In October 2020, Robert T. Brockman, a Texas tech mogul, was charged with the largest-ever penalty for tax evasion in United States history. Mr. Brockman faces a fine of $2 billion, according to law enforcement officials.
Robert Brockman is the CEO of Reynolds & Reynolds, a software company. He also created Universal Computer Systems in 1970, which is a computer system for car dealerships. Additionally, Brockman served in the Marine Corps and worked for Ford and IBM.
Not only was Brockman charged with tax evasion, but also money laundering, wire fraud and other white collar charges over an alleged 20-year scheme to defraud roughly $2 billion from the IRS and the company’s investors.
Also noted in the 39-count indictment is the following charges:
- Not reporting taxable income so he could purchase a yacht (aptly named “Turmoil”)
- Operating foreign companies and bank accounts
- Requesting that a money manager use a false name to attend a “money laundering conference”
- Requesting a money manager use shredders and hammers to destroy documents and equipment with sensitive information
- Using an encrypted email system for communication with his employees
In addition to the $2 billion restitution, Brockman—who has pleaded not guilty—also faces potentially lengthy incarceration and criminal forfeiture if found guilty.
Brockman, who is 79, is facing an even bigger challenge than the charges against him. His physicians state that he is showing signs of progressive dementia, which will leave him unable to participate in his own defense. For this reason, his attorney has requested that the trial be moved from San Francisco, where he was indicted, to Houston, where he lives and is being treated by his doctors.
Dr. James Pool, Brockman’s physician, states that the tech mogul exhibits symptoms of Parkinson’s disease, parkinsonism, Lewy body dementia or a combination of the 3 conditions. Unfortunately, the only way to definitively prove the diagnosis is upon Brockman’s autopsy.
Dr. Pool, who is a professor of pharmacology at Baylor College of Medicine in Houston, states that Brockman’s “long-term memory [is] inaccessible and defective,” which will make him unable to assist his defense team.
Brockman’s attorneys will ask the court for a competency hearing to show that Brockman isn’t able to stand trial. If the judge makes this ruling, Brockman’s case could be over. Given Brockman’s health, it is likely that he’ll never face charges.
What is tax evasion?
By definition, tax evasion is an activity in which a person or entity illegally and deliberately doesn’t pay their tax liability. Rather than being a state charge, deliberately not paying your taxes is a federal crime against the Internal Revenue Service (IRS) tax code and is prosecuted under Chapter 75 of the IRS code.
Additionally, tax evasion also involves underpaying your taxes; however, this must be a deliberate attempt of non-payment.
Charges under the IRS code for tax evasion include:
Title 26 U.S. Code § 7201
This title handles attempts to evade or defeat taxes. If someone is found guilty under Title 26 U.S. Code § 7201, they are subject to a fine of up to $100,000 (individuals), $500,000 (corporations) and/or up to 5 years in federal prison.
Title 26 U.S. Code § 7202
This title deals with neglecting to collect or pay taxes. In other words, offenders of Title 26 U.S. Code § 7202 fail to collect and/or pay the taxes imposed on them or fail to truthfully account for their taxes. Penalties for breaking Title 26 U.S. Code § 7202 include a fine of up to $10,000 and/or 5 years in prison.
Title 26 U.S. Code § 7203
This title handles deliberately failing to file a tax return or supply the information for taxes. Those found guilty of Title 26 U.S. Code § 7203 can face a $25,000 fine and/or 1 year in prison.
The Brockman case involves 22 million pages of documents, according to reports. While it’s likely that you’ll never face a trial as complex as this, it goes to show how important it is to have a strong defense attorney on your side.