Imperfect timing: The interesting media coverage of SEC investigation into Black billionaire, Robert F. Smith

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Months after billionaire businessman and philanthropist speaks out on police killings and reparations, mainstream news reports that the Austin resident faces a potential tax investigation. Releasing the report at this moment questions if this is retribution for his recent work against inequities in the US, or merely a coincidence.

News surfaced that Robert F. Smith is under criminal investigation with the IRS for directing money to Bermuda offshore accounts without paying taxes on it. Axios: ReCap reports that the money was used to pay for Smith’s philanthropic works, including wiping out $34 million in debt for 2019 Morehouse Graduates, and a $20 million donation to build the Smithsonian National Museum of African American History and Culture.

Smith, a private equity capitalist who is the co-founder and CEO of Vista Equity Partners, is listed as the nation’s richest Black person. A chemical engineer who moved to the financial sector where he built his wealth, Smith now faces legal woes alleging that he funneled approximately $200 million into Bermuda entities. In turn, the money went to a US based charitable foundation where he’s dolled out millions to organizations largely assisting African Americans, cancer research and in some cases, women. 

For four years, the US Justice Department and the IRS have been investigating the case. Currently, no charges have been made against Smith. According to Bloomberg, Smith has a strong case if he shows that the money was charitable donations in which he did not profit or personally benefit. But, if formally charged and convicted, he faces prison time and would be forced out of a company worth $65 billion.

Justice or just him

White House Meeting on Protecting Consumers from Social Media Abuse President Donald J. Trump, joined by Mississippi Attorney General Lynn Fitch and U.S. Attorney General William Barr, meets with states attorneys general on protecting consumers from social media abuse Wednesday, Sept. 23, 2020, in the Cabinet Room of the White House. Official White House Photo by Tia Dufour

In the case of Smith, the question remains if justice is being served with a heaping spoon of stopping him in recent efforts to enfranchise Black people. While a release on Smith’s pending case emerged, the neglect to report a nearby businessman’s conviction points to a gap in fair coverage.

On August 6, a Houston attorney named Jack Stephen Pursley was sentenced to 24 months of supervised detainment for moving $18 million of a client’s money to offshore accounts on the Isle of Man. Pursely received $4.5 million, or 25 percent of the money. This conviction did not make headlines.

Most glaringly, news of Smith’s probe comes as the Justice Department comes under fire for how it handles certain investigations around Black Lives Matter protests in citiesAt the same time, current and past Trump officials and surrogates’ actions are coming under harsh scrutiny. Or, in the case of eight Trump-adjacent persons, they themselves have been arrested.

Prior to the breaking story regarding Smith, Attorney General William Barr had to testify before the House Judiciary Committee for the lackadaisical handling of Trump-related investigations. Leading up to the congressional hearings probing Barr, a number of persons and agencies called for him to face tough questions. The New York City Bar released a letter alleging AG Barr’s conduct “threatens public confidence in the fair and impartial administration of justice.” In the details, they said that Barr used “coercive power” to vilify persons and entities labeled as “progressives” or on “the Left,” while refusing to use intelligence by the Inspector General that points to “the Trump-Pence campaign and Russian officials in 2016.”

Included in accusations of Barr’s partisan-based handling of cases is how he influenced the outcome of the trial of Trump-ally, Roger Stone. Found guilty for obstruction, lying to Congress and witness tampering, Stone received a 40-month prison sentence. Eventually, he was commuted by Trump on July 10 of this year. In a statement, Trump said Stone was “charged by overzealous prosecutors.” Some of these prosecutors cited Barr as hindering their efforts during the case.

| Read: Billionaire, restaurateur pay it forward

During the congressional hearings, Barr was also cited for not hiring any Black staff. In an ironic twist, he disagreed that “there’s systemic racism in the police department, generally, in this country.

After Congress grilled Barr in July, the Justice Department has pursued cases that fall within line of a Right-wing, Trump-centric agenda. In August, the Justice Department filed a lawsuit against Yale University for discriminating against white and Asian student applicants. They allege that “Yale discriminates based on race and national origin in its undergraduate admissions process, and that race is the determinative factor in hundreds of admissions decisions each year.

Prof. Greg Carr of Howard University surmised that this is the works of “tiny white nationalists” who are taking “this last few months of the Trump presidency and launching their attack through the Justice Department” by way of AG Barr.

Carr further explained. “This is the insurance policy that they’re launching before November that speaks directly to the reason [white nationalists and Trump] been stacking these courts with all those judges.” The “insurance policy” Carr speaks of also finds its way to Smith. 

The day before the news of Smith came out, coverage of Steve Bannon’s arrest broke. Bannon, the former chief strategist of the Trump campaign, has been accused of spending non-profit money raised for a fund to build a border wall he never constructed. His trial date is May 24, 2021.

While Bannon is in custody, Smith has not been charged. Rather, information of the probe revealed that his name emerged as the result of a larger investigation of Houston billionaire, Robert T. Brockman, who infused Smith’s Vista Equity with $1 billion. In a story by Barron’s, some of that money is alleged to be used for Smith’s Foundation II Foundation charitable fund.

Call to hold corporations, US gov accountable for financial inequities 

President Donald J. Trump meets with representatives of the banking industry Wednesday, March 11, 2020, in the Cabinet Room of the White House, to discuss how the financial services industry can meet the needs of their customers, particularly consumers and small businesses, who may be affected by COVID-19. Official White House Photo by Joyce N. Boghosian

Smith is the only African American billionaire who signed the “Giving Pledge” in which he committed to donating half of his earnings to philanthropic initiatives.

