Billionaire CEO of Software Company Indicted For Alleged $2 Billion Tax Evasion Schemes (zdnet.com) 75
The billionaire chief executive of Ohio-based Reynolds and Reynolds Co, Robert Brockman, has been indicted on charges of tax evasion and wire fraud conducted over "decades." ZDNet reports: The scheme, in which roughly $2 billion was hidden away in offshore accounts and through money laundering, took place between 1999 and 2019, the US Department of Justice (DoJ) said on Thursday. According to the indictment (.PDF), the resident of both Houston, Texas, and Pitkin County, Colorado allegedly used a "web" of offshore organizations in Bermuda and Nevis to hide the profits he made from investments in private equity funds.
Brockman squirreled away his capital gains and also tampered with the evidence of his alleged activities, prosecutors say, by methods including backdating records and using "encrypted communications and code words" to communicate with co-conspirators, including the phrases "Permit," "King," and "Redfish." A ranch, luxury home, and yacht were among the purchases apparently made with non-taxed income. US prosecutors also say that between 2008 and 2010, Brockman used a third-party entity to purchase $67.8 million in debt securities from the software company. As CEO, the executive is not permitted to do so without full disclosure as it can have an impact on share prices and trading; however, Brockman allegedly did so without informing sellers.
As a result, approximately $2 billion in income was kept hidden from the US Internal Revenue Service (IRS). In addition, US prosecutors allege that investors in the software firm's debt securities were also defrauded. A federal grand jury in San Francisco, California has issued a 39-count indictment, including seven counts of tax evasion, 20 counts of wire fraud, money laundering, evidence tampering, and destruction of evidence.
Brockman squirreled away his capital gains and also tampered with the evidence of his alleged activities, prosecutors say, by methods including backdating records and using "encrypted communications and code words" to communicate with co-conspirators, including the phrases "Permit," "King," and "Redfish." A ranch, luxury home, and yacht were among the purchases apparently made with non-taxed income. US prosecutors also say that between 2008 and 2010, Brockman used a third-party entity to purchase $67.8 million in debt securities from the software company. As CEO, the executive is not permitted to do so without full disclosure as it can have an impact on share prices and trading; however, Brockman allegedly did so without informing sellers.
As a result, approximately $2 billion in income was kept hidden from the US Internal Revenue Service (IRS). In addition, US prosecutors allege that investors in the software firm's debt securities were also defrauded. A federal grand jury in San Francisco, California has issued a 39-count indictment, including seven counts of tax evasion, 20 counts of wire fraud, money laundering, evidence tampering, and destruction of evidence.
Re: (Score:2, Troll)
The FairTax taxes domestic commerce and that makes it a great way to destroy our own economy and prop up the economies of Mexico and Canada as people cross the two borders to do all their shopping.
So let me ask you: are you Canadian, or Mexican?
Re: (Score:1, Interesting)
Those purchasing across the border will pay the FairTax at the customs station upon their return.
Totally untaxing US business will make the USA the world's biggest, best tax haven, attracting manufacturing from all over the world, creating millions of new jobs for citizens.
Re: (Score:1)
Re: (Score:2)
Re: (Score:2)
I see, you support the FairTax because it won't gut your community of commerce due to the fact that you live too far from either border.
In the interest of full disclosure, you should lead with that next time.
Re: (Score:1)
Re: (Score:2)
Re: (Score:1)
Would make cheating harder, but it'll never happen (Score:3)
I don't know that income tax is "evil" any more than any other tax. The fair tax does make tax evasion and complex tax avoidance schemes more difficult, though. The complexity of the tax code provides sneaky paths through.
However, a simple, fair tax system won't happen in the United States any time soon for one simple reason. Congress routinely uses the tax code to get people to do what the politicians (or their donors) want people to do, and to reward their donors. Tax credits for this, deductions for th
Re: (Score:1)
You're right, congress will never pass it, but we can nuke the 16th Amendment and therefore the income taxes if we can get repealing the 16th Amendment onto the agenda of the Convention of States project, that completely bypasses congress when making new amendments to the Constitution. We just need an amendment that says, "The 16th Amendment to the Constitution of the United States is he
Re: (Score:1)
Re: (Score:1)
The FairTax is not "evil" because it is completely non-coercive.
Come one, be serious. You don't think that there would be millions of people who complain about how coercive it is that "government thugs with guns" are arresting people at the border just for buying products overseas and bringing them to the US in hidden compartments? Taxes of the kind you're promoting always lead to smuggling and the smugglers always have large numbers of supporters who view the government as evil for persecuting the smugglers. Let's not forget that, in his day, Al Capone was actually vie
Re: (Score:2)
The amount of money you could save this way would be pretty close to non-existent. The expenses of doing this would eat up the savings from doing this. You'd have to be organized crime, doing this by the tractor-trailer load in orde
Re: (Score:2)
You'd have to be organized crime, doing this by the tractor-trailer load in order to make any significant money at it, and then that is just a particular, high-value item that you bought in a foreign country, like cheap drugs or cheap - what - machine tools?
