In a statement, the DOJ alleged that Brockman had hidden $2 billion in income from the Internal Revenue Service over two decades, using a family charitable trust and a network of offshore companies in Bermuda and St. Kitts and Nevis.
In total, Brockman is charged with conspiracy; seven counts of tax evasion; six counts of failing to file foreign bank account reports; 20 counts of wire fraud affecting a financial institution; two counts of concealment money laundering, and tax evasion money laundering; and one count each of worldwide concealment money laundering; evidence tampering, and destruction of evidence. Brockman, 79, is chief executive of automation software company Reynolds & Reynolds Co., but the charges stem from his investment in a private equity fund managed by Vista Equity Partners and its founder, billionaire Robert Smith. Mark E. Matthews, a lawyer for Smith, declined to comment Thursday.
Mr. Brockman set up a complex network of offshore companies and trusts created to hide $2 billion in gains earned from investments in Vista's private-equity funds, according to the indictment.
A Bloomberg story said, "Robert T. Brockman, a Houston software tycoon, was charged with using a web of Caribbean entities to hide $2 billion in income in what prosecutors called the largest USA tax case ever against an individual".
The indictment states that Brockman conspired with a person described as Individual 1, who was put in charge of St. John's Trust Company, an entity in Bermuda that was owned by Brockman but was set up in a way to hide any ties it had to him.
The charges also included allegations that between 2008 and 2010, Brockman lied to investors and allegedly bilked them out of almost $68 million.
According to the indictment, Brockman backdated documents and used encrypted code words to communicate with offshore money handlers.
Along with the tax offenses, the indictment alleges that Brockman engaged in a fraudulent scheme to obtain approximately $67.8 million in the software company's debt securities.
He pleaded not guilty Thursday in an appearance via Zoom in federal court in the Northern District of California.
"We look forward to defending him against these charges", said Brockman attorney Kathryn Keneally.
Smith will pay more than $139 million in taxes and penalties, according to the non-prosecution agreement.
Mr. Smith moved to Switzerland in 2010, when he used untaxed income to buy the winter homes in the French Alps.
Smith, of Vista Equity Partners, accepted responsibility for his role in the alleged tax evasion scheme and agreed to a non-prosecution agreement, officials said. "Smith's agreement to cooperate has put him on a path, away from the indictment". Those assets, the investigation showed, ended up under the control of Smith's charitable Fund II Foundation, but without any U.S. taxes being paid in between.
Smith, 57, who is worth more than $5 billion according to Forbes magazine, drew tears of joy past year when he promised the 400-member graduating class of historically Black Morehouse College in Atlanta that he would pay off all of their student loans. The criminal tax probe into Smith was first reported by Bloomberg News in August. Mr. Brockman told Mr. Smith no taxes would be owed on the sale because the company was owned by a foreign trust located in Bermuda that had been set up by Mr. Brockman's father in the 1980s, according to the statement.
Brockman is the CEO of Reynolds & Reynolds, one of the largest vendors of auto dealership software in the United States. Brockman is a beneficiary of the trust.