Feds Are Looking Into Pro-Reparations Billionaire Robert Smith Over Offshore Tax Structures
On July 22, billionaire and philanthropist Robert F. Smith tweeted: “…anyone can acquire wealth, the real art is giving it away.”
And giving it away he is. Smith, who is worth $5.2 billion, signed the Giving Pledge in 2017, committing to devote half of his net worth to causes that support “equality of opportunity for African Americans” and ecological protection.
Most recently, Smith pledged to pay off the debt of the entire 2019 graduating class of Morehouse College, a gift estimated at the time to be worth as much as $40 million, The New York Post reported.
Smith, who amassed his wealth as the founder of Vista Equity Partners, has also been talking about the need for the U.S. government to pay reparations to Native Black Americans.
Now, the wealthiest Black man in America is under investigation for possible tax crimes, according to a Bloomberg News investigation.
Federal authorities have reportedly spent four years investigating whether Smith failed to pay U.S. taxes on about $200 million in assets that were transferred from Vista’s first private equity fund to offshore entities. Later, some of the money was moved to a charity Smith headed in the U.S., Fund II Foundation.
Smith has been on the radar of the IRS since 2014, Bloomberg reported.
“That year, the billionaire reportedly approached the federal agency seeking amnesty from prosecution under a program to Americans who did not report offshore assets. The IRS, however, declined Smith’s request. The agency reportedly turns down taxpayers if it already knew they had not reported offshore accounts,” TheGrio reported.
There has been no decision made to charge Smith with a crime. That will depend on whether he was the beneficial owner of the entities in the Caribbean that received proceeds from the fund, Forbes reported.
If the funds were always destined for charity, Smith would not have been considered to be the “beneficial owner” and because of this wouldn’t have had to pay U.S. taxes.
A U.S. citizen has to pay taxes on any income even if the transaction does not take place in the country. The failure to declare foreign assets will alert the IRS at which point a civil settlement can be reached or prosecutors get involved.
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Many went to Twitter to express suspicions about the federal investigation against a wealthy Black man.
“They’re finally coming after Robert Smith. It was a matter of time. Anyone who attempts to benefit Black people financially with a ‘head start’ always faces prosecution & persecution,” @AlwaysPash tweeted.
Smith wants the Justice Department to resolve the case with a civil settlement instead of a criminal conviction that could result in a prison sentence and force him to resign from Vista, which manages $65 billion in assets, according to the Bloomberg investigation. He could also be fined $65 million.
The report also noted that Smith may not be the primary target of an investigation and that his associate, Houston businessman Robert T. Brockman is the one they’re after.
Smith is said to be cooperating with the feds on the Brockman investigation. Brockman has a number of projects with Smith involving offshore entities, trusts, and foundations. Brockman gave Smith $1 billion in 2000 to start his equity firm. The funds came from a charitable trust based in Bermuda that Brockman benefits from. Brockman is the CEO of Reynolds and Reynolds, a company that develops software for car dealers, Bloomberg reported.