Crime

Tax attorney charged with enabling $225m tax fraud

Carlos Kepke supposedly supported a private equity CEO to create offshore organizations designed to conceal capital gains income

A Houston-based tax attorney has been charged with conspiring with a private equity boss to defraud the IRS of taxes on $225m in capital gains.

According to the indictment, Carlos Kepke supported Robert Smith, chairman and CEO at Vista Equity Partners, in creating offshore organizations designed to conceal the capital gains income earned by Smith.

In March 2000, Kepke supposedly formed Flash Holdings and Excelsior Trust to act as Smith’s tax evasion vehicles.

Flash’s British Virgin Islands and Swiss accounts allegedly received portions of Smith’s capital gains income from 1999 to 2014.

Meanwhile Smith could not be traced to the entity as Excelsior, not Smith, was the owner of Flash.

Kepke has been charged with a further three counts of supporting the CEO’s false tax returns, which occurred between 2012 and 2014.

In turn for his services, Smith is said to have paid Kepke up to $1m since 2007, including annual payments for the tax attorney to “securitize” the records.

Scheduled to appear in court on April 22, Kepke faces up to five years in prison for conspiring to defraud the IRS charges, and a further three years in prison for each count of falsifying Smith’s tax returns.

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