Home Auto U.S. judge agrees to delay Brockman hearing; national security questions raised

U.S. judge agrees to delay Brockman hearing; national security questions raised

A federal judge has agreed to delay a competency hearing to determine whether former Reynolds and Reynolds Co. CEO Bob Brockman can assist in his defense against tax evasion charges.

U.S. District Judge George Hanks Jr. on Wednesday signed an order moving the scheduled competency hearing in Brockman’s case from June 29 to Sept. 13, according to court filings in the U.S. District Court for the Southern District of Texas, where the case is pending.

Hanks’ decision follows a request from Brockman’s attorneys to postpone the hearing and extend deadlines for other competency proceedings after Brockman was hospitalized in March for an undisclosed medical condition. Defense attorneys originally asked Hanks to push the competency hearing to August but later sought to move it to September to provide more time to submit expert reports to the court.

Prosecutors do not oppose the request, Brockman’s attorneys noted in the filing.

Brockman, 79, was taken to the emergency room at Houston Methodist Hospital on March 14 and later admitted to a neurosensory center, his lawyers wrote in a court filing. He was released March 19. Details about the medical condition that required Brockman to be hospitalized were redacted from the public filing, with his attorneys citing “the inclusion of sensitive medical information.”

Brockman had completed one of several planned psychiatric or psychological exams sought by prosecutors before he was admitted to the hospital, according to the court filing.

His attorneys did not immediately respond to messages seeking comment Thursday.

Brockman’s lawyers sought the competency hearing to determine whether he can aid in his defense on 39 counts, including tax evasion, wire fraud, money laundering and evidence tampering. Prosecutors have called the charges part of a scheme lasting two decades to evade taxes on $2 billion in income. Brockman has pleaded not guilty. His attorneys said in court filings that Brockman has a diagnosis indicative of Parkinson’s disease or Lewy body dementia that is progressive and has affected his ability to process and retain information.

Hanks’ original schedule for competency proceedings said the court will set dates for future events, including a trial, “if needed” after a decision is made as to Brockman’s competency.

Brockman stepped down from his roles as chairman and CEO of privately held dealership management system giant Reynolds and Reynolds in November.

A status conference in the case is scheduled for Tuesday.

National security questions

Meanwhile, Brockman is seeking access to national security information that he claims helped fellow billionaire Robert Smith avoid prosecution in exchange for his cooperation against Brockman.

Brockman asked a federal judge on Tuesday for a non-public hearing under the Classified Information Procedures Act to discuss the “probable existence” of material about Smith that could aid Brockman at trial. Brockman initially invested at least $1 billion in Vista Equity Partners, where Smith is CEO.

Brockman has pleaded not guilty to charges that he hid $2 billion in Vista proceeds from the Internal Revenue Service. Smith avoided prosecution after admitting he hid more than $200 million in Vista income, agreeing to pay $139 million in back taxes and penalties and cooperating in investigations of Brockman and others. Both men used similar networks of offshore entities, nominees and secret foreign bank accounts to hide income.

Bloomberg News reported on Feb. 3 that Smith’s cooperation and his involvement in an unspecified national security matter contributed to the decision by then-Attorney General William Barr to forego an indictment and allow him to enter a non-prosecution agreement.

Citing the article, Brockman’s filing noted the matter was deemed sufficiently important that it involved the former head of the Justice Department’s tax division, Richard Zuckerman, and the current head of the national security division, John Demers.

“According to the Bloomberg Article, ‘[l]ate in the game, facing an imminent indictment, Smith agreed to cooperate against Brockman’ and thereby secured his ‘stay-out-of-jail card,’” Brockman’s lawyers said in the filing.

“It appears the intelligence community had a motive to protect Smith and his involvement in a national security matter,” the filing said. “The means to offer this protection was to shift culpability from Smith to Mr. Brockman, which former Attorney General Barr facilitated.”

Brockman’s attorneys wrote to prosecutors on Feb. 9 about the potential existence of classified material relevant to his case, according to the filing. They asked prosecutors to collect and preserve “all communications and notes of communications between Smith’s lawyers and DOJ” as well as “Smith’s contacts in the intelligence community regarding Mr. Brockman, Vista Equity Partners, and any other subject matter related to the DOJ’s tax investigation.”

In a response on Feb. 10, a prosecutor said his team was working with the Justice Department’s National Security Division “to take the appropriate action.” He also said, without explanation, that some of the information in the article “is not accurate.’”

A spokesman for the DOJ didn’t immediately respond to a request for comment. Spokesmen for Smith, Vista and Brockman declined to comment.

Prosecutors aren’t objecting to Brockman’s request for a court hearing on the classified information, according to the filing. Brockman’s lawyers seek exculpatory material that may help Brockman’s defense, including information to use in a cross-examination of Smith, if he testifies at trial should it take place.

Lindsay VanHulle of Automotive News and Bloomberg contributed to this report.

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