Robert T. Brockman, a Houston software mogul, was charged Thursday with hiding more than $2 billion of income from the IRS in what federal prosecutors say is the largest tax-evasion case in U.S. history.
“I have not seen this pattern of greed or concealment and cover-up in 25-plus years as an agent for the IRS,” James Lee, head of the IRS Criminal Investigation unit, told reporters at a press conference to announce the charges.
The 39-count indictment charges Mr. Brockman, 79, with wire fraud, evidence tampering, tax evasion and destruction of evidence.Mr. Brockman is the CEO of Reynolds & Reynolds, one of the largest vendors of auto dealership software in the United States.
He set up a tangled web of charitable trusts and offshore entities to hide assets from the IRS while failing to pay taxes for 20 years, according to an indictment filed in a San Francisco federal court.
Prosecutors say Mr. Brockman created false paper trials to secretly purchase millions of dollars in luxury items, including a yacht and $30 million for vacation properties. They also said he used code words and encrypted emails as part of the scheme to hide assets.
“Complexity will not hide crime from law enforcement,” U.S. Attorney Dave Anderson said at the press conference.
Prosecutors say Mr. Brockman couldn’t have carried out the fraud without the assistance of Robert F. Smith, another billionaire, who was also under investigation on tax-evasion charges.
Mr. Smith agreed to cooperate with federal prosecutors against Mr. Brockman and will not be charged with a crime in exchange for his assistance, Mr. Anderson said.
Under his cooperation agreement, Mr. Smith will pay $139 million in back taxes and penalties and will admit he violated federal law. Prosecutors said Mr. Smith used the money to purchase ski properties in the French Alps and a vacation home in Sonoma, California.
“These allegations should disgust every American taxpayer as well because the law applies to all of us when it comes to taxes and paying our fair share,” Mr. Lee said.
But Mr. Anderson said that Mr. Smith “has accepted responsibility and provided “complete and truthful cooperation.”