Well, yes, organized crime would do this. Organized crime already does this to get around tariffs. They manage to turn a profit and to have customers. Consider Eric Garner, who was strangled to death by police for selling untaxed cigarettes. Dodging this kind of tax is a real thing that already happens.
Anyway, My main point wasn't that the tax would be defeated by smugglers. Smuggling would only be a marginal bite out of it. The point was that you wrote: "The FairTax is not "evil" because it is completely n
Re: (Score:2, Troll)
The income taxes are evil, being basically stealing,
Actually, income tax is one of the fairest taxes, at least in theory. Implementation details are of course vitally important.
Rich people will avoid any tax system because they are all crooks. You can't abolish every law just because someone is breaking it.
Re: Abolish the Income Taxes (Score:2)
Re: (Score:1)
It is not absurd, it will work to fund the nation without having to point a gun at people and take their money. People will decide how much tax they want to pay. They will do that by buying luxury items - new items for sale at retail above poverty level spending, and services for sale at retail above their poverty le
Re: Abolish the Income Taxes (Score:2)
Re: (Score:1)
That's fine, but wherever on th planet you are, I think you probably have an opportunity to be abused by income taxes.
Otherwise, everything else I said I think is still applicable.
Re: Abolish the Income Taxes (Score:2)
Re: (Score:2)
I think that is because you're simply used to income taxes. You have to remember we didn't have income taxes until 1913, when the 16th Amendment was ratified.
Well, in your country.
Re: (Score:2)
Marxism is also fair in theory. Implementation matters.
Re: (Score:2)
Marxism is also fair in theory. Implementation matters.
Getting income tax to work fairly is a lot easier than getting Marxism to work at all.
Re: Abolish the Income Taxes (Score:2)
All taxes are stealing...but... (Score:2)
The income taxes are evil, being basically stealing
All taxes are stealing. When the government says "give us money or we'll lock you in a cage", that's extortion. It doesn't matter whether it's income tax, sales tax, luxury tax, etc.
But we as a society have not found a better way to implement government, so we have collectively agreed that this controlled, moderated extortion imposed by elected representatives is the method we'll use to fund government. If you have a better idea of how to do things, you could get your ideas out there and/or run for offic
Re: (Score:1)
Re: (Score:2)
All taxes are stealing.
Taxes are what pays for civilization. I happen to like having drinkable water, food that isn't poisonous, I like that shit goes down the drain when I flush, that there are roads and bridges and building codes. All these are paid for by taxes, they're the price of civilization. In pre-monetary societies taxes were paid by labor or goods, but they were every bit as necessary to the existence of the Inca or Babylonians as they are to the American Empire.
Re: (Score:1)
Re: (Score:2)
Ah, yes, the glorious days of the Victorian Era, when widows and orphans starved in the streets. Can't wait to get back to those days.
Re: (Score:1)
Re: (Score:2)
Until the government stops acting like an alcoholic in charge of a liquor store, I agree.
Re: (Score:2)
Don't forget the income generated by those unpaid taxes, upon which no tax was paid, that all needs to be taken back. Confiscation of assets is due, the proceeds of crime.
Re: Well, how else can your business survive in Oh (Score:2)
Re: Well, how else can your business survive in O (Score:1)
Re: (Score:2)
Often that difference is such a gray line that it is only a ruling by a court that decides whether someone was avoiding or evading.
Re: (Score:2)
Why? We don't. We could protect considerably more of our income than we do but we **LIKE** living in an area with decent services, and services need to be paid for with taxes. We don't even complain about paying property taxes for schools even though we don't have kids, because an educated population improves everyone's standard of living. If you like living in some Third World shithole like Haiti or Louisiana avoid paying taxes, personally I happen to like civilization.
Business experience (Score:3, Funny)
Sounds well-qualified to be President of the USA
Re:Business experience (Score:5, Insightful)
Sounds well-qualified to be President of the USA
You're not too far off. This article from Forbes lists the at least $1 billion in debt the con artist owes (not the $400 million previously reported). One of the more interesting parts is this:
The debt against Trump’s Chicago tower includes the most confounding liability in his portfolio. In addition to a Deutsche Bank loan for what seems to be $45 million, there’s a loan of more than $50 million, from a creditor named Chicago Unit Acquisition LLC. Here’s where things gets confusing: Donald Trump owns Chicago Unit Acquisition LLC, so he’s lending money to himself. If one of his companies owes more than $50 million to another one of his companies, then the company lending the money should theoretically be worth more than $50 million. But Trump does not list any value for Chicago Unit Acquisition LLC on his financial disclosure report. All of this has befuddled investigative reporters from Mother Jones, the Washington Post and, yes, Forbes for years.
And here's something else. Chicago Unit Acquisition LLC lists no employees, has no contact information and never files any financial paperwork.
It's almost as if this company isn't real and the con artist simply pulled fake money out of the air.
Re: (Score:1)
Except he got caught, so he's a loser, right?
Re:He sounds smart. (Score:5, Funny)
Billionaires create jobs! Therefore it is our moral duty as miniscule underlings to pay extra taxes on their behalf, just in case they're hiring. Clearly the Justice Department is engaging in evil socialist practices by targeting these patriotic citizens! Well, unless the billionaires are democrats, then it's ok.
