Private Equity CEO to Pay more than $139 million in tax and penalties

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Robert F. Smith, the Chairman and Chief Executive Officer of a San Francisco based private equity company, admitted that he knowingly and intentionally used his trust in Belize, Excelsior Trust and Flash Holdings (a shell company) and their associated foreign bank accounts in the British Virgin Islands and Switzerland to conceal from the IRS, and the U.S. Treasury Department, income earned and distributed to Flash Holdings from private equity funds.

As a result of the overall scheme, Smith willfully did not report to the IRS over $200 million of partnership income. Smith also failed to report his ownership of his foreign bank accounts in BVI and Switzerland as required by law.

 Over the years, Smith used millions of this unreported income to acquire and make improvements to real estate used for his personal benefit. Smith admits that, in 2005, he used approximately $2.5 million in untaxed funds to purchase and renovate a vacation home in Sonoma, California. In 2010, Smith again used untaxed funds to purchase two ski properties and a piece of commercial property in France. In 2011 and 2012, Smith used approximately $13 million of untaxed funds to build and make improvement to a residence in Colorado and to fund charitable activities at the property.

Smith admitted to his involvement in the illegal scheme and agreed to cooperate with ongoing investigations and to pay back taxes and penalties in full. Under the terms of the agreement with the Department of Justice, Smith will pay more than $139 million in taxes and penalties. Additionally, Smith agreed to abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS.



Comments (1)

Raymond Henson, eXp Realty
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA

That is quite a turnaround from a huge tax break to paying a large amount of back taxes and penalties. 

Jan 05, 2021 09:45 AM