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Billionaire philanthropist Robert Smith's tax fraud roils Vista Equity
Robert Smith's admission to tax fraud has done more than just cost him a whopping $140 million. It's also roiled Vista Equity Partners, the private equity firm he founded and leads, with some insiders and limited partners feeling they were misled (or left in the dark) about the extent of Smith's legal troubles.
Behind the scenes: Smith called a virtual meeting of Vista's managing directors and other top staffers on Wednesday, to discuss details of his settlement. A source says he called the overall experience "humbling" and that he regretted the "undue burden" that his actions had put on others, including some Vista colleagues.
Smith also said that Brian Sheth, Vista's co-founder and president, is likely to be leaving Vista. Sheth himself was not on the call, and it does not appear that he was invited to participate.
- Sheth, long considered one of Vista's top dealmakers, had told managing directors last December that he was thinking about leaving the firm or retiring.
- But he had not yet made any formal decision, nor have he and Smith discussed specifics of how a departure would be structured. Complexities include his existing firm economics, fund "key man" clauses, etc.
- Sources say that Smith's tax troubles are a contributing factor to a breakdown in the two men's relationship, and that Smith's meeting comments raised some eyebrows.
- Expect Dyal Capital Partners, which has twice purchased minority stakes in Vista, to have some say in the final resolution.
Of note: Sheth did not return a request for comment, while a Vista spokesman also declined comment.
One of Smith's biggest internal challenges is a perception that he long underplayed the severity of the investigation — presenting it as a relatively minor accounting problem. Or not raising it at with certain limited partners, save perhaps for a minor data room mention.
- But, yesterday, the U.S. Attorney's press release was much more biting, calling it an "illegal scheme to conceal income and evade millions in taxes."
- It added that Smith did so "knowingly and intentionally," which reads a bit different from Smith's narrative of being a naive young investor who went along to get along with the tax structures proposed by an older, more experienced limited partner.
- That LP was Robert Brockman, who yesterday was charged with what DOJ calls the "largest ever" tax fraud scheme by a U.S. citizen. Smith is cooperating in that ongoing investigation.
- Smith and Vista are said not to be concerned about a subsequent SEC investigation into Smith's continuing ability to run a securities firm, but I'm not quite sure why they're so confident. Particularly if new sheriffs roll into down next year, and they're not thrilled with the fact that Smith's fat bank account is largely what kept him out of jail.
- Read the full findings of facts.
The bottom line: Smith has settled with DOJ and the IRS, but the story isn't over yet.
AOC says it's "extremely important" that Biden offer Bernie Sanders a Cabinet position
Rep. Alexandria Ocasio-Cortez (D-N.Y.) said on CNN's "State of the Union" Sunday that she believes it's "extremely important" that Joe Biden offer Sen. Bernie Sanders and other progressive leaders Cabinet positions if he's elected president.
The big picture: Ocasio-Cortez was pressed repeatedly on policy differences between her and the more moderate Biden, including her opposition to fracking and support for Medicare for All. She responded that it would be a "privilege" and a "luxury" to be able to lobby a Biden administration on progressive issues, insisting that the focus right now should be on winning the White House.
What she's saying: "I think what a lot of people misunderstood about the progressive movement is that it wasn't a slogan when Bernie ran on saying, 'Not me, us.' And so it's not just about where Bernie Sanders is next term or what role that Sen. Sanders is playing, but it's really about who the Biden administration is choosing to lead agencies across the board," Ocasio-Cortez said.
- "The fact of the matter is this isn't just about the progressive movement. This is about making sure that we're not just going back to how things were and rewinding the tape before the Trump administration," she continued.
- "This is about making sure, how are we going to not just make up for lost time, but leap into the future and actually ensure we are making the investments and policy decisions that will create an advanced American society. And, frankly, conservative appointments will not get us there."
Worth noting: Politico reported last week that Sanders is interested in becoming Biden's Labor secretary. If he's tapped for a Cabinet position, however, Vermont's Republican governor would get to decide who fills his Senate seat.
Trump campaign to run election night war room on White House grounds
The Trump campaign will run itselection night war room at the Eisenhower Executive Office Building, located steps from the West Wing, the Trump campaign confirmed to Axios.
Why it matters: The decision to move the main political operation from the campaign's headquarters in Rosslyn, Va., to the White House complex is the latest example of the Trump administration blurring the lines between governing and political activity.
What they're saying: “The war room needed to be in close proximity to the president and there is no expense whatsoever to American taxpayers for the use of a room in the EEOB, where events like prayer services and receptions for outside groups frequently occur," Trump campaign communications director Tim Murtaugh told Axios.
- "Every piece of equipment, including WiFi and computers, was paid for by the campaign, and no White House staff is involved. The arrangement has been approved by White House counsel.”
- The New York Times' Maggie Haberman first reported this development.
Flashback: The decision to host Trump's acceptance speech during the Republican National Convention from the White House South Lawn served as one of the most blatant examples of the blurring of staged campaign-style events and official business of governing on the White House premises. It violated traditional norms and, many critics argue, was in violation of the Hatch Act.
Mitch McConnell says he will vote to acquit Trump in second impeachment trial
Senate Minority Leader Mitch McConnell (R-Ky.) told his fellow Senate Republicans in an email that he will vote to acquit former President Trump in his impeachment trial for inciting the deadly U.S Capitol riot on Jan. 6, two sources familiar with the email told Axios.
Why it matters: McConnell's acquittal vote will likely shrink the number of Republicans who considered voting to convict Trump in his second impeachment trial, making a conviction on the House's single charge of "incitement of insurrection" unlikely.



