Billionaire Robert Smith’s IRS deal a contrast to Ty founder’s tax-evasion case

Ty Beanie Babies

Robert F. Smith in Berlin, February 2018. U.S. Department of State photo, in the public domain

SAN FRANCISCO – (AP) Federal prosecutors announced on Thursday that Texas billionaire and philanthropist Robert F. Smith, founder/chairman of Vista Equity Partners, has cooperated with Internal Revenue Service investigators and will pay $139 million to settle a probe into his taxes.

Prosecutors say that Smith, 57, used about $2.5 million in untaxed funds to buy and upgrade a vacation home in Sonoma, California; purchase two ski properties in France; and spend $13 million to buy a property and fund charitable activities at his property in Colorado. An October 21, 2020 Financial Times article by Kadhim Shubber notes that Smith, who is worth an estimated $5 billion, “had hidden $200M from the taxman offshore and evaded some $43M in taxes from 2005 to 2014.”

David L. Anderson, U.S. attorney for the Northern District of California, applauded Smith for stepping up, despite the serious nature of his crimes, which occurred from 2000 to mid-2015.

“Smith’s agreement to cooperate has put him on a path away from indictment,” he said.

Smith founded the tech investment firm Vista in 2000, and Forbes reports that it now has over $50 billion in assets and is “one of the best-performing private equity firms, posting annualized returns of 22% since inception.” Last year Smith announced during a commencement address at Morehouse, a historically Black all-male college, that he would be paying off the student loan debt of the entire graduating class. His gift totals an estimated $34 million.

In the same Financial Times article referenced above, Kadhim Shubber writes: “Mr Smith’s deal contrasted with the treatment of Ty Warner, the toys entrepreneur who created Beanie Babies, who pleaded guilty to a criminal charge in 2013 for evading $5.6M in federal taxes by stashing millions of dollars of income offshore. He paid $80M in penalties.” According to Wikipedia, Warner was also sentenced to two years’ probation and 500 hours of community service.

Ty Warner maintains a low public profile, rarely granting media interviews. He has significant investments in luxury hotels, golf courses and other properties. Ty Warner Hotels and Resorts’ portfolio includes the Four Seasons Hotel in New York City, the Sandpiper Golf Club in Santa Barbara, California; and San Ysidro Ranch in Montecito, California. He is known for his quiet philanthropy, both on a personal and corporate level, and has donated and raised hundreds of millions of dollars from Beanie Babies special editions produced for charities that benefit underprivileged children, marine conservation, pediatric AIDS, and the Princess Diana Memorial Fund, among many others.


Associated Press writers Tom Krisher in Detroit, Juliet Williams in San Francisco and Jake Bleiberg in Dallas contributed to this story, as did Auction Central News International.

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