Following disclosure last week that Austin billionaire Robert F. Smith had reached a $140 million tax evasion settlement, more information has emerged from federal authorities and other sources.
Smith is Chairman and CEO of Vista Equity Partners, a $58 billion private equity firm with 400 direct employees and thousands more working in its portfolio companies. Perched on top of Austin's Frost Bank Tower, Vista's Austin office was founded in 2011 and is one of five offices throughout the U.S.
Smith, 57, lives in Austin's Westlake area, overlooking Lake Austin. The son of two Colorado school teachers, his net worth is estimated by Forbes to be more than $5 billion. He is regarded as the country's wealthiest Black person.
Smith is cooperating with federal investigators in exchange for non-prosecution
Smith is assisting federal authorities in their investigation of Houston resident Robert Brockman, 79. Charged with hiding $2 billion in income over 20 years in the nation's largest-ever personal tax fraud case, the feds say Brockman filed false tax returns and concealed overseas cash.
Brockman was the original investor who funded Smith's creation of Vista.
At a Thursday press conference, at which Smith's behavior was called "egregious," the U.S. Attorney for the Northern District of California David Anderson announced Brockman's indictment and Smith's cooperation agreement. Anderson said that Smith will be responsible for the following:
- Providing complete and truthful information
- Continuing work with federal prosecutors
- Attending meetings and providing documents
- Testifying before a grand jury
Money in offshore accounts was used for Smith's extravagant personal real estate
A copy of Smith's signed Oct. 7 settlement letter with the government reveals that Smith routed untaxed gains through offshore partnerships and bank accounts in Belize, Nevis, the British Virgin Islands, the Cayman Islands and Switzerland.
Smith admitted to concealing more than $200 million in income and evading subsequent taxes during a 15-year period, from 2000 to 2015.
While much of the money was routed to Smith's charitable trust, the settlement letter states that substantial funds were withdrawn for personal use in real estate acquisitions and remodeling projects, including:
- A home in Sonoma County, California that he owned with his then-wife
- A Colorado ranch property that he used personally and at which he hosted events for disadvantaged youth and wounded war veterans
- Two ski chalets in the French Alps used by Smith and his family
- A European industrial property
Smith's settlement is larger than originally stated
According to documents signed by Smith, he has agreed to:
- Pay $139 million in taxes and penalties
- Abandon a $182 million tax refund claim
- Pay interest on taxes owed
Cloudy reports at Vista
Axios reports that Smith held a call with top Vista executives last week, in which he discussed his tax settlement and disclosed that his longtime billionaire associate, Vista co-founder and president Brian N. Sheth, would be leaving the company. Axios referred to a "breakdown in the two men's relationship."
Vista's situation is unclear as investors are alarmed and the SEC, according to Axios, is poised to investigate whether Smith will be allowed to continue to run the firm.
Authorities deny that Smith's connections were a factor
U.S. Attorney Anderson specifically denied, in response to a direct question, that Smith's charitable involvements and political connections were a factor in the decision not to prosecute him.
Smith famously repaid student loans last year for all graduates of Atlanta's Morehouse College. His list of philanthropic efforts is extensive, and in 2019 he was awarded the Carnegie Medal of Philanthropy.
During the investigation period, Smith had cultivated relationships with people close to President Donald Trump, including Treasury Secretary Steven Mnuchin and the president's daughter, Ivanka, according to various reports.
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By Jonathan Lee
The Planning Commission was split Tuesday on whether to help save an eclectic lakefront estate from demolition by zoning it historic amid concerns over tax breaks and the likelihood that a previous owner participated in segregation as a business owner.
The property in question, known as the Delisle House, is located at 2002 Scenic Drive in Tarrytown. The main house, with Spanish and Modern influences, was built in 1923 by Raymond Delisle, an optician. A Gothic Revival accessory apartment was built in 1946. The current owner applied to demolish the structures in order to build a new home.'
Historic preservationists, for their part, overwhelmingly support historic zoning, which would preserve the buildings in perpetuity. The Historic Landmark Commission unanimously voted to initiate historic zoning in July, citing architectural significance, landscape features and association to historic figures. City staffers recommend historic zoning, calling both structures one-of-a-kind examples of vernacular architecture.
Tarrytown neighbors have also banded together to stop the demolition. Many have written letters, and a few spoke at the meeting. “How could anyone buy this property with the intent of destroying it?” Ila Falvey said. “I think it’s an architectural treasure.”
Michael Whellan, an attorney representing the property owner, said that the claims made by preservationists are shaky. The buildings are run down, he said, and have had substantial renovations. A structural engineer hired by the owner said any attempt at preservation would involve tearing down and rebuilding – an undertaking Whellan said would likely cost millions.
Whellan also argued that any historical significance derived from the property’s association with Delisle and longtime owner C.H. Slator is dubious. “These men are not noted for any civic, philanthropic or historic impact,” he said.
What’s more, according to Whellan, Slator likely participated in segregation as the owner of the Tavern on North Lamar Boulevard between 1953 and 1960.
A city staffer, however, said she found no evidence to support the claim. “We would never landmark a property where a segregationist lived, or there was a racist person,” Kimberly Collins with the Historic Preservation Office said.
Commissioner Awais Azhar couldn’t support historic zoning in part due to lingering uncertainty about Slator. “Focusing on that factor is not here to disparage an individual or family. It is not about playing the race card. This is an important assertion for us to consider as Planning commissioners,” Azhar said.
Commissioner Carmen Llanes Pulido said that allegations of racism should come as no surprise. “We’re talking about white male property owners in the 1950s, in Austin, on the west side – and of course they were racist,” she said. But she argued that allowing the house to be demolished based on these grounds does nothing to help people of color who have been harmed by racism and segregation.
The question of tax breaks was also controversial. Michael Gaudini, representing the property owner, said that the tax breaks associated with historic zoning would exacerbate inequality by shifting property tax burdens to less affluent communities. City staffers estimate that the property, appraised at $3.5 million, would get either a $8,500 or $16,107 property tax break annually, depending on whether a homestead exemption is applied.
Commissioner Grayson Cox preferred the commission focus not on tax breaks but on whether the structures merit preservation. “To me, nothing in the historic preservation criteria lists, is this person deserving of a tax break or not?”
Azhar, on the other hand, said he plans to propose a code amendment getting rid of city property tax breaks for historic properties.
The commission fell one vote short of recommending historic zoning, with six commissioners in support and three opposed. Azhar and commissioners Claire Hempel and Greg Anderson voted against.
The odds of City Council zoning over an owner’s wishes are slim. Nine out of 11 members must vote in favor, and there have only been a handful of such cases over the past several decades.
What's new in Austin food & drink this week:
- Nau's Enfield Drug closing after losing their lease. Did McGuire Moorman Lambert buy the building, with its vintage soda fountain?
- Nixta Taqueria Chef Edgar Rico named to Time Magazine's Time 100 Next influencer list, after winning a James Beard Award earlier this year.
- Question: From what BBQ joint did pescatarian Harry Styles order food this week?
- Austin Motel is opening the pool and pool bar Wednesday nights in October for Freaky Floats.
- Vincent's on the Lake closing due to "economic conditions and low water levels [at Lake Travis]."
- Cenote has closed its Windsor Park location. The East Cesar Chavez location remains open.
- The Steeping Room on N. Lamar has closed.
- Local startup It's Skinnyscored new financing for its gluten-free pasta business.
- P. Terry's opened a new location in Kyle, at 18940 IH-35.