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Reynolds and Reynolds CEO Brockman charged with tax evasion, laundering


Robert T. Brockman, head of the largest private dealership management system company in the U.S., was charged with using a web of Caribbean entities to evade taxes in what may be the largest prosecution of its kind in U.S. history.

Brockman, 79, is accused of using a family charitable trust based in Bermuda and other offshore entities to hide assets from the Internal Revenue Service while failing to pay taxes, according to an indictment unsealed Thursday in federal court in San Francisco. Brockman was also charged with money laundering and other crimes.

Brockman is CEO of Reynolds and Reynolds Co. of Dayton, Ohio, a DMS provider to dealerships and manufacturers in the U.S., Canada and Europe. Brockman was due to appear Thursday before a judge in U.S. District Court in San Francisco.

A Reynolds spokesman told Automotive News via email that “the allegations made by the Department of Justice focus on activities Robert Brockman engaged in outside of his professional responsibilities with Reynolds & Reynolds. The Company is not alleged to have engaged in any wrongdoing, and we are confident in the integrity and strength of our business.”

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Like many wealthy Americans, Brockman set up offshore trusts that on paper were overseen by independent directors. However, the indictment charges that he conspired over two decades to secretly maintain “complete” control over trust assets while failing to pay capital gains and income taxes.

The 39-count indictment also charges Brockman with wire fraud, evidence tampering and destruction of evidence. Brockman used code names and encrypted emails to secretly manage the trusts, according to the indictment. Prosecutors received help from Robert Smith, the CEO of Vista Equity Partners, who set up his private equity fund two decades ago with a $1 billion investment from Brockman’s trust structure.

Brockman earned about $2 billion in capital gains made through his Vista investments, according to the indictment.

The $2 billion in tax fraud, “is the largest ever tax charge against an individual in the United States,” David Anderson, U.S. Attorney for Northern District of California, said in a press conference.

“Brockman is charged with two schemes, a tax fraud scheme and an investor fraud scheme,” Anderson said Thursday.

“In the tax fraud scheme, Brockman is charged with hiding approximately $2 billion in income from the IRS over a period of 20 years. In the investor fraud scheme, Brockman is charged with manipulating debt securities by his own company to defraud investors.”

In all, Brockman faces seven counts of tax evasion, six counts of failing to file foreign banking reports, 20 counts of wire fraud and counts for conspiracy, concealment money laundering, tax evasion money laundering, international money laundering, evidence tampering and evidence destruction, Anderson said.

Jim Lee, chief of Internal Revenue Service’s criminal division, said the allegations disgusted him so much, he flew to California to be part of the press conference.

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

Lee added: “Through the use of offshore accounts over 20 years, Mr. Brockman seemingly spent as much time covering up his tracks as he did earning the money in the first place — a clear indication to me that he knew exactly what he was doing.”



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