Philanthropist, billionaire and Cornell alumnus Robert F. Smith ’85 formally admitted wrongdoing in a scheme to illegally dodge millions of federal taxes.
The Justice Department and Internal Revenue Service first began an investigation into Smith’s financial activities in 2016, after the billionaire investor moved $200 million in assets through suspicious offshore entities, Bloomberg reported in August.
Last week, the four-year investigation concluded when federal prosecutors determined that Smith had filed false reports and fraudulently relied on foreign trusts to evade taxes over a span of 15 years.
However, the Department of Justice offered to drop criminal charges in exchange for Smith partially paying back taxes and cooperating in the federal case against Robert Brockman, a billionaire software CEO and longtime business partner who was indicted in a related tax evasion case — the “largest ever,” according to prosecutors.
“It is never too late to do the right thing,” U.S. Attorney David Anderson said in a statement last Thursday. “It is never too late to tell the truth. Smith committed serious crimes, but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.”
The wealthiest Black man in America, Smith is the founder and CEO of Vista Equity Partners, a private equity firm that manages over $65 billion in assets. Revelation of the massive tax evasion scheme complicates the legacy of a man who had previously been best known for unique business savvy and high-profile philanthropy.
Smith last made headlines in his 2019 commencement speech at Morehouse College, where he pledged to pay the student debts for the entire graduating class. The alumnus is also a major donor and Cornell department namesake, with the Robert F. Smith School of Chemical and Biomolecular Engineering and the Robert F. Smith Tech Scholars Program both named for him. In 2016, Smith made a $50 million commitment to Cornell.
As part of the government’s non-prosecution agreement, Smith agreed to pay $140 million back to the U.S. government and forfeit $182 million in charitable contribution deductions. According to the settlement, Smith had hidden at least $200 million in taxable profits from his ownership in Vista Equity in offshore accounts, evading at least $43 million in taxes.