Financial Crime World

Title: Bermuda Liquidators Seek US Protection in $1.4 Billion Tax-Evasion Case Involving Texas Billionaire Robert T. Brockman

Date: April 7, 2022

Bermuda-based liquidators of an investment company allegedly involved in a multi-billion dollar US tax-evasion scheme have applied for Chapter 15 recognition of the Bermuda liquidation in the United States. The move comes as the Internal Revenue Service (IRS) targets assets held by the company to pay a reported $1.4 billion tax debt.

US Tax-Evasion Charges Against Texas Billionaire Robert T. Brockman

Texas billionaire Robert T. Brockman, 80, and his companies - Point Investments Ltd, Point Investment LLC, and the Brockman family trust - are accused of using offshore entities in Bermuda, Nevis, and the Cayman Islands to conceal over $2 billion in income and evade US taxes. The IRS alleges that Brockman underreported taxable income and concealed capital gains from his investments in Cayman Island funds, resulting in approximately $2.7 billion in underreported income between 2004 and 2018.

As part of its efforts to seize Point Investments Ltd’s assets, the IRS’s actions have triggered a legal battle. The investment company’s management is controlled by a Nevis-based entity, and since April 2021, it has been controlled by Maples FS, a Cayman Islands subsidiary.

Point Investments Ltd holds about US$1.8 billion in assets, primarily invested in Cayman Islands funds. However, the liquidation of the company is being carried out by the Bermuda Supreme Court. The company’s assets are currently being held in several jurisdictions, including the US, Bermuda, and the Cayman Islands.

Bermuda Liquidation and US Protection

To shield the company’s assets from seizure by the IRS, the liquidators applied for Chapter 15 recognition of the Bermuda liquidation in the United States. This recognition would allow the Bermuda court’s decisions regarding the liquidation to be enforced in the US.

BCT Limited, Maples FS, St Johns Trust Company Limited, and Tamine are also embroiled in a controversy surrounding funds misappropriation allegations totaling $28 million.

Swiss prosecutors have reportedly frozen about $950 million linked to Brockman following his indictment in October 2020. The future of the case and the assets involved remains unclear as legal proceedings unfold in both the United States and Bermuda.

Background: Former Business Associate’s Non-Prosecution Agreement

Brockman’s former business associate, Robert Smith of Vista Equity Partners, entered a non-prosecution agreement with the US government in October 2020, admitting to wilful tax evasion using similar offshore structures as Brockman’s. The US government alleges that Brockman’s actions violated the Bank Secrecy Act and that he was not domiciled or resident in the United States during the pertinent tax years.

Brockman’s Lawyers Deny Allegations

Despite the allegations and ongoing legal proceedings, Brockman’s lawyers argue there is no need for the liquidation and all relevant assets can be seized within the US. They also deny the tax-evasion allegations and emphasize that there are ample assets in the US to cover potential tax obligations.