Billionaire philanthropist Robert Smith, who paid off student debt for entire Morehouse graduating class in 2019, is ‘facing criminal tax fraud investigation over offshore account in the Caribbean’
- Bloomberg reports Smith is being investigated over a 2014 transaction from Vista Equity Partners to an offshore account in St Kitts and Nevis
- $247million was moved from Vista to the offshore entity Flash Holdings LLC
- Prosecutors want to know whether or not he owned Flash and if tax should have been paid on the money
- US citizens have to pay tax on income anywhere in the world
- Smith, 57, became a national hero last year after vowing to pay off $34million in student debt from Morehouse
- He is worth $6billion and, according to Forbes, is the wealthiest black person in America
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Billionaire philanthropist Robert Smith, the richest black person in America who paid off the entire student debt of Morehouse’s graduating class in 2019, is being investigated by the Department of Justice for potential tax evasion, according to reports.
Smith, 57, is the CEO of Vista Equity Partners and is worth $6billion.
According to sources cited by Bloomberg, investigators are looking into whether he used offshore accounts in the Caribbean to funnel $247million from his fund into his charitable foundation in 2014 without paying tax.
He has not been charged and may not be. According to Bloomberg’s sources, he is trying to resolve the issue by paying a settlement.
A spokesman for Vista and Smith declined to comment on Monday morning.
Billionaire philanthropist Robert F. Smith is reportedly facing a criminal investigation over a 2014 transaction of $247million from his private equity fund to a Caribbean company
The fund sent out a letter to investors last week, after Bloomberg made details of the probe public.
According to The Wall Street Journal – which viewed the letter – it confirmed there was an investigation and that Vista was trying to settle it privately.
It said the fund was ‘working on reaching an acceptable resolution with the DOJ, which we hope will be achieved in the near future.’
The issue at hand, the sources say, is whether or not Smith was the owner of Flash Holdings LLC, a company based in St Kitts and Nevits.
Starting in 2014, Flash received $247million from Vista. If Smith owned Flash, he should have paid tax on the money because he is a US citizen.
The money was then paid to Smith’s charitable foundation – which has given tens of millions of dollars to universities, museums and African American organizations in the United States.
The Bloomberg sources say that in 2014, Smith approached the IRS asking for amnesty from prosecution, like 56,000 other Americans who failed to report offshore assets.
They turned him down but he was never charged.
The investigation is, according to the sources, linked to a larger probe into Robert Brockman, the CEO of Reynolds and Reynolds.
In May last year, Smith became a national hero by offering to pay off all the student debt of the 2019 graduating class at Morehouse College
The reaction from graduates at Morehouse after Smith announced he would pay off their debt
One of the people cooperating with that investigation is Australian lawyer Evatt Tamine. He has turned over emails and has testified in front of a grand jury in San Francisco three times, the sources say.
It’s unclear if he has given any information about Smith or Brockman specifically.
In May 2019, Smith became a national hero by vowing to pay off the student debt of the entire Morehouse graduating class.
‘On behalf of the eight generations of my family who have been in this country, we’re gonna put a little fuel in your bus.
‘Now I’ve got the alumni over there. This is a challenge to you, alumni. This is my class, 2019. And my family is making a grant to eliminate their student loans,’ he said at the time.
He then extended the pledge to soak up any of the student debt the kids’ parents were carrying.
Smith started at Goldman Sachs then was poached to work in private equity. Brockman helped give him a start with a $1billion injection to his fund in 2000.
In 2014, he and his wife of 26 years, Suzanne McFayden, divorced, citing infidelity as the reason.
He went on to marry Playboy model Hope Dworaczyk, 35, with whom he has one child.
Smith with his second wife, former Playboy model Hope Dworaczyk. He has not commented