TOPLINE
Billionaire investor and philanthropist Robert F. Smith, the wealthiest Black man in America and founder of Vista Equity Partners, is under investigation for possible tax crimes, according to a Bloomberg investigation.
Robert F. Smith gives the commencement address during the Morehouse College on May 19, 2019 in … [+]
KEY FACTS
Federal authorities have reportedly spent four years investigating whether Smith failed to pay U.S. taxes on about $200 million in assets that moved from Vista’s first private equity fund through offshore entities, sources familiar with the situation told Bloomberg.
Some of that money was later moved to a charity Smith headed in the United States, Fund II Foundation, which was created to direct the assets of a reserve set up during the fund’s inception to public charities, according to its website.
Whether Smith is charged with a crime may ultimately depend on whether he was the beneficial owner of the entities in the Caribbean that received proceeds from the fund.
According to Bloomberg, it’s possible that if the funds were always destined for charity, Smith would not have been considered to be the “beneficial owner” and by extension, wouldn’t have been on the hook for U.S. taxes; Vista Equity Partners did not immediately return a request for comment.
Smith hopes to convince 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, the report says.
Smith has reportedly asked for leniency in exchange for cooperation with multiple investigations, including one in connection to Robert Brockman, who has a host of projects with Smith involving offshore entities, trusts and foundations, Bloomberg said.
big number
$5.2 billion. That’s how much Smith is currently worth, according to Forbes.
key background
Smith is the founder of Vista Equity Partners, a private equity firm that specializes in software and technology companies. Smith founded the firm in 2000 after a stint at Goldman Sachs, where he first worked in the mergers-and-acquisitions department and eventually came to lead enterprise systems and storage, according to a 2018 Forbes profile.
tangent
Smith has supported Black causes extensively in his philanthropic efforts. Through Fund II Foundation, Smith has directed money towards conserving African American experiences and culture and protecting the environment. When Smith signed the Giving Pledge in 2017, becoming the first Black tycoon to do so, he committed to devoting half of his net worth to causes which support “equality of opportunity for African Americans” and ecological protection.
surprising fact
Bloomberg notes that if federal prosecutors ultimately decide to charge Smith or Brockman, their cases could surpass one of the most notable billionaire tax evasion cases of the decade. Ty Warner, owner of Beanie Babies maker Ty Inc., escaped serving jail time after pleading guilty in 2013 to evading at least $5.6 million in U.S. taxes via a secret account in Switzerland.
further reading
Billionaire Robert Smith Fighting U.S. Criminal Tax Inquiry (Bloomberg)
Robert Smith’s Road To Paying Off Morehouse Graduates’ Loans Started With His Own Graduation Speaker (Forbes)
‘Heartbreaking And Painful’: Billionaire Robert F. Smith Addresses George Floyd’s Death In Staff Memo (Forbes)
Billionaire Robert Smith Urges Corporations To Take ‘Action’ On Reparations (Forbes)
Appeals Court Decides Beanie Babies Billionaire Tax Evader Ty Warner Won’t Go To Jail (Forbes)
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