A Texas Billionaire Makes Tax Fraud History

Texas billionaire Robert Brockman is about to find out just how serious tax fraud is. He’s been charged with committing fraud to the tune of $2 billion, making this the largest case of fraud ever against an American citizen.

ABC News reports:

Department of Justice officials said at a news conference that Brockman, 79, hid capital gains income over 20 years through a web of offshore entities in Bermuda and Nevis and secret bank accounts in Bermuda and Switzerland…. The 39-count indictment unsealed Thursday charges Brockman, the chief executive officer of Ohio-based software company Reynolds and Reynolds Co., with tax evasion, wire fraud, money laundering, and other offenses.

Robert F. Smith, CEO of Vista Equity Partners, which aided in the schemes, is cooperating with investigators. He has agreed to pay $139 million he currently owes in taxes.

Using to offshore accounts to commit fraud

Brockman’s illegal scheme played out over the span of two decades through use of offshore bank accounts and business entities. Offshore banking itself is completely legal as is setting up offshore businesses. Where things become legally murky is where these offshore accounts and businesses are used with the intent of hiding assets from the Internal Revenue Service (IRS) to evade paying capital gains taxes.

Any money earned outside the country in offshore accounts can be reported as foreign earned income and is tax exempt – but other than that, anything over $10,000 must be reported to the IRS and taxes must be paid. Brockman not only failed to do this but keep his money offshore fully intending to avoid paying taxes. That’s illegal activity punishable by fines and prison time.

Tax fraud isn’t the only crime charged

Brockman is also being charged with wire fraud, money laundering, and other unnamed offenses.

Wire fraud is where electronic means is used to carry out an illegal scheme. It can be done through telephone, computer, text message, radio, television, or any other electronic means of communication. Brockman used coded emails in the furtherance of his crime by providing instructions to those who helped him for moving money to his offshore accounts and destroying the evidence of those transactions.

Money laundering is the process by which illegally obtained funds are routed through a legitimate source to make them appear legal. Brockman arranged to make a gift to a college through his deceased father’s charitable trust. What the school didn’t know is that the gift was never actually going to be made. Brockman rescinded the $250 million pledge to the school through a pre-established excuse under which to withdraw the pledge. No one was the wiser.

Both of these offenses can be charges as state or federal crimes. When the IRS is involved, penalties will be doled out under federal law, which requires:

• For money laundering, a fine of up to $500,000 or double the value of the amount involved, whichever is greater, and/or incarceration for a period of up to 20 years.
• For wire fraud, the fine and incarceration periods are similar to money laundering unless the scheme affects a financial institution in which case you may be fined up to $1 million and/or be sentenced up to 30 years in prison.

If you have been charged with fraud, you want the Killeen defense attorneys of Mary Beth Harrell Criminal Defense and DWI Lawyers in your corner, fighting for you. Schedule a consultation in our Killeen or Copperas Cove office today by calling 254-312-2523, or we invite you to visit our contact page.