Robert F. Smith, the Texas billionaire lauded last year when he paid off the student loan debts for Morehouse College’s entire graduating class, has agreed to a settlement with federal prosecutors in a tax fraud case.
Smith, who runs a California-based private equity firm, did not report to the Internal Revenue Service over $200 million of income and also did not report that he owned foreign bank accounts in the British Virgin Islands and Switzerland, which is required by U.S. law, federal officials said.
Smith will pay $139 million in taxes and penalties and he’ll also abandon his protective claims for a refund totaling approximately $182 million that were filed with the IRS, U.S. Justice Department officials said in a statement Thursday.
News reports surfaced several months ago about the Justice Department investigation of Smith. Federal officials said Smith used third-parties to conceal his beneficial ownership and control of overseas accounts to avoid paying U.S. income taxes. He used some of the money to buy two ski properties, a piece of commercial property in France and to renovate a vacation home in California, Justice Department officials said.
Smith last year donated $34 million to pay off the debt for the Morehouse students. Smith’s gift sparked discussions about how Historically Black Colleges & Universities like Morehouse get fewer large donations from philanthropic organizations and donors. Morehouse officials said in a statement that Smith’s gift resulted in more than $50 million from other benefactors to its program to provide scholarships and loan debt for future students.
Smith has agreed to cooperate with ongoing investigations.
“It is never too late to do the right thing,” U.S. Attorney David L. Anderson for the Northern District of California said in a statement. “It is never too late to tell the truth. 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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