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Lawyer Charged in Billionaire Tax Case Dies on Eve of Trial (2)

Nov. 28, 2022, 8:27 PM

A Houston lawyer charged with helping private equity billionaire Robert F. Smith evade taxes for more than a decade died just before he was about to go on trial.

Carlos Kepke died over the weekend in Texas, said one of his attorneys, Richard Strassberg. Kepke was 83. He was set to go on trial Monday in San Francisco federal court on charges of conspiring to defraud the Internal Revenue Service and aiding and abetting the filing of false tax returns by Smith, founder of Vista Equity Partners.

“Carlos always maintained that he was innocent of these charges, and we were prepared to prove that at trial,” said Strassberg, who represented Kepke along with Grant Fondo.

Jury selection had been scheduled to begin Monday morning. At a brief hearing, the lawyers told US District Judge James Donato of Kepke’s passing, according to Strassberg. Donato said he would dismiss the case once prosecutors file a motion requesting that he do so.

Kepke’s lawyers had previously raised his age and poor health in arguing for him to appear remotely for certain pre-trial proceedings. They noted that he’d had two heart attacks and a history of other cardiac ailments.

The passing of Kepke relieves Smith, 59, of the need to testify as the government’s star witness. Prosecutors accused Kepke of helping Smith evade taxes on $225 million he earned from Vista by setting up a trust structure with entities or accounts in Belize, Switzerland, Nevis and the British Virgin Islands. Under an unusual 2020 agreement, Smith avoided prosecution for tax crimes.

A spokesman for Smith and a spokesman for the Justice Department both declined to comment.

Read more: The Sting That Snagged the Tax Lawyer to a Pair of Billionaires

(Updates with Justice Department response in last paragraph)

To contact the reporters on this story:
David Voreacos in New York at dvoreacos@bloomberg.net;
Neil Weinberg in New York at nweinberg2@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Anthony Lin

© 2022 Bloomberg L.P. All rights reserved. Used with permission.