Reynolds and Reynolds CEO charged in alleged $2B tax fraud scheme

Robert Brockman

‘We will not hesitate to prosecute the smartest guys in the room,’ prosecutors say

Federal prosecutors presented an indictment Thursday against Robert Brockman, the chairman and chief executive of Kettering-based auto dealers software producer Reynolds and Reynolds.

U.S. attorneys are alleging that Brockman hid $2 billion from the Internal Revenue Service and defrauded investors in a debt securities scheme.

A federal grand jury in San Francisco returned a 39-count indictment charging Brockman with tax evasion, wire fraud, money laundering, and other offenses, U.S. attorneys for the the Northern District of California said in a press release Thursday.

ExploreReport: Prosecutors building case against Reynolds and Reynolds CEO

Brockman lives in Houston and Colorado. Prosecutors contend he used “a web of offshore entities based in Bermuda and Nevis to hide from the IRS income earned on his investments in private equity funds which were managed by a San Francisco-based investment firm.”

Prosecutors painted a picture of Brockman directing untaxed capital gains income to “secret bank accounts" in Bermuda and Switzerland.

The indictment says further that Brockman “took measures such as backdating records and using encrypted communications and code words to communicate with a co-conspirator, among other alleged actions.”

The charges stem from an alleged decades-long scheme, prosecutors said.

“Complexity will not hide crime from law enforcement,” said U.S. Attorney David Anderson. “Sophistication is not a defense to federal criminal charges. We will not hesitate to prosecute the smartest guys in the room.”

“Today’s indictment reflects the Department of Justice’s commitment to finding and prosecuting the costliest and most sophisticated tax crimes in the United States,” said Principal Deputy Assistant Attorney General of the Tax Division Richard Zuckerman.

Brockman purchased Reynolds and Reynolds in 2006. The longtime Dayton company at the time was a rival of the company Brockman started in 1970, Universal Computer Systems.

Reynolds was born as a business forms company in Dayton in 1866, turning toward the automotive industry in 1927.

The indictment also alleges that beyond the alleged tax offenses, between 2008 and 2010, Brockman engaged in a “fraudulent scheme to obtain approximately $67.8 million in the software company’s (Reynolds & Reynolds) debt securities.”

“As CEO, Brockman was contractually restricted from purchasing any of the software company’s debt securities without prior notice, full disclosure, and amending the associated credit agreements,” the U.S. attorneys' press release said.

“The allegations made by the Department of Justice focus on activities Robert Brockman engaged in outside of his professional responsibilities with Reynolds & Reynolds,” said a statement from a spokesperson for Reynolds and Reynolds. “The company is not alleged to have engaged in any wrongdoing, and we are confident in the integrity and strength of our business.”

The company Reynolds and Reynolds itself is referred to but not explicitly named in the press release announcing Brockman’s indictment.

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