Robert Smith committed historic tax crimes. Facing federal scrutiny, he moved next door to the president.
IN SEPTEMBER 2020, a month before the Department of Justice revealed one of the biggest tax-evasion cases in U.S. history, the phone rang at the Palm Beach Police Department. The caller was Hope Smith, the wife of private-equity billionaire Robert Smith. Mrs. Smith had taken inventory of her jewelry collection ahead of a planned move and found that a 3.63-carat diamond ring, worth $1.1 million, was missing from a safe.
“Smith advised she does not recall where or when it was lost,” explained the police report, which Forbes obtained a week ago through a public-records request. “However, it was last seen in her Palm Beach residence in January or February of 2020.”
The police report identified the residence as 1125 South Ocean Boulevard, directly next door to President Trump’s winter White House, Mar-a-Lago. The Smiths did not own 1125 South Ocean Boulevard but rented it, starting around the fall of 2019. Their landlord, who purchased the 10,500-square-foot property a year earlier, was Donald Trump. Smith, worth about $5 billion at the time, could well afford the estimated $65,000-per-month tab. The question is why the private-equity tycoon, who has spent millions buying and renovating homes in locales including Colorado, California and France, rented that particular property from that particular person.
According to Smith’s representative, the investor was eager to get to Palm Beach before his kids had their first day of school, and a previous rental had fallen through because of black mold, leading an agent to move quickly to secure Trump’s home. The situation, however, led to an unusual dynamic, with the president renting to a man who had hidden more than $200 million from the government and was embroiled in a historic tax-evasion investigation.
Trump’s other white house: 1125 South Ocean Boulevard, pictured top left, stands out next to Mar-a-Lago, the Palm Beach club where the president spends much of the winter.
Joe Raedle/Getty Images
“The Smiths quickly rented a short-term property that Robert did not visit in advance, and no one knew it was an investment property of Eric Trump,” Smith’s spokesperson said in a statement. The property belongs to Donald Trump, not Eric, who manages his dad’s business. “The family occupied the property for about six months until March 11, 2020, when the Covid pandemic began,” the spokesperson added. “They then went to Colorado and homeschooled their children for two years.” The Smiths may have only “occupied” the property for six months, but it seems likely they rented for closer to 12 months, given that the police report, filed in September 2020, said Hope Smith realized she was missing her ring “prior to moving.”
With a possible indictment looming over his head, Smith had vowed during a May 2019 commencement speech that he would wipe out the student debt of the entire graduating class at Morehouse College. That donation caught the eye of Ivanka Trump, who forged a relationship with Smith that continued into the pandemic, when they spoke weekly, according to the Washington Post. Smith also chatted with Treasury Secretary Steven Mnuchin, at times daily, as they worked to ensure Covid relief funds went to underserved communities. Smith also cooperated with investigators as they turned their sites to his billionaire business partner, a software entrepreneur named Robert Brockman, who allegedly hid about $2 billion from tax authorities.
A month after his wife contacted the police, Smith signed a non-prosecution agreement with the Justice Department, admitting to tax evasion and agreeing to pay $139 million but avoiding criminal charges. “Smith committed serious crimes,” U.S. Attorney David Anderson noted in an October 15, 2020 press release, “but he also agreed to cooperate. Smith’s agreement to cooperate has put him on a path away from indictment.” He still had plenty of money leftover—Smith purchased two homes in North Palm Beach that exact same day for $48 million.
If prosecutors planned to use Smith to convict his partner, they never got what they wanted. Brockman pleaded not guilty to 39 counts that included tax evasion, wire fraud, money laundering, conspiracy and destruction of evidence. About six months before his trial, he died at 81. In the end, neither billionaire went to jail for one of the biggest tax-evasion schemes in American history.
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