Billionaire Robert Smith Facing Serious Criminal Tax Probe, Under Investigation For Allegedly Moving $200M Through Offshore Accounts

The billionaire investor who vowed to pay off student loans for Morehouse College seniors is said to be facing a serious criminal tax probe where he’s been accused of moving $200 million through offshore accounts. Deets on the feds investigating Robert F. Smith inside…

Billionaire investor Robert F. Smith is reportedly the subject of a federal investigation into potential tax crimes, according to unnamed sources. You’ll recall, Robert Smith made headlines when he committed to paying the student debt of the entire Morehouse College 2019 graduating class.

According to Bloomberg, Mr. Smith is facing an investigation into potential tax crimes that involves hundreds of millions of dollars.

Sources told Bloomberg that the Justice Department and IRS have been investigating him for the past four years, which means he was under investigation when he wiped away school debt of Morehouse students.

They believe he owes taxes on $200 million in assets that were moved through offshore accounts. A key question in the case is whether Mr. Smith was the “beneficial owner” of entities in the Caribbean that received proceeds from Vista’s first private equity fund, known as Vista Equity Fund II.

The billionaire tech investor hasn’t been charged, and prosecutors may possibly conclude he owes no taxes on those assets.

Bloomberg reports:

The matter hinges largely on whether Smith was actually the beneficial owner of Caribbean entities that received proceeds from his company’s first private equity fund, according to two of the people. A portion eventually flowed through the offshore entities into a U.S. charitable foundation where Smith is president and founding director.

U.S. citizens are required to pay taxes on income anywhere in the world. When the IRS catches mistakes on a return, taxpayers generally rectify the problem and reach a civil settlement. Prosecutors can bring criminal cases, however, against those who willfully fail to pay taxes or fail to declare their foreign assets.

Smith is trying to persuade the Justice Department to forgo criminal charges and resolve his case with a civil settlement, according to three of the people. A conviction could send him to prison and force him out of Vista Equity Partners, a money management firm with $65 billion in assets that has brought him fame and a luxe lifestyle.

The sources also made claims that Mr. Smith has been chatting with prosecutors to possibly get leniency for his cooperation.

Recently, Smith has talked to prosecutors about possibly cooperating with their investigations in exchange for leniency, one of the people familiar with the matter said.

That’s because prosecutors are building what may be a larger tax case against a Smith associate -- Robert T. Brockman, a Houston businessman -- according to Bermuda court records and people familiar with the matter. The Brockman investigation was reported by the Sydney Morning Herald, though the inquiry into Smith hasn’t been disclosed previously. The two men’s business connections involve a jumble of offshore entities, trusts and foundations, much of it opaque to anyone without subpoena power.

You can read the full investigative piece here. 

Photo: lev radin/Shutterstock.com

source: theybf