Lawyer To Private Equity Billionaire Dies Of Self-Inflicted Gunshot On Eve Of Tax-Fraud Trial

Lawyer To Private Equity Billionaire Dies Of Self-Inflicted Gunshot On Eve Of Tax-Fraud Trial

You may know billionaire Robert F. Smith, 59, founder of private equity giant Vista Equity, as the richest black man in the U.S with a net worth of $8 billion.

Robert F. Smith is the richest black man in the US with a net wealth of $8 billion, according to Forbes

You may also know him for his escapades with the US Treasury which accused him of hiding tens of millions in income from the IRS and then using the untaxed money to buy up expensive homes in California, Colorado and France as well as putting his girlfriend up in an expensive Manhattan pad. He is also the same philanthropist who previously donated some $34 million (in more untaxed income) to pay off the student debt of black students at Morehouse College.

A French ski condo purchased by Smith, allegedly through untaxed funds

This libertarian tax evader, however, never saw the inside of a jail: he escaped charges by agreeing to testify against his business partner, former Reynolds & Reynolds CEO Robert Brockman, who was accused of hiding $2 billion from the IRS in the largest tax bust in US history (Brockman died earlier this month). He didn’t completely get away with it however: the Vista Equities boss was hit with $139 million in fines for his admitted tax evasion.

And while you may or may not know Bob, you probably don’t know and never heard of Houston lawyer Carlos Kepke who had been set to go on trial Monday in San Francisco federal court on charges of conspiring to defraud the IRS and aiding and abetting the filing of false tax returns by Bob.

And you never will: Carlos, who was 83, died of a self-inflicted gunshot wound to his head on Sunday in a bedrom in his home, according to the Harris County Institute of Forensic Sciences website.

“The court is advised that defendant Kepke has passed away,” U.S. District Judge James Donato in San Francisco said in a Monday order canceling the trial.

In an interview on Monday, Kepke attorney Richard Strassberg said, “Carlos always maintained that he was innocent of these charges, and we were prepared to prove that at trial.”

Carlos Kepke, was charged with helping Robert Smith, the billionaire founder of private equity Vista Equity Partners LLC, conceal $225 million from the IRS.

Prosecutors had alleged Kepke created for Smith a limited liability company in Nevis called Flash Holdings, as well as an offshore trust based in Belize, called Excelsior Trust. Excelsior was set up to own Flash. Thus, when Smith’s portion of capital gains from Vista funds was deposited into accounts held in Flash’s name in Switzerland and the British Virgin Islands, the money could be routed to the offshore Excelsior trust, away from the eyes of the IRS.

According to the DOJ’s press release, Kepke enabled what Smith has admitted to as an illegal scheme. Thanks to Kepke’s work, “Smith was able to hide this income because Excelsior, and not Smith, was the nominal owner of Flash. Smith then allegedly failed to timely and fully report his income to the IRS.”

In 2020 Smith entered into a “non-prosecution agreement” with the DOJ, in which he admitted to felony tax evasion and the wrongful use of roughly $30 million in charitable trust funds for his personal benefit. Smith agreed to fork over $139 million in taxes and penalties, and to cooperate against affiliated scofflaws like Brockman, and Kepke. U.S. Attorney David L. Anderson said at the time that despite having committed “serious crimes,” Smith’s cooperation had “put him on a path away from indictment.”

Both Brockman and Kepke are now dead, which may or may not will Bob sleep better at night, having thrown both under the bus to save his own ass.

Meanwhile in Bermuda, oversight of the multi-billion-dollar A. Eugene Brockman Charitable Trust, remains in limbo, as attorneys for Brockman and his wife Dorothy argued recently to the Bermuda appelate court that they ought to appoint a new independent trustee to oversee the trust, replacing anyone connected to former trustee Tamine. According to attorneys, Cayman Island-based trust specialist Maples Group has agreed to take on the job. We are surprised Sam Bankman-Fried didn’t somehow get involved and embezzle the funds to keep his crypto scam going a little longer.

Tyler Durden
Tue, 11/29/2022 – 13:20

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