Did Robert F. Smith use Black America?

OPINION: A criminal tax investigation could reveal that Smith’s $40 million gift to Morehouse may have been a strategy to achieve leniency.

Robert Smith thegrio.com
(Photo: Morehouse College)

Robert F. Smith, the businessman, philanthropist and the wealthiest Black man in America, gained a great deal of attention and accolades when he pledged to pay off the entire student loan debt of the Morehouse College class of 2019. Tweets went out in praise. Memes of Black folk changing their degrees to “Morehouse ‘19” went up. And a collective sense of pride filled many chests as they saw the gift as the perfect example of “taking care of our own.”

Smith vowed to pay off the college loans incurred by the parents of these 400 young men — up to $50,000 per family — for a total of $34 million. No one needs to tell you that is a lot of money, particularly for Black folks who pursue education only through great sacrifice and financial hardship that others in this country cannot begin to conceive.

When Smith gave his Morehouse commencement address, what many didn’t know is that he was being investigated by the Justice Department and the IRS for possible tax offenses, including allegations that he neglected to pay taxes on $200 million in assets, proceeds from his first private equity fund that moved through offshore structures in the Caribbean. 

Read More: Billionaire Robert Smith investigated by feds for possible criminal charges

Smith is reportedly attempting to reach a civil settlement with the government, and previously tried to gain entrance to an IRS amnesty program to avoid prosecution in 2014 when the IRS first investigated him. He was turned down. Under the program–which provides amnesty to taxpayers who failed to report offshore accounts—the IRS reportedly turns down applicants it already knows did not report those assets, according to Bloomberg. Smith was one of them.

The investigation against Smith is of a criminal nature. The feds have focused on the movement of funds from two offshore accounts into Smith’s charitable foundation in 2014. Investigators have also zeroed in on the winding down of Smith’s first private equity fund that year, which also coincided with his divorce.  

One of the many questions Smith’s philanthropy raises is whether he contributed these millions with the knowledge that news of the tax allegations would come out. Was there any aspect of these initiatives that were an effort to fortify his image in the Black community, and the community at-large? How much did Robert Smith donate to Black America before he had a severe tax problem in 2014?  How should we view his generous contribution to Morehouse in light of the tax probe?  

While these questions may seem uncomfortable for some of us to ask, they challenge us to think about how the wealthy influence many aspects of our society and the true reasons for their charitable gifts.

As Jelani Cobb suggested, philanthropy is a “penance mechanism” for those who know they’ve done wrong, or serves to hide their foibles by causing people to focus on their charity.            

Given that Smith faces a criminal investigation, a question that remains is whether he should be criminally charged. Offshore tax havens for corporations and the rich are a real problem, with $36 trillion and 10% or more of global GDP in untaxed money stashed away each year. By comparison, the U.S. government takes in $3 trillion in annual revenue. At a time when millions are suffering financially under the coronavirus pandemic and governments face economic turmoil, there must be accountability for those who are hiding vast sums of money that could help people in need.

Ultimately, the truth reigns supreme and through time, it comes to light.

But perhaps the most interesting revelation from this story, is that Smith followed the lead of another billionaire who was convicted of tax evasion- Ty Warner of Beanie Babies.

After being convicted of tax evasion and holding offshore accounts worth 104 million dollars, the judge praised Ty Warner for his charitable gifts and Warner’s legal team was able to get him a plea deal of only 5 years probation, and no jail time.  

Robert F. Smith has hired one of Warner’s former lawyers and is campaigning for a legal settlement and no criminal charges.

The donations. The same lawyer.  Is this a coincidence? Or is this a strategy that reveals the manipulation of Black America to achieve a legal outcome?

For the Black community to continue to advance, we must be willing to celebrate good deeds and gifts, without fear of considering the context of the giving— whether they be from organizations, corporations, or individuals who look like us.

The investigation of Robert F. Smith’s taxes may reveal he’s a Black man with something to hide— or a target in this nation’s taking down of another Black man in America. Our willingness to look at whatever truth may come from it, reveals the price we put on integrity.

Follow David A. Love on Twitter at @davidalove.