“The $ 2 billion tax fraud allegation is the largest ever tax charge against an individual in the United States,” David L. Anderson, the United States attorney for the Northern District California.
An indictment filed earlier this month claims that Brockman, chief executive officer of Reynolds and Reynolds, an Ohio-based company that makes auto dealership software, used a network of entities in Bermuda and Nevis to hide investment income to the IRS. He also allegedly had secret bank accounts in Bermuda and Switzerland, where he channeled untaxed profits from the sale of assets.
To maintain the scheme, Brockman used secret, encrypted email systems to coordinate with offshore money managers, according to the indictment. Brockman, who seemed to have a penchant for naming people and places, called himself “Permit,”
Brockman, who lives in Houston and Pitkin County, Colorado, is a navy veteran who started marketing at the Ford Motor Company. He later worked as a salesman at IBM before founding Universal Computer Services in 1970 leading the company through the acquisition by Reynolds and Reynolds in 2006.
But starting in 1999, prosecutors say, Brockman began carefully putting money aside overseas and covering his tracks to avoid investigators.
Brockman was adept at evading taxes and covering up suspicious activities, prosecutors say. He told his principal manager, who is anonymous in the indictment, to “operate as paperless as possible” so that everything was “in digitally encrypted form,” the prosecution said.
Investigators also found that Brockman backdated the documents to cover up his crimes. In an email from July 2008, Brockman notified his manager to avoid using photocopiers and laser printer paper because “he has coded the manufacturer of that paper in it, as well as the year and month of manufacture,” Brockman wrote. “For this reason I have always set aside a few packs of copy paper with the dates above – for potential future use.”
The allegations also included allegations that between 2008 and 2010 Brockman lied to investors and allegedly defrauded them for nearly $ 68 million.
A spokesperson for Reynolds and Reynolds told the New York Times that the company “is not presumed to have committed any wrongdoing and we are confident in the integrity and strength of our business” and noted that Brockman’s actions occurred “beyond out of his responsibility. “
The case against Brockman was supported by witness and alleged co-conspirator Robert F. Smith. Referred to as the richest black person in the country, the 57-year-old billionaire drew national headlines in May 2019 when he pledged to pay off all student loans for the graduation class of Morehouse College, a historically black male-only college. Atlanta.
Smith is the founder of Vista Equity Partners, a San Francisco-based private equity fund that had a single investor: Brockman. According to prosecutors, Smith helped Brockman hide his profits earned through Vista in offshore accounts so he could avoid paying taxes.
In a press conference, Anderson, the U.S. attorney in San Francisco, said Smith signed a non-prosecution agreement, in which he admitted his part in the scheme and agreed to cooperate with investigators. He also admitted to evading $ 43 million in federal taxes from 2005 to 2014 and agreed to a deal to pay around $ 140 million in taxes and penalties.
Smith’s attorney did not immediately respond to a request for comment.
During Thursday’s virtual hearing, Brockman pleaded not guilty on all counts and was released on $ 1 million bail.
“We look forward to defending him against these allegations,” Brockman’s attorney Kathryn Keneally said in a statement to the Wall Street Journal.