Robert Smith, the private equity investor who made headlines with his commitment to pay off last year’s student loans from Morehouse College, is the target of a U.S. probe into his tax affairs.
Vista Equity Partners, the group that Mr. Smith founded in 2000, wrote to investors Friday about the investigation, after Bloomberg reported that federal investigators were investigating whether Mr. Smith had paid U.S. taxes because of millions of dollars in assets.
Mr. Smith is not charged with any crime, and authorities may conclude that he paid all the taxes he owed. Vista, which declined to comment on a client letter, told investors it hoped its founder would soon reach a resolution with the U.S. Department of Justice.
A chemical engineer by training, Mr. Smith has taken over Oprah Winfrey to become the country’s richest African-American, according to Forbes.
Over two decades, he has taken private equity investment into new territory, adapting the techniques of leveraged financing to technology companies that often have healthy cash flows but few tangible assets – raising a fortune of $ 5 billion in the process.
He founded Vista with a $ 1 billion investment from a charitable trust linked to entrepreneur Robert Brockman, an executive he met as a banker at Goldman Sachs, who is now chairman of enterprise software company Reynolds and Reynolds.
A March ruling by the Bermuda Supreme Court refers to “an investigation into taxation and money laundering” by the DoJ and the Internal Revenue Service, which is related to a charity named for Mr Brockman’s father.
“The investigations into Mr Brockman’s tax cases and Mr Brockman’s alleged tax evasion in relation to more than $ 2 billion in unreported profits made by entities within the. . . trust structure, ”the verdict states.
Reynolds and Reynolds did not immediately respond to a request for comment.
The past year delivered a valid address at the historic Black Morehouse College of Atlanta, telling Mr. Smith to take risks and work hard, and called for an optimistic vision of a high-tech economy in which the key to success was intellectual capital rather than hereditary wealth.
He then announced that his family had donated an estimated donation of $ 40 million to pay off the entire student debt of the graduating class – an act praised by political figures including Barack Obama and Ivanka Trump.
Vista’s letter to investors, described to the Financial Times by a person who saw it, said the group had published the review of Mr Smith’s tax return on investment materials so long ago in 2016.
Neither Vista nor its funds and portfolio companies were targets of the review, the letter said.
