Paul L. Caron
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Monday, August 24, 2020

Billionaire Who Vowed To Pay Off Student Loans Of Morehouse College Graduates Fights Criminal Tax Probe

Bloomberg, Billionaire Robert Smith Fighting U.S. Criminal Tax Inquiry:

When billionaire Robert Smith ended his 2019 Morehouse College commencement speech by vowing to pay off student debt for the entire graduating class, cheers of “MVP, MVP, MVP!” rose from students and faculty on the Atlanta campus.

What the audience didn’t know was that Smith was harboring a financial secret. He was being pursued by Justice Department prosecutors and Internal Revenue Service agents for potential tax crimes, according to four people familiar with the matter.

Federal authorities have spent four years examining whether Smith failed to pay U.S. taxes on about $200 million in assets that moved through offshore structures, some of those people said. Smith hasn’t been charged, and prosecutors may conclude he owes no taxes on those assets.

The matter hinges largely on whether Smith was actually the beneficial owner of Caribbean entities that received proceeds from his company’s first private equity fund, according to two of the people. A portion eventually flowed through the offshore entities into a U.S. charitable foundation where Smith is president and founding director. ...

[P]rosecutors are building what may be a larger tax case against a Smith associate -- Robert T. Brockman, a Houston businessman -- according to Bermuda court records and people familiar with the matter. The Brockman investigation was reported by the Sydney Morning Herald, though the inquiry into Smith hasn’t been disclosed previously. The two men’s business connections involve a jumble of offshore entities, trusts and foundations, much of it opaque to anyone without subpoena power.

https://taxprof.typepad.com/taxprof_blog/2020/08/billionaire-robert-smith-fighting-us-criminal-tax-inquiry.html

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