Climate advocates turn sights on Wall Street
Billionaire who said he would pay off Morehouse student debt admits to tax fraud
Robert Smith, the billionaire who went viral last year for paying off the debt of students at Morehouse College, admitted to an illegal scheme to conceal income and evade taxes by using offshore trusts and bank accounts for 15 years.
The Justice Department announced on Thursday that Smith entered a non-prosecution agreement, in which he admitted his involvement in the scheme and agreed to cooperate with the ongoing investigation. The billionaire will also pay back $139 million in taxes in penalties, and he agreed to abandon $182 million in charitable contribution deductions.
"It is never too late to do the right thing," U.S. Attorney David Anderson said in a statement. "It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith's agreement to cooperate has put him on a path away from indictment."
Smith, the CEO of Vista Equity Partners, admitted to using third parties to conceal his beneficial ownership and control of the Excelsior Trust in Belize and Flash Holdings, a shell company. He formed these entities so that he could use them to avoid paying taxes.
Smith also admitted to using the Excelsior Trust and Flash Holdings and their foreign accounts in the British Virgin Islands and Switzerland to hide income earned and distributed to Flash Holdings from private equity funds.
The billionaire, who lives in Austin, Texas, did not report over $200 million of partnership income as a result of the scheme.
Smith further admitted to using $2.5 million of the unreported income to purchase a vacation home in Sonoma, Calif., in 2005. In 2010, he bought two ski properties and a piece of commercial property in France.
The billionaire also used $13 million of the unreported money in 2011 and 2012 to make improvements to a residence in Colorado and to fund charitable activities at the property.
Smith's case is connected to another billionaire, Robert Brockman, who on Thursday was charged with hiding $2 billion in income from the IRS. It was the biggest tax fraud case in U.S. history.
Smith previously donated $34 million in September 2019 to pay off the student loans of Morehouse College's then-graduating class and set up a foundation to aid students struggling with loans in the future.