“The allegation of a $ 2 billion tax fraud is the largest tax charge against an individual in the United States,” David L. Anderson, the United States attorney for the Northern California District, told a news conference. .
A lawsuit filed earlier this month alleges that Brockman, chief executive of Reynolds and Reynolds, an Ohio-based company that makes software for car dealers, used a network of entities. in Bermuda and Nevis to hide investment income from the IRS. He also has secret bank accounts in Bermuda and Switzerland, where he customizes unexpected income from the sale of assets.
To maintain the scheme, Brockman used secret, encrypted email systems to communicate with money handlers ashore, according to the accusation. Brockman, who seems to be inclined to assign monikers to people and places, calls himself “Permit,”; the IRS “the house,” and assigns to his handlers the coded names of codes such as, “Redfish,” Bonefish, “and” Snapper. “He also named the $ 29 million luxury yacht – allegedly paid for by hidden funds -” Chaos. “
Brockman, who lives in Houston and Pitkin County, Colo., Is a Marine veteran who started marketing at Ford Motor Company. He later worked as a salesman at IBM before establishing Universal Computer Services in 1970 leading the company through its acquisition by Reynolds and Reynolds in 2006.
But starting in 1999, prosecutors said, Brockman began carefully storing money abroad and covering his tracks to prevent investigators.
Brockman is adept at avoiding fees and covering suspicious activity, according to prosecutors. He told his chief executive, who was not named in the complaint, to “work as much as possible on a paperless procedure” so that everything was “in encrypted digital form,” the accusation said.
Investigators also found out that Brockman had backdated documents to cover up his crimes. In an email from July 2008, Brockman advised his handler to avoid using copy machines and laser printer paper because “the manufacturer of that paper was encoded as well as the year and month of manufacture,” wrote Brockman. “For that reason I always keep a few packets of paper copies with dates on them – for potential future use.”
The charges also include allegations that between 2008 and 2010, Brockman lied to investors and allegedly sold them for nearly $ 68 million.
A spokesman for Reynolds and Reynolds told the New York Times that the company “did not claim to have done anything wrong, and we are confident in the integrity and strength of our business,” and noted that Brockman’s actions took place “outside. of his professional. responsibility. “
The case against Brockman was upheld by a witness and alleged accomplice Robert F. Smith. Referred to as the richest Black man in the country, the 57-year-old billionaire got national news in May 2019 when he promised to pay off all student loans for Morehouse College graduating class, a all-male, historical Black college in Atlanta.
Smith is the founder of Vista Equity Partners, a San Francisco-based private equity fund with a single investor: Brockman. According to prosecutors, Smith helped Brockman hide his earnings earned through Vista in offshore accounts so he could avoid paying taxes.
At a news conference, Anderson, the United States attorney in San Francisco, said Smith signed a non-prosecution agreement, in which he admitted his part in the procedure and agreed to cooperate with investigators. He also acknowledged the avoidance of $ 43 million in federal taxes from 2005 to 2014 and accepted an agreement to pay approximately $ 140 million in taxes and penalties.
A lawyer for Smith did not immediately respond to a request for comment.
During a virtual hearing on Thursday, Brockman pleaded not guilty to all counts and was released on a $ 1 million bond.
“We look forward to defending him against these charges,” Kathryn Keneally, Brockman’s lawyer, said in a statement to the Wall Street Journal.