The scope of the U.S. investigation emerged at a court hearing in Bermuda on Feb. 20. A Bermudian lawyer, Jan Woloniecki, spoke on behalf of the Justice Department. He said prosecutors were investigating “a major and very large tax fraud on the United States” that could “set a record” because prosecutors believe $1.5 billion of revenue was concealed fraudulently from the U.S. government.
Woloniecki also said St. John’s Trust had engaged in a “cynical attempt” to block the investigation by attacking Tamine. The trust and related entities have accused Tamine in Bermuda and London courts of stealing $20 million. Tamine‘s lawyers said he “vigorously denied” any suggestion of unlawful conduct.
“Mr. Tamine is an important cooperating witness into a U.S. Department of Justice (DOJ) investigation in relation to Bob Brockman,” a spokesperson for Tamine’s lawyers, Mishcon de Reya, said in a statement. “The bogus allegations of theft were raised by entities associated with Mr. Brockman only after he agreed to assist the DOJ and are clearly designed to undermine his credibility as a witness. Those same entities tried (ultimately without success) to delay access to key documents by Mr. Tamine and the DOJ.”
Speaking on behalf of the U.S. government, Woloniecki said it would be “very damaging to the reputation of Bermuda” if the plaintiffs were to use their claims against Tamine to derail the investigation.
If the U.S. decides to charge Smith or Brockman with tax crimes, their cases could surpass one against another billionaire known for charitable giving. Ty Warner, the founder of the company that makes Beanie Babies, pleaded guilty in 2013 to evading almost $6 million in taxes on $107 million held offshore. It was the largest of 150 cases in a U.S. crackdown on offshore tax evasion.
At Warner’s sentencing, a judge praised his philanthropy and imposed a sentence of probation rather than the nearly five years in prison he faced under a plea agreement. Smith is represented by one of Warner’s former lawyers.
This article was provided by Bloomberg News.