concealed $200 million of income from the IRS and helped Smith evade $43 million in federal income taxes. Smith paid a $139 million settlement and avoided prosecution, but the revelations still incited chaos inside his software-focused private equity fund Vista Equity Partners, Axios reported. A representative for Smith declined Business Insider's request for comment on his non-prosecution agreement with the Department of Justice. In a letter to investors, viewed by Business Insider, Smith apologized for his actions and expressed hope for the future. "The decision made twenty years ago has regrettably led to this turmoil, which has put undue stress and burdenon too many," Smith wrote. "I should never have put myself in this situation, and more importantly, I apologize for any issues or concerns that this may have caused for you." Remarks from Smith's letter to Vista investors are published in full below. Dear Investor, I want to address with you the resolution of my tax matter with the Department of Justice. I have entered into a settlement with the Department of Justice called a non-prosecution agreement, or NPA.This agreement resolves all aspects of what was a personal tax matter. No Vista Equity Partners entity is part of the settlement and the Department of Justice never claimed that Vista or any Vista funds were involved or under investigation. Importantly, the Department of Justice has never suggested that any Vista client money was misapplied, misused, or diverted. All of our funds are audited by Deloitte and there has never been any issue raised with respect to the accounting of our investors' money. Your money has always been safe and invested appropriately. Since first learning about the Department of Justice's investigation, I have cooperated fully for the last four and one-half years and have provided all relevant information to them. Recently, the Department of Justice offered to resolve this matter with me. I decided that the best thing for Vista, including its employees and our investors, my family and me, was to resolve the matter by entering into the NPA. Under the NPA, I have admitted my culpability, I will pay full restitution to the government, and I have agreed to continue cooperating with their broader investigation of a larger tax matter. I will fully comply with the terms of the NPA, and by doing so the Government will not prosecute me. This resolution allows me to fully move forward and put this matter behind me. The essence of this case involves an offshore structure I created twenty years ago at the insistence of my onlyinvestor in my first private equity fund. The taxes at issue arose from a portion of the carry from that first fund that was directed to this structure in accordance with the terms of the limited partnership agreement. I was always entitled to the full amount of that carry—I did not get any extra carry or take money that should have gone to an investor. Although I have paid significant amounts of federal income tax during my lifetime, I should have paid taxes on the carried interest that was distributed to the offshore structure, and I did not. Ultimately, I donated the funds in that offshore structure to Fund II Foundation, a U.S. 501(c)(3) charity, which has made significant contributions to support initiatives such as UNCF's STEM scholarships for minority students, Susan G. Komen's racial disparities breast cancer work, the National Parks Foundation's preservation of Martin Luther King, Jr.'s birth and family homes, and the recently-announced Student Freedom Initiative to ease the burden of debt for students at Historically Black Colleges and Universities (HBCUs). As part of my resolution with the Government, I am not receiving any deduction or other tax benefit with respect to such donation. The decision made twenty years ago has regrettably led to this turmoil, which has put undue stress and burden on too many. I should never have put myself in this situation, and more importantly, I apologize for any issues or concerns that this may have caused for you. We have built an amazing business, comprising over 450 employees, one that has been, and remains, focusedon generating strong returns for our investors in a wise and prudent manner, achieved in partnership with our portfolio companies. This is a result of the determination and resolve that you have grown to count on and should expect into the future. I have appreciated your support now and over these many years. I am relieved that this has been fully resolved and is now behind me. Though this has been a humbling experience for me, I am strengthened by great passion and purpose for the work I get to do and for the firm I get to lead. I am as committed as ever to moving forward as a CEO, an investor, a community leader, and a philanthropist – in order to continue to be a productive person trying to leave the world better than I found it. Should you require further information on this matter, please contact me and we will be happy to provide any additional requested information. With gratitude,RobertSEE ALSO: Robert F. Smith on becoming the richest black man in America, what companies get wrong about diversity, and what he's doing to help mint more black billionaires DON'T MISS: 19 of the most powerful women in global finance Join the conversation about this story » NOW WATCH: Why some Hong Kong skyscrapers have gaping holes
Federal prosecutors said Robert T. Brockman had used a web of entities based in Bermuda and...Federal prosecutors said Robert T. Brockman had used a web of entities based in Bermuda and Nevis, as well as secret bank accounts in Bermuda and Switzerland, to hide $2 billion in income from the I.R.S.