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Software CEO Robert Brockman charges $ 2 billion in tax evasion case

A federal grand jury has returned an indictment alleging that Brockman, CEO of software company Reynolds & Reynolds, was involved in tax evasion, physical fraud, money laundering and other crimes as part of a nearly 20-year scheme. to cover up about $ 2 billion in revenue from the Office of Internal Revenue and defraud investors in the debt securities of his software company, a federal statement said.

The 39-count indictment – filed earlier this month in the Northern District of California and printed this week – sometimes reads as a scenario: The charges against Brockman include managing a complex network of foreign companies and bank accounts; use of undeclared taxable income to purchase a luxury yacht called “Turmoil;”

; creating an encrypted email system to communicate with employees using code names such as “Bonefish” and “Snapper;” a request from a money manager to attend a “money laundering conference” under alleged identity; and persuading the same money manager to destroy documents and electronic media using shredders and hammers.

“Amounts in dollars aside, I have not seen this pattern of greed or cover-up and cover-up in my 25 years as a special agent,” said Jim Lee, head of the IRS’s criminal investigation unit, during a news conference.

Brockman founded Universal Computer Systems, a provider of computer systems and car dealership software, in 1970. In 2006, the company merged with Reynolds & Reynolds, of which Brockman is now CEO and Chairman. Prior to Universal Computer Systems, he served in the U.S. Marine Corps and worked for Ford (F) and IBM (IBM).
Brockman made an initial appearance in federal court on Friday, where he pleaded not guilty to all counts and was released on a $ 1 million bond, according to a Wall Street Journal report.

“We look forward to defending him against these allegations,” Catherine Kennelly, Brockman’s lawyer, told CNN Business. Kennelly is a former Assistant Attorney General for the U.S. Department of Justice, Tax Department.

A spokesman for Reynolds & Reynolds said the allegations in the indictment focused on activities that Brockman had engaged in “outside of his professional responsibilities with Reynolds & Reynolds,” according to a statement provided to CNN Business. “It is not claimed that the company has committed any violations and we are confident in the integrity and strength of our business.”

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According to the indictment, Brockman, an investor in Vista Equity Partners, used offshore companies in Bermuda and Nevis and secret bank accounts in Bermuda and Switzerland to hide from the IRS’s earnings from his investments in the fund. Vista Equity Partners is a privately held investment company that invests in software, data and technology launches; its founder, chairman and CEO, Robert Smith, cooperated with officials in the investigation.

The prosecution also alleges that Brockman took steps, such as asking employees to date the archives back and using encrypted communications to cover up the alleged scheme. Brockman is also said to have fraudulently bought nearly $ 68 million of his software company’s debt securities while maintaining inside information about the company.

If convicted, Brockman faces a “significant period of imprisonment,” authorities said, as well as restitution and confiscation.

Smith of Vista Equity Partners has claimed responsibility for its role in the alleged tax evasion scheme and agreed to a non-prosecution agreement, officials said. Vista Equity Partners declined to comment.

Officials say the 57-year-old Smith hid money in offshore accounts in Belize and Nevis. Smith used his tax-free income to buy a vacation home in Sonoma, ski properties in the French Alps and make charitable donations, including maintaining a home in Colorado for children from the city and injured veterans, authorities said. As part of an agreement with the Justice Department, Smith will pay $ 139 million in taxes and sanctions, drop his $ 182 million refund claim and pay interest, but avoid prosecution.

“It’s never too late to tell the truth. Smith has committed serious crimes, but he has also agreed to cooperate,” said attorney David Anderson. “Smith’s agreement to cooperate put him on the road away from the indictment.”

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