Personal-equity billionaire Robert Smith will face credibility check at lawyer’s tax trial

The authorized workforce for a Houston-based lawyer accused of serving to private-equity billionaire Robert Smith evade taxes for a decade indicated it’s going to problem Smith’s credibility if he testifies as a prosecution witness on the lawyer’s trial.

On Friday, attorneys for Carlos Kepke filed a movement saying prosecutors have not turned over all paperwork of their possession referring to Smith’s claims of innocence throughout a multiyear investigation earlier than he did an about-face in 2020. Smith, founding father of Vista Fairness Companions, agreed in a non-prosecution settlement, or NPA, that he dedicated tax crimes and agreed to pay $139 million in taxes and penalties and cooperate with prosecutors. 

Kepke, who’s in his early 80s, has pleaded not responsible and faces a November trial. The submitting means that Kepke’s legal professionals will argue that if Smith did not consider he dedicated any crimes earlier than his NPA, then Kepke cannot be responsible. 

Robert Smith

Jason Alden/Bloomberg

“The statements of Mr. Smith, the federal government’s key witness, present that he himself believed he had not dedicated any fraud,” in accordance with Kepke’s submitting Friday in federal court docket in San Francisco.

Protection legal professionals attempt to elevate doubts about cooperating witnesses throughout cross-examination by exhibiting jurors inconsistencies, or outright lies, of their accounts as they sought leniency from prosecutors. Documentation of Smith’s prior claims of innocence “goes to the core” of his credibility, Kepke’s legal professionals wrote.

“It can present how Mr. Smith’s statements modified in the course of the three years of proffers and negotiations that result in his NPA” and his motives in agreeing to the NPA, in accordance with the movement. With out it, “Kepke will likely be denied his proper to totally and successfully cross-examine the federal government’s most important witness.”

Kepke’s legal professionals stated prosecutors supplied them with a 29-page doc on Aug. 12  summarizing the assorted positions taken by Smith and his legal professionals over time. Kepke’s workforce filed that abstract below seal, however supplied some highlights of their movement. Smith’s wide-ranging efforts to keep away from prosecution concerned not less than 5 shows or conferences between his authorized workforce and the federal government between 2017 and 2020, in accordance with Kepke’s submitting.

“Mr. Smith stated he believed using offshore entities is effectively accepted within the non-public fairness business, that he believed his reporting place to the IRS was in keeping with the regulation, and that he had religion perception that the belief construction was correct,” in accordance with the submitting. Such statements are “immediately exculpatory of Mr. Kepke, and the federal government should flip over the unique sources of Mr. Smith’s statements, and never just a few abstract written by the prosecution.”

As a part of the NPA, Smith made detailed admissions a couple of 15-year scheme to hide earnings and evade taxes by utilizing an offshore belief construction with associated international companies. Smith admitted, as an example, he knew in 2000 when he created two international entities, “they had been supposed, and can be used, to keep away from the cost” of U.S. tax on earnings earned by investments.

A spokesman for Smith and Vista declined to remark.