Billionaire Robert Smith, the richest black American who paid off the student debts of Morehouse’s graduating class in 2019, is under criminal investigation for potential tax crimes, according to a report by Bloomberg. The Denver native and philanthropist is the CEO of Vista Equity Partners and is worth $6 billion.
Bloomberg reports of a U.S. Department of Justice investigation into whether Smith used offshore accounts in the Caribbean to funnel $247million from his fund into his charitable foundation in 2014 without paying tax.
The investigation began in 2016 and sources told Bloomberg that the philanthropist has not been charged and may not be as he also attempts to resolve the issue by paying a settlement.
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Smith and Vista are yet to comment on the issue, but the fund, in a letter sent out to investors last week following Bloomberg’s report, confirmed that there was an investigation, adding that Smith was “working on reaching an acceptable resolution with the DOJ, which we hope will be achieved in the near future,” reports the Wall Street Journal.
Currently, investigators are looking into whether or not Smith was the owner of Flash Holdings LLC, a company based in St Kitts and Nevis. Flash, from 2014, received $247 million from Vista, according to sources. If Smith was the owner of Flash, he should have paid tax on the money because he is a U.S. citizen. U.S. citizens are required to pay taxes on income anywhere in the world.
The $247 million was then paid to Smith’s charitable foundation. Bloomberg reports that if the proceeds were always meant to go to charity, it could mean Smith did not owe taxes on that money. The report adds that Smith recently talked to prosecutors about cooperating with a larger investigation into associate Robert T. Brockman, a Houston businessman who supported him with $1 billion when he was launching his investment firm Vista Equity Partners.
Jan Woloniecki, a Bermudian lawyer, told Bloomberg that the case against Brockman could deal with as much as $1.5 billion, which investigators believe has been “concealed fraudulently from the U.S. government.”
When Smith announced last month that he would pay off the student loan debt of each graduate of Morehouse College’s 2019 graduating class, the gesture was applauded by many.
Just weeks after the announcement, the well-known philanthropist and private equity fund CEO showed his generosity again as he launched an internship programme for ethnically underrepresented students.
Smith’s Vista Equity Partners, a private equity company he founded in 2000, has carved a niche for itself, fixing up enterprise software outfits and today has a value of about $46 billion in assets. Forbes ranked number three on its 2019 billionaires list.
