The largest tax-evasion case in the U.S. can proceed to trial, a judge ruled this week.
Billionaire Robert Brockman, who faces multiple charges of tax evasion, wire fraud and money laundering, is mentally competent to stand trial, according to a decision issued Monday by Judge George Hanks, Jr., in the Southern District of Texas.
Brockman, 80, is the former CEO of Reynolds & Reynolds, a software company for auto dealerships, which he left in 2020. In October of that year, Brockman was charged with 39 counts of . Prosecutors said he hid over $2 billion in income from authorities over a 20-year period by putting money in secret accounts, encrypting communications and falsifying documents.
The case against Brockman is the largest tax case against an individual in U.S. history, according to prosecutors. His indictment lays out a complex web of accounts and trusts based in Nevis, Bermuda and Switzerland that Brockman allegedly used to hide investment income. Brockman is also accused of illegally buying back Reynolds & Reynolds' debt.
Brockman's attorneys have argued that he is not mentally competent to stand trial because he has dementia. Experts told the court that Brockman did not know what the number "two" was, that he had poor recall of recent events and that sometimes he believed he was eating at a restaurant while dining at home.
But Hanks found that although Brockman suffers from some mental decline, he was likely exaggerating his symptoms to avoid prosecution.
"Brockman is an elderly person who has Parkinson's Disease, which is a neurodegenerative disorder, and has suffered from some degree of cognitive impairment," Hanks wrote in his decision. "However…Brockman is also an extremely intelligent person with both a high cognitive reserve and history of malingering for secondary gain. The government has introduced compelling evidence showing that Brockman exaggerated his cognitive symptoms when he was being examined by medical professionals in the past; and Brockman's performance on validity tests — some of them administered by his own neuropsychological expert — indicates that he continues to exaggerate impairment."
Hanks outlined discrepancies between what Brockman's attorneys claimed about his mental functions and Brockman's own actions. Brockman was diagnosed with dementia in late 2018, but in 2019 he testified in two complex antitrust cases, during which time no lawyers or doctors raised concerns about his mental abilities, according to the judge's ruling.
Brockman also continued in his role as CEO of Reynolds & Reynolds until November 2020 after he had been charged with tax fraud. The court ruling quoted from testimony and emails sent by Brockman that Hanks said showed evidence he was able to understand and express complex thoughts.
"Brockman continued to run the billion-dollar Reynolds company — and, by all available evidence, run it well — for nearly a year after [a] second examination declared him incompetent to stand trial and for seven months after his criminal attorneys told the Justice Department that he would be resigning because his cognitive abilities had declined to the point where prosecuting him would violate fundamental principles of due process," Hanks wrote.
Attorneys for Brockman did not immediately respond to a request for comment. They could file a new claim of incompetency to stand trial if his mental condition worsens, Bloomberg reported.
Robert Smith ensnared
The government's case against Brockman charges that the billionaire earned at least $2 billion from investments managed by Vista Equity Partners, an investment fund started by Robert Smith, a billionaire investor who in 2019 paid off the debt of . The indictment alleges that Brockman hid this investment income over a 20-year period to avoid paying taxes on it.
Smith agreed to cooperate with the government's investigations and pay $139 million in a 2020 non-prosecution agreement to settle his own tax probe. Vista has not been accused of any wrongdoing.
Brockman is also fighting a $1.4 billion assessment imposed by the Internal Revenue Service, and he has filed suit in federal court to stop the IRS from seizing his assets.
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