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Billionaire Robert Smith To Pay $139 Mln To Settle U.S. Tax Investigation

The U.S. Department of Justice announced that Robert Smith, the Chairman and Chief Executive Officer of a San Francisco based private equity company, entered into a non-prosecution agreement on international tax fraud scheme and agreed to pay more than $139 million in taxes and penalties.

In the agreement, Smith admitted his involvement in the illegal scheme and agreed to cooperate with ongoing investigations and to pay back taxes and penalties in full. He also agreed to abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS in charitable contribution deductions.

The agreement is related to billionaire Smith's involvement from 2000 through 2015 in an illegal scheme to conceal income and evade millions in taxes by using an offshore trust structure and offshore bank accounts.

As per the agreement, Smith formed the Excelsior Trust in Belize, and a shell company, Flash Holdings, in Nevis in 2000. Smith used third-parties to conceal his beneficial ownership and control of the Excelsior Trust and Flash Holdings, but controlled both offshore structures and made all substantive decisions.

Smith used the Excelsior Trust to conceal his ultimate ownership and control over Flash Holdings. He further used Flash Holdings to hide his interest in private equity investments.

Smith admitted that he formed these foreign entities in order to use them to avoid the payment of U.S. taxes.

U.S. Attorney David Anderson for the Northern District of California said, "It is never too late to do the right thing.... Smith committed serious crimes, but he also agreed to cooperate. Smith's agreement to cooperate has put him on a path away from indictment."

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