DOJ charges Robert Brockman in $2 billion tax fraud scheme

Robert Brockman, the Houston billionaire and CEO of a software company, has been charged with taking $2 billion through a scheme to evade taxes, hide assets, and launder money, in what federal prosecutors say is the biggest case of its kind.

Brockman, 79, was charged in a 39-count indictment that includes charges of money laundering, conspiracy, wire fraud, and tax evasion.

Prosecutors say he used code words on encrypted emails as part of an elaborate scheme to hide assets overseas. His code name was “Permit,” for instance, while others used nom de plumes like “Redfish, King, Bonefish, Snapper, or Steelhead.”

“Complexity will not hide crime from law enforcement,” U.S. Attorney Dave Anderson said at a Thursday news conference announcing the charges. He added, “We will not hesitate to prosecute the smartest guys in the room.”

The indictment covers a 20-year period, authorities said. It was secured thanks in part to the help of another billionaire who was also being investigated for allegedly evading taxes on a massive scale, though Anderson would not detail what sparked the investigation.

Chief Jim Lee of the IRS said he was “incredibly irritated” and “disgusted” with the nature of the charges.

“These allegations should disgust every American taxpayer as well, because the law applies to all of it when it comes to tax and paying our fair share,” Lee said.

Brockman’s case is tied to that of another American billionaire, Robert F. Smith, who agreed to cooperate with federal prosecutors against Brockman. Smith will not be charged with a crime in exchange for his assistance, Anderson said.

Smith has agreed to pay $139 million in owed taxes and penalties, and admitted a violation of federal law. Smith used his ill-gotten gains for ski properties in the French alps, a vacation home in Sonoma, but also for charitable causes, like a Colorado charity for wounded veterans and impoverished youth, prosecutors said.

“Although Smith willfully and knowingly violated the law, Smith has accepted responsibility and agreed to provide complete and truthful cooperation,” Anderson said.

Brockman’s net worth is estimated at more than $1 billion. He made much of his fortune selling software to automotive company, and is the CEO of the auto software company Reynolds and Reynolds.