The U.S. government’s tax fraud case against former Reynolds and Reynolds Co. CEO Bob Brockman has links to a lawsuit brought by some former salesmen more than two decades ago, according to a media report.
The salesmen claimed in a lawsuit that Brockman had not paid commissions and instead diverted some amount of customers’ payments to an entity in the Cayman Islands, The Wall Street Journal reported Wednesday. That case was settled in 2001, according to the newspaper.
But the lawsuit may have been the start of IRS attention on Brockman, the newspaper reported.
Brockman, 79, was indicted in October and charged with federal tax evasion and wire fraud in what prosecutors say was a scheme lasting two decades to avoid paying taxes on $2 billion in income. He has pleaded not guilty.
The case is pending in federal court in Houston after being transferred there in January from San Francisco, where the charges initially were filed.
A competency hearing to determine whether Brockman can assist with his defense has been scheduled for June 29. His lawyers have argued in court filings that Brockman has a diagnosis indicative of Parkinson’s disease or Lewy body dementia that is progressive and has affected his ability to process and retain information.
Prosecutors contend that a competency hearing is warranted, but have said Brockman’s activities — including continuing to lead Reynolds and Reynolds as its chairman and CEO until after he was charged — raise questions about the defense’s competency claims. The government also noted in court filings that Brockman’s doctors all have ties to the Baylor College of Medicine in Texas, to which Brockman has given tens of millions of dollars.
The Wall Street Journal interviewed former employees and family members of Brockman. His brother, Dave Brockman, told the newspaper that his brother “went out to make something of himself” after growing up in Florida and that the two have not been in close contact for years. Brockman would start Universal Computer Systems, which merged with dealership management system provider Reynolds and Reynolds in 2006.
Brockman was described as closely involved with the company he ran and hiring employees, according to The Wall Street Journal.
He was known to fire employees at random, a former executive, Bobby Tyson, told the newspaper. Tyson told the newspaper he remembered Brockman asking him, “When was the last time you shot somebody between the eyes?” which was a reference to such an action. Tyson, who said he admires Brockman, said he had participated in a random firing, though reluctantly, according to the newspaper.
The Wall Street Journal reported that Brockman’s lawyers did not respond to questions for the story. His attorneys did not immediately respond to an emailed message seeking comment Wednesday from Automotive News.