Re: He sounds smart. (Score:3)
Re: (Score:2)
He got caught. Not so smart.
A good accountant can save you quite a bit through tax avoidance (legal) instead of evasion.
Re: (Score:2)
Re: (Score:2)
If you think this guy is going to jail or will even end up paying what he owes
Remember Leona "Only little people pay taxes" Helmsley? The IRS may not get everything owed. But they will take enough to make the evasion 'unprofitable' for Brockman.
In the final analysis, it is easy to structure your financial affairs to legally minimize your tax obligations. Not eliminate them entirely, but reduce significantly. That's why I laugh so hard at Uber drivers who keep crying "I wanna be an employee!" They are either ignorant of how the system works. Or they are shilling for the IRS to keep t
Re: He sounds smart. (Score:1)
Little people (Score:3)
Only little people and suckers pay taxes.
Re: (Score:2)
Can confirm, the more money I've made every year, the more I save in taxes with professional tax services.
Re: Little people (Score:2)
Re: (Score:2)
Only little people and suckers pay taxes.
I understand from recent news that this has got so bad that philanthropic millionaires are complaining that they do not pay enough tax, when compared to most salaried employees. It is not uncommon for a wealthy person to pay tax in the low teens percentage-wise. It is not just that wealthy people are employing clever accountants, lawyers and bankers to avoid paying taxes. Some forms of income, which only the rich can enjoy, are just not taxed enough, compared to wages and salaries that ordinary folk live on
Smart rich guys tax shelter their income. (Score:5, Insightful)
Dumb ones lie about their income.
After so many years of political favors to the wealthy, a billionaire who cheats at his taxes is cheating in a game that's already rigged in his favor.
Re:Smart rich guys tax shelter their income. (Score:4, Insightful)
He has agreed to pay $139 million in taxes and penalties and forfeit $182 million in charitable donations.
And now that he's caught cheating, it's rigged in his favor enough to forfeit only about $320E6 [justice.gov], or about a 16% rate on $2E9 [youtu.be] in income. How does this work again? Incentives or something?
Re: (Score:2)
For a second there ai thought you were talking about the same guy.
Smith paid $139 million for failing to report $200 million.
Re: (Score:2)
Yup, that's it. Confused the two.
Re: (Score:2)
Uhm, duh.
Re: (Score:2)
Dumb ones lie about their income.
After so many years of political favors to the wealthy, a billionaire who cheats at his taxes is cheating in a game that's already rigged in his favor.
I wonder: was scamming the shareholders just a bonus? I suspect his ego got a huge boost from scamming both the government and the shareholders at the same time.
Rake him over the coals (Score:2)
There's still time... (Score:2)
With the right kind of donation, he might end up being pardoned yet...
Re: (Score:1)
The right kind of donation will result in all charges dropped, nothing to be pardoned for.
2024 (Score:3)
Seems like the perfect candidate for Republicans 2024 presidential nomination assuming the current one can be persuaded to leave.
Re: 2024 (Score:2)
Twenty years to spot this? (Score:3)
We also know from the article that he did make several significant purchases ("a ranch, a yacht and a luxury home"), but of course these could have been purchased by a holding company - say one set up in a tax haven - to hide the true owners.
But seriously? How on earth did the IRS miss this for 20 years?
Re: (Score:2)
How would they spot it?
$100m is a lot of money but you can't track every transaction and assure that all taxes are being paid on it.
If someone's explicitly trying to hide those transactions, that makes it even harder.
If those hidden transactions can be reasonably portrayed as business activity and not payments to an individual, they don't even look suspicious.
Re: Twenty years to spot this? (Score:3)
"But seriously? How on earth did the IRS miss this for 20 years?"
The deck is stacked against them, and us. If you worked a second job for a month over the summer and forgot to report that income, they'd let you know, and if you didn't pay, your current employer would get a nastygram and garnish your wages. And they'd do that over a few hundred bucks.
Hiding millions in business transactions and capital gains is infinitely easier than hiding your W2 from Orange Julius.
Write your congressman, ask for more fu
Re: (Score:2)
Newt Gingrich's moment of brilliance was when he realized that he didn't need to eliminate popular regulatory agencies like the EPA or FDA, all he needed to do was move their enforcement functions to a separate line item in the budget and squeeze it into oblivion. The IRS auditing and enforcement division used to make the government money, and most of the fees and penalties were plowed back into the agency to fund the complex investigations
necessary to turn up hundreds of millions of missing money. Gingri
But I thought... (Score:2)
I thought that billionaires could loophole all taxes in perfectly legal ways. There must be some problem with that assumption.
Re: (Score:2)
I thought that billionaires could loophole all taxes in perfectly legal ways. There must be some problem with that assumption.
Some people are so greedy that the bonanza they are already offered is not enough. They just love being crafty to make more money, even if they do not need the money. "Greed is good" is alive and well.
If you owe $1,000 . . . (Score:2)
It's long been known that if you owe a thousand dollars, you're a piker, if you owe a million you're a tycoon, and if you owe a billion you're a government.
Now we know what owing *two* billion means . . .
hawk