The ends do not always justify the means, and in the case of Texas billionaire and Vista Equity Partners CEO Robert Smith, his actions certainly didn’t justify his means. Smith made headlines across the country in 2019 when he offered to pay off the debt of the entire graduating class of Morehouse College, which is a good thing. But he also recently admitted to an illegal scheme of concealing income and evading taxes by using offshore trusts and bank accounts for 15 years – not such a good thing.
In October 2020, after a four-year investigation, Smith entered a non-prosecution agreement with the Justice Department. Smith admitted to forming two offshore entities (Excelsior Trust and Flash Holdings) to avoid paying taxes. He also failed to report more than $200 million in assets and avoided paying $30 million in taxes, thanks to these accounts in Switzerland and the British Virgin Islands.
Unfortunately, Smith didn’t use these extra funds for more student loan forgiveness. Instead, he went on a real estate and renovation spree. He reportedly snapped up a $2.5 million home in California and three properties in France (two for skiing, the third for commercial use). On top of that, he used $13 million of the unreported money in 2011 and 20012 to renovate a home in Colorado and “fund charitable activities at the property,” according to The Hill.
In the end, Smith did the right thing and cooperated with the investigation, so he won’t have to do jail time. However, he will have to pay $139 million in tax penalties and give up $182 million that he was originally claiming in charitable contribution deductions. This will be a hit to his wallet, but considering Smith has a net worth of $7 billion, the biggest damage will likely be to his reputation.
Luckily, no matter what happens, the $34 million Smith donated to Morehouse graduates in 2019 is safe with them. One graduate, Elijah Dormeus, told WSB TV 2 Atlanta that he already used his portion of it to pay off over $125,000 in student loans.
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