Texas billionaire charged in $2 billion tax scheme
Federal prosecutors charged Texas billionaire Robert Brockman on Thursday with a $2 billion tax fraud scheme in what they say is the largest such case against an American.
Department of Justice officials said at a news conference that Brockman, 79, hid capital gains income over 20 years through a web of offshore entities in Bermuda and Nevis and secret bank accounts in Bermuda and Switzerland. Prosecutors announced that Robert Smith, CEO of a private equity firm that aided in the schemes, also would cooperate with the investigation.
The 39-count indictment unsealed Thursday charges Brockman, the chairman and chief executive officer of Ohio-based software company Reynolds and Reynolds Co., with tax evasion, wire fraud, money laundering, and other offenses.
Smith, founder and chairman of Vista Equity Partners, will pay $139 million to settle his own tax probe. Smith, 57, stunned a senior class last year when he promised to wipe out the student loan debt of the entire graduating class at Morehouse, a historically Black all-male college.
Brockman appeared in federal court from Houston via Zoom Thursday. He entered a plea of not guilty to all counts and was released on $1 million bond, said Abraham Simmons, spokesman for the Northern District of California.
Prosecutors said he used encrypted emails with code names, including Permit, Snapper, Redfish and Steelhead, to carry out the fraud and ordered evidence to be manipulated or destroyed.
Reynolds and Reynolds is a 4,300-employee company near Dayton, Ohio, that sells accounting, sales and management software to auto dealerships.
Reynolds & Reynolds issued a statement saying the allegations were outside Brockman's work with the company and the company is not alleged to have participated in any wrongdoing.
Prosecutors say that Smith used about $2.5 million in untaxed funds to buy and upgrade a vacation home in Sonoma; purchase two ski properties in France; and spend $13 million to buy a property and fund charitable activities at his property in Colorado.
Stocks fall as economic stimulus talks falter
U.S. stock indexes erased much of their early losses and closed modestly lower Thursday, extending the S&P 500's losing streak to a third day.
Technology, health care and communications stocks accounted for most of the selling, outweighing slight gains in banks and elsewhere in the market.
The S&P 500 fell 0.2% after having been down 1.4%, dropping 5.33 points to 3,483.34. The Dow Jones Industrial Average dropped 19.80 points, or 0.1%, to 28,494.20. It had been down 332 points in the early going. The Nasdaq composite gave up 54.86 points, or 0.5%, to 11,713.87.
Smaller company stocks fared better than the broader market. The Russell 2000 index of small-cap stocks bounced back from an early slide and rose 17.23 points, or 1.1%, to 1,638.88.
Stocks have been mostly climbing this month, but have pulled back this week as ongoing talks between Democrats and Republicans on an economic stimulus package have failed to deliver results. Investors have been hoping that Washington would provide more financial support for the economy since July, when a $600-a-week extra benefit for the unemployed expired.
The 10-year Treasury yield held steady at 0.73%.
Investors continued to weigh the latest batch of earnings reports from major U.S. companies. Several reports so far have been better than expected, but the health crisis continues to cloud the outlook.
United Airlines slumped 3.8% Thursday after reporting that its revenue plummeted over the summer. Morgan Stanley rose 1.3% after the investment bank said its third-quarter profit jumped 25%, thanks to a surge in trading revenue and higher fees. Walgreens Boots Alliance gained 4.8% after the drugstore chain's latest quarterly results topped Wall Street's forecasts.
Compiled from Associated Press reports.