While he’d been ramping up his giving in the past several years, for the past year, Smith, who is known as a quiet person, seemed to be positioning himself as a viable political candidate in his home state of Texas. With whispers of a gubernatorial or Senate run, Smith began to take outspoken stances on the recent turmoil that sparked citizens across the country to participate in thousands of demonstrations still going on. 

Right before nationwide protests, Smith spoke of “banking deserts” in the African American community that made it hard for Black businesses to thrive before and during the Covid-19 pandemic. In an interview with CNBC, he said that he was working with White House officials and congressional members to “enable banks to process” PPP loans for “Black and Latinx businesses.” For Smith, he said that his work attempted “repair some of the economic damage that this Covid virus and sheltering at home has done to the community’s economic base.”

Shortly after his talks on working with small businesses, following the police killing of Minneapolis resident, George Floyd, Smith said in an Instagram post, “This has been a heartbreaking and painful week for America and a reminder that in our endless pursuit of a ‘more perfect union,’ a great deal of work remains.”

In his advocacy, he allowed his IG page to be used for regular posts on Black history. The gesture was in line with those with large platforms allowing people or organizations who did not have expansive followings to highlight their work.

Weeks later, Smith addressed an ongoing conversation regarding economic restorative justice in the shape of reparations. For Black Americans who are descendants of US slaves, reparations is a plan that attempts to address and repair generations of malicious economic disenfranchisement through generations of slavery, Jim Crow, mass incarceration and other forms egregious discrimination and domestic terror.

Reparations

St. Paul, Minnesota: June 19, 2020 – Juneteenth reparations rally to demand reparations from the United States government. About 300 people gathered outside the Minnesota capitol building to demand reparations from the United States government for years of slavery, Jim Crow, segregation, redlining, and violence against black people from police. The demonstration happened on the heels of the George Floyd police killing. Photo credit: Fibonacci Blue

This past June, Smith proposed that large US corporations  should give 2 percent of their profits to communities to close the wealth gap. “Employees of companies are also going to hold the leaders accountable to do something about it,” Smith told Reuters. “We have a chance for systemic change.

Economic reparations are not new methods as a way to restore financial disruptions or inequities. Certainly, it is not novel in the case of slavery. When slavery was eliminated in the British colonies, the UK took out a £20 million loan in 1844 to award slave owners as a form of reparations. To repay the loan, the government siphoned taxpayers dollars. The repayment of the loan ended in 2015, but, to date, the British government has yet to release the names of the banking institutions it borrowed from.

| Read: House hearing on Juneteenth to hear reparations testimony for H.R. 40

In another instance, Haitians were required to pay France reparations after they won their independence from the major colonial power that built much of its empire on slave labor. Added, many French planters moved their money out of Haiti with enslaved African women who relocated to New Orleans during the Haitian Revolutionary War.

| Read: Disemboweled: Haiti endures decades of foul foreign hostilities 

The women, called “mulatta concubines,” took with them millions of dollars stemming from over 200 years of sugarcane production. The newly arrived women created a nouveaux-riche, hyper-local “Creole” class when their enslavers did not return to the French colony of Louisiana after the Louisiana purchase. While some women remained mixed-race, their offspring changed their identities to pass for white Americans in groups like passé pour blanc.

After Haiti’s decades of paying the loan—along with a global embargo enforced by the US and Europe for independence efforts—are part-and-parcel of the island’s financial distress. 

The first shall be last 

While a number of groups have been given reparations by the US government, there remains a call for reparations for African Americans. Over the years, several organizations have worked to mobilize legislative action for financial repair. Groups such as the National Coalition of Blacks for Reparations in America (N’COBRA) have backed the only proposed bill, H.R. 40, for decades.

Introduced in 1989 by deceased congressman, John Conyers, H.R. 40 still needs more sponsorship to make it to the House floor for a vote after more that 20 years. When the bill was introduced, it was for the purpose to establish a commission to study and develop reparations proposals. Two decades later, Blacks who have lived in the US for generations and are descendants of those who fueled the country to be a massive capitalistic global behemoth, remain at the bottom of the US economic and social latter. 

Added to continuing the call for reparations is #AODS, a group launched by Antonio Moore and Yvette Carnell. For years, Moore, a criminal defense attorney and Carnell, a political analyst and former campaign staffer, have been growing their arguments and support base for a movement called American Descendants of Slaves. #ADOS, a recent name that Moore and Carnell created to identify those who have direct lineage in Africans who worked on US plantations, the two carry out regular Youtube streams dealing with wealth disparities in the US, and arguing for reparations for those descendants of enslaved peoples. 

They also aligned themselves with Duke University economist, Sandy Darity, who has carried out extensive research on the racial wealth gap. In his work, the racial wealth gap is a concept looking at how wealth in the US was purposely stymied for non-white groups, and in particular Blacks, who now have a reported negative wealth. What is more, Darity’s studies show how institutions directly destroyed the potential for Black wealth and enfranchisement long after slavery. The crippling effects, according to Moore, Carnell and Darity, are evident today.

Currently, H.R. 40 picked up a number of co-sponsors in the last two years that ADOS has advocated to close the racial wealth gap via reparations. In 2019, a Congressional hearing explored H.R. 40, but still is at the stage of a proposal. However, in California, Governor Gavin Newsome (D) signed AB 3121, an order establishing a first-in-the-nation task force to study and make recommendations on reparations for slavery addresses reparations.

There are no reports showing if Smith is connected to any of the reparations activities between the respective organizations, but there are overlapping thought that Blacks who can trace their lineage to an American slave, are due restorative economic justice.

Since news surfaced of the SEC investigation, Smith has been quietly handling his affairs. Bloomberg reports that Smith’s counsel is in negotiations with officials to see if his cooperation will grant an “exchange for leniency.”

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