Bob Brockman ruled competent to stand trial in U.S. court for tax evasion

Former Reynolds & Reynolds CEO Bob Brockman must stand trial for the largest tax evasion case against an individual in U.S. history despite asserting dementia leaves him incompetent, a judge ruled.

U.S. District Judge George C. Hanks Jr. discounted claims that dementia leaves Brockman, 80, unable to help his lawyers defend against a 39-count indictment accusing him of evading taxes on $2 billion of income and other crimes.

Brockman’s lawyers argued that his progressive dementia, caused by Alzheimer’s and Parkinson’s disease, has worsened recently. They’ve said they’ll file a new incompetency claim.

Brockman was indicted on tax evasion and money laundering charges that accused him of using a complex trust structure in the Caribbean to hide $2 billion in income over two decades.

“The court finds that despite Brockman’s recent health problems, the government has met its burden of establishing that Brockman is competent to stand trial,” Hanks ruled Monday in federal court in Houston.

Testing shows Brockman is “exaggerating his symptoms of severe dementia and his cognitive abilities are not as poor as reflected by his cognitive test results,” the judge wrote. “In other words, Brockman is malingering to avoid prosecution.”

The judge agreed with prosecutors who claimed that while Brockman has some cognitive impairment, he exaggerated his decline since 2018 as U.S. investigators focused on whether he controlled billions of dollars in a Bermuda charitable trust. They said Brockman functioned at a high level even after his October 2020 indictment.

Brockman stepped down as CEO of Reynolds & Reynolds, a software company that provides sophisticated dealership management systems for auto retailers, the following month. Tommy Barras, then Reynolds’ president and COO, was promoted to CEO.

Barras testified during Brockman’s competency hearing in November 2021 that he had no doubts that Brockman was capable of leading the company and that Brockman remained involved in all important company decisions after Barras’ promotion to president in June 2020.

Brockman’s privately held Universal Computer Systems merged with then-publicly traded Reynolds in 2006. The company doesn’t share its dealership customer numbers, but has long been one of the largest DMS providers in the U.S.

The Justice Department has investigated Brockman for five years, and the ruling raises questions about its ability to prosecute wealthy tax defendants. Prosecutors said most of the income he failed to pay taxes on came from investments in Vista Equity Partners, founded by billionaire Robert F. Smith.

An entity tied to Brockman launched Smith into the private equity world with an investment in Vista beginning around 2000 that later grew to at least $1 billion. In 2020, Smith signed a non-prosecution agreement that required him to admit to tax crimes, agree to pay $139 million and cooperate against Brockman.

Hanks’ ruling follows an eight-day competency hearing in November, when doctors, experts and colleagues testified about Brockman’s cognitive state. Defense witnesses said that neuroimaging studies show Brockman likely suffers from moderate dementia.

But prosecution witnesses said that while Brockman may have early Alzheimer’s disease, he faked his dementia for years. In a court filing, prosecutors said he led a double life, “presenting to select doctors as severely cognitively impaired, while simultaneously leading a normal, unimpaired life.”

In an unusual twist, Hanks heard testimony from a UK lawyer, Evatt Tamine, who oversaw Brockman’s offshore holdings for more than a decade. Tamine signed an immunity deal with U.S. prosecutors in 2018. Tamine testified he believed Brockman is innocent of tax evasion and money-laundering charges, while acknowledging he faces his own probes in Bermuda and Switzerland.

Brockman must also contend with the Internal Revenue Service, which imposed a $1.4 billion tax assessment against him in October. In January, he sued the U.S. to halt the agency’s immediate assessment of that levy. Days later, he filed a separate lawsuit in Tax Court.

The case is U.S. v. Brockman, 21-cr-09, U.S. District Court, Southern District of Texas (Houston).

Lindsay VanHulle of Automotive News contributed to this report.