This fellow has been mentioned before on Pen-L.
From the Berkeley Daily Planet 1/29/08
Feds Say Teece Must Pay $12 Mil for Tax Dodges
By Richard Brenneman (01-29-08)
David J. Teece, the UC Berkeley professor and until recently perhaps
Berkeley’s richest private landlord, used illegal tax dodges and owes
Uncle Sam millions, says the IRS.
And the agency is taking him to tax court—again.
But this time, he raised eyebrows at Forbes Magazine, prompting writer
Janet Novack to remark, “An adverse outcome in the cases could hurt
Teece’s credibility as a highly paid witness and provide fodder for
hostile cross-examiners.”
The feds want $12 million in back taxes and penalties, alleging the
internationally famous business maven claimed $21 million in bogus
short-term capital losses in 1998 and 1999, according to the Forbes
account.
In addition to holding the Thomas W. Tusher Chair in Global Business
at the university’s Haas School of Business, Teece is founder,
director and vice chair of LECG Corporation (the initials stand for
Law and Economics Consulting Group.)
The firm provides expert witnesses, and Teece’s expert submissions
have been cited in decisions issued by the U.S. Supreme Court.
The New Zealand-born economist also served as a member of the Atlas
Group’s board of directors and as a trustee of Atlas Insurance Trust.
Atlas was the brokerage arm of Golden West Financial, which owned the
Atlas Funds and World Savings. Both have since been acquired by
Wachovia Corporation, ending Teece’s tenure.
Among his New Zealand-based investments, Teece holds major interests
in investment funds and is the founder of Canterbury International,
Australasia’s leading purveyor of rugby uniforms. He is named in a
separate IRS tax case against Canterbury Holdings LLC, its American
subsidiary.
But to Berkeley residents not affiliated with the university, he has
left his biggest mark on the city as partner with Patrick Kennedy in
the Gaia Building and other downtown apartment buildings recently sold
to a company controlled by an even richer landlord, Sam Zell’s Equity
Residential.
Just how much of the $140 million-plus sales price Teece will reap
remains an open question.
On Nov. 27, he signed a seven-year retention agreement with LECG
guaranteeing him payments of $10 million divided between the last
quarter of 2007 and the first quarter of the new year. The pact also
allowed him to sell some of his previously restricted stock in the
company.
According to records filed with the Securities and Exchange
Commission, between Jan. 14 and Jan. 24, Teece sold 470,500 LECG
shares for a total of $6,643,800.
While Teece has yet to return a call from this paper, he granted an
interview to the Wall Street Journal last March in which he
acknowledged that 60 LECG consultants were making more than $500,000 a
year each.
The experts, who include people with powerful political connections in
both parties, are consulted by leading companies around the globe.
In 2006, according to LECG Corporation’s latest annual report, Teece
earned $3,519,258 in fees in addition to his other earnings from the
company.
An examination of tax court filings in San Francisco shows that Teece
and spouse Leigh G. Teece were named in an action filed last Aug. 15
and served two days later.
The couple was also named in an IRS tax claim filed Sept. 14, 2004 and
dismissed four months later because the allegations it raised had been
covered in a still earlier action.
Canterbury Holdings LLC. was named in three actions filed in 2004 and
a fourth case filed July 21, 2006.
According to Forbes, the most recent case against the Teeces alleges
that Teece used partnership, options and stock in Germany’s Deutsche
Bank to manufacture tax losses and shield his other income from
federal taxes.
A 2007 estimate printed in New Zealand—where he still owns a home and
visits frequently—estimated his net worth at $94 million.
Asked about the federal tax claims, David Roth, Teece’s Beverly Hills
tax lawyer, said, “We have no comment.”
The company’s stock, which trades on the NASDAQ exchange, was selling
for as much as $17.87 on Nov. 9 but closed at $12.43 Monday.
Dona Spring, the Berkeley City Councilmember whose district houses
most of the buildings created by the Teece-Kennedy partnership, said
that if the allegations are true “he needs to pay it back.”
“That could help pay for some of the deteriorating streets, storm
drains and schools,” she said, adding, “I wonder if, if it’s true,
whether the local politicians who made money from his fund raisers
will return it?” Recipients of Teece contributions include President
George W. Bush, state Senator Don Perata, former Berkeley Mayor
Shirley Dean and Berkeley Councilmember Gordon Wozniak.
