(Bloomberg) — A Bermuda fund linked to billionaire Robert Brockman has landed in U.S. bankruptcy court after the Internal Revenue Service said it may seize some of the fund’s assets at Vista Equity Partners to satisfy tax debts owed by Brockman.
The bankruptcy filing by Point Investments Ltd. may frustrate IRS efforts to quickly collect $1.46 billion in taxes it’s seeking from Brockman, 80. Prosecutors separately charged him in the largest U.S. criminal tax-evasion case against an individual, alleging he dodged taxes on $2 billion in income.
Most of that came from investments in Vista by Point, which Brockman controlled, prosecutors allege. Brockman pleaded not guilty and denied he controls Point. The billionaire amassed his fortune in part by building a software vendor for car dealerships. Last week, his lawyers slammed the IRS for emptying his wife’s bank account.
Billionaire Robert Smith founded Vista more than two decades ago, with Point as his first investor. In 2020, Smith avoided prosecution by admitting he evaded taxes, paying $139 million, and cooperating with prosecutors against Brockman and others.
Read More: Billionaire Robert Smith Admits Evading Taxes for Years
The IRS can impose a levy to permit the “legal seizure of your property to satisfy a tax debt,” according to its website. That includes taking money from bank or financial accounts, the IRS says. Last week, the agency issued notices of levy to Vista, listing a number of investment vehicles it runs. It also sent notices to Smith in his capacity as founder, chairman and chief executive officer of Vista.
A spokesman for Smith and Vista declined to comment Wednesday, as did Brockman’s lawyer.
In its filing, Point said it’s unclear what specific property the IRS seeks to levy and why the notices were directed to Vista and Smith. “Their particular relation to funds in which the Debtors are invested is unclear,” Point’s attorneys wrote.
‘Unclear’ Legal Basis
They said Vista and Smith “do not appear to be the general partners of such funds and therefore it is unclear what legal basis they could have to possess or control any of the Debtor’s interests in the funds.”
Still, Point fears that “individuals or entities associated with the Vista funds will deliver the Debtor’s property to the IRS and that the IRS will issue additional purported levies against the Debtor’s property,” according to the filing.
The IRS asserts that it can impose a “jeopardy assessment” to immediately seize Point’s property on the grounds that it’s an alter ego of Brockman. Point asked a U.S. judge to recognize a Bermuda court has jurisdiction over its affairs. Liquidators have been appointed in Bermuda and control Point’s assets without input from Brockman, according to the filing.
Point is invested in various Vista entities and its assets include a stake in Reynolds & Reynolds, according to the filing. It also claims Vista owes it $41 million in distributions that are being withheld in part because of the levy notices issued to Vista.
Brockman’s lawyers claim he has dementia and can’t understand the criminal case against him. Prosecutors say he’s faking. A Houston federal judge has not ruled on that matter or on his lawsuit seeking to end the jeopardy assessment.
Read More: Billionaire Brockman May Fight IRS for Years, Even With Dementia
Point’s biggest direct investment in the U.S. is a minority stake in Solera Global Holding Corp., lawyers for the fund said. The fund’s most recent audited financial report estimates the value of the stake at $383.5 million. Solera provides software and services to the automotive and insurance industries, according to its website.
The case is Point Investments Ltd., 22-10261, U.S. Bankruptcy Court for the District of Delaware.
(Updates with Point Investments stake in Reynolds & Reynolds, updates bankruptcy court docket.)
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