Billionaire Robert Smith avoided prosecution after co-operating with prosecutors in largest ever tax evasion case

Rozina Sabur-Wed, February 3, 2021, 3:51 PM

A billionaire businessman who praised the Trump administration’s efforts to help minority business owners and cleared black students’ debt was reportedly spared prosecution for tax evasion in a deal to co-operate on another massive tax case.

Robert Smith, America’s wealthiest black businessman, made headlines when he pledged to pay the student debt for students graduating from Morehouse College, an all-male historically black college in Atlanta, in 2019.

Mr Smith, who runs a private equity firm and is estimated to be worth $7 billion, was also a vocal advocate of the Trump administration’s financial relief efforts for minority business owners during the pandemic and spoke regularly with the former president’s daughter Ivanka Trump.

But according to Bloomberg, at the same time, Mr Smith was being investigated by prosecutors and the US taxman who believed he had failed to declare more than $200 million in income.

According to the outlet, Donald Trump’s attorney general, William Barr, signed off on a non-prosecution agreement which allowed him to avoid a potential jail term and losing control of his company Vista Equity Partners.

Hope Smith and Robert Smith in 2017 - Gilbert Carrasquillo /FilmMagic 
Hope Smith and Robert Smith in 2017 – Gilbert Carrasquillo /FilmMagic

The agreement required Mr Smith, 58, to admit his involvement in the illegal scheme, pay a $139 million penalty and to co-operate with investigators against a close business associate Robert Brockman, a billionaire from Texas.

Mr Brockman has been charged in a $2 billion tax evasion case, the largest in US history. He has pleaded not guilty and denies wrongdoing.

Sources involved in the investigation and prosecution negotiations told Bloomberg that the Justice Department first came close to charging Mr Smith in late 2019, but his connection to a “national security matter” complicated the case.

Prosecutors ultimately moved towards indicting Mr Smith last summer, when protests over the country’s racial inequities were at a fever pitch, and Mr Barr intervened to settle the dispute between tax prosecutors and national security officials.

The attorney general instructed prosecutors not to charge Mr Smith, according to Bloomberg, who in return admitted hiding millions in offshore trusts to evade taxes and repeatedly filing false tax forms.

As part of the agreement Mr Smith agreed to pay more than $139 million, forsake tax deductions for $182 million in charitable donations and co-operate for five years with prosecutors on investigations, including their case against Mr Brockman, who allegedly hid $2 billion in income earned from Mr Smith’s firm Vista.

While negotiations for the agreement were reportedly ongoing, Mr Smith raised his public profile and joined Mr Trump and his vice president Mike Pence in March 2020 to discuss the coronavirus pandemic’s impact on the economy.

In a TV interview last spring, Mr Smith praised the administration’s Covid relief measures, and said Ivanka Trump, a White House adviser, and Treasury Secretary Steven Mnuchin were “very engaged” in the effort.

According to US media, Mr Smith began having weekly calls with Ms Trump, who publicly praised their “very substantive discussions” and the businessman’s efforts to support businesses in minority communities.

However, Mr Smith’s public support of the Trump administration did not appear to influence the Justice Department, which pushed ahead with plans to indict the billionaire. The case was twice referred up to Mr Barr.

According to Bloomberg, Mr Smith’s team made a direct appeal over his case to the attorney general in July last year.

A person familiar with Mr Smith’s case suggested that the Justice Department would have faced a challenging trial environment with the prosecution of a high-profile African-American in the wake of the Black Lives Matter movement.

The Justice Department announced Mr Smith’s non-prosecution agreement and the charges against Mr Brockman in October.

Jim Lee, chief of criminal investigation for the IRS, said the alleged tax evasion was “brazen, intentional and significant”.

“I have not seen this pattern of greed or concealment and cover-up in my 25-plus years as a special agent,” he said.

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