Reynolds and Reynolds CFO says he didn't doubt Bob Brockman's mental competence

HOUSTON — The former CFO of Reynolds and Reynolds Co. said Wednesday that Bob Brockman did not communicate concerns about his mental abilities or qualifications while serving as CEO of the dealership management system giant.

Craig Moss testified in a Houston courtroom on the third day of a competency hearing to determine whether Brockman can stand trial on federal charges of tax evasion, a hearing expected to last at least a week.

Prosecutors asked Moss about multiple emails Brockman sent addressing specific company matters, including flights using a Reynolds plane, both before and after Brockman was indicted in October 2020.

Moss testified that one such email, from January 2020, involved a discussion with Brockman about the fact that the company had been “losing customers at a rate that would negatively impact the financial statements.”

When prosecutors asked if Moss had had any reason to doubt Brockman’s mental competence at that time, Moss testified that he had “none.”

Prosecutors assert that Brockman had both the motivation and the capacity to malinger, or feign symptoms of cognitive impairment, to avoid prosecution. He is charged with 39 counts, including tax evasion, wire fraud, money laundering and evidence tampering.

Despite diagnoses of dementia, prosecutors say, Brockman, now 80, remained involved at the helm of privately held Reynolds until after he was indicted. That includes reorganizing the company’s leadership in June 2020 while he retained the roles of chairman and CEO, prosecutors said.

Defense lawyers contend Moss is among competency witnesses called by the government who are unable to “testify as to Mr. Brockman’s current competency to assist in his defense,” according to a court filing last week.

Moss also said he has not seen Brockman in more than a year, telling defense attorney Kathy Keneally during cross-examination that the last time he saw Brockman before Wednesday’s court appearance was in August 2020.

Brockman’s lawyers on Wednesday called their first medical expert, Dr. Thomas Wisniewski, to testify.

Wisniewski, a neurologist at New York University, wrote in an October report that Brockman has “a permanent, progressive and irreversible cognitive impairment that is currently in the moderately severe stage, with very significant impairments of all activities of daily living,” according to a court filing last week from Brockman’s attorneys. That impairment, Wisniewski wrote, “would severely limit his ability to interact with his attorneys to any substantive, sustained degree, or to participate meaningfully in a courtroom trial.”

Wisniewski testified Wednesday that he reviewed video of Brockman’s January 2019 deposition in a federal multidistrict litigation case involving Reynolds and Reynolds. An attorney who took Brockman’s deposition testified Tuesday that Brockman was “a very skilled opponent” and did not recall any cognitive or mental issues were raised at the time.

Under questioning from Brockman’s lawyers, Wisniewski testified that Brockman’s presentation during the deposition is consistent with the possibility that he might also be experiencing dementia because “highly learned information can be quite preserved, even in the settings of dementia, so when people are speaking about things which were a core part of their life, they can seemingly look normal.”

Prosecutors pressed Wisniewski during their cross-examination on his perception of Brockman’s 2019 deposition performance, asking if Wisniewski thought the fact that Brockman was able to prepare for the deposition with his attorneys over multiple days was consistent with someone who would score poorly on memory tests that same year.

Wisniewski said the fact that Brockman prepared with lawyers doesn’t speak to how effective that preparation was but acknowledged under questioning that his performance could.

In a related development this week, Swiss bank Mirabaud & Cie. faces new questions from a powerful U.S. lawmaker about its failure to recognize the origin of $1 billion deposited on behalf of Brockman, Bloomberg reported.

U.S. Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, asked the bank’s U.S. lawyer on Wednesday to explain what steps it took to uncover the source of that untaxed money. Swiss prosecutors froze about $950 million linked to Brockman after his indictment in October 2020.

The U.S. claims Brockman concealed his control of money at Mirabaud by hiding behind nominee accounts and false paper trails created by Evatt Tamine, a lawyer now cooperating with federal authorities. Wyden’s request expands his initial inquiry in September, when the bank said Brockman had concealed his ownership of the funds.

Tamine, who wasn’t charged with a crime, was testifying on Wednesday as a prosecution witness in Brockman's competency hearing.

Wyden’s letter said it was “critical to understand what information the bank requested from Mr. Tamine or other account signatories at the time of onboarding” and when large deposits were made, including one for $799 million in 2010. Prosecutors say that was a distribution from Vista Equity Partners, where Brockman was the original investor, eventually providing at least $1 billion in capital.

“Did Mirabaud ever request any information related to the source of wealth or source of funds for this deposit?” Wyden asked.

Wyden asked about the bank’s due diligence and “know your customer” procedures to determine who ultimately owns accounts.

A spokesman for the bank said Wednesday the indictment made clear that “Brockman went to great lengths to deceive Mirabaud about his real involvement in the accounts,” which were not held in his name.

According to the spokesman, Mirabaud has complied with all U.S. treaty requests for information in the Brockman investigation and with the Foreign Account Tax Compliance Act, which requires overseas financial institutions to report assets held by U.S. account holders.

In response to an earlier Wyden query, the bank’s lawyer wrote on Oct. 1 that until the indictment was released, it was unaware of Brockman’s role, it had no contact with him, and it was “not in a position to verify or request any information from him.”

Bloomberg contributed to this report.