Finding Millard=Filling Coffers?

September 12, 2011

Millard mansion in Saipan. Photo from WSJ
Interesting stories from the Wall Street Journal to CBS News to the Saipan papers concerning "finding" millionaire William Millard, once owner of Computerland.  In the 1980s Millard brought his family and his "assistant" Lynn Knight to settle in the CNMI to take advantage of the tax code. An August 1986 story from the Los Angles Times reads:
Millard's agents insist to this day, that the Marianas tax laws offered what a congressional staff member calls "the best deal under the American flag"--a promised 95% rebate of income or capital-gains taxes that would be owed under the federal tax code. The idea of the Marianas Legislature's rebate plan, which took effect last year, is to encourage investment.

"Basically, if you're in the 50% bracket, your effective tax rate is 2 1/2%," the congressional staffer said.

For Millard, it was such an attractive package that he moved his family to Saipan, bought a house and started looking for ways to be a helpful local citizen. He wanted to upgrade the local power utility, for example. He also bought more than 100 acres overlooking lovely Laulau Bay and, according to Knight, planned to spend more than $50 million developing the site.
It appears that the CNMI Legislature saw Millard as a piggy bank (much like the CNMI government views the federal government) and decided to overhaul the tax laws to get some of the millionaire's cash after he sold his shares of Computerland for over $200 million.  Fitial is going after the taxes from that sale with the help of an expensive law firm that he hired in 2010, and according to the Wall Street Journal, "an army of private investigators."

From the Wall Street Journal:
In August 1990, the Millards left Saipan. 
The following year, the Northern Marianas' tax department issued a deficiency notice to the Millards and their attorneys in the U.S., according a commonwealth filing in federal courts in the U.S. Mr. Giles, the former lawyer for Mr. Millard, said he never received such a notice. 
"Bill paid his taxes in the Marianas on time and in full based on the tax code. They changed the law or made up some reason retroactively to try to chase Bill off the island," Mr. Giles said. 
In 1994, the commonwealth obtained a tax judgment against Mr. Millard and his wife for $36 million in U.S. District Court in the Northern Marianas.
Millard and his family left the CNMI in 1990 to places unknown around the time that the tax laws were revised. It appears the only things he left behind were his mansion on the hill and his assistant, Lynn Knight who would later become one of Governor Fitial's most prized defenders.

There is more to this story. In 1987 Millard accused CNMI officials of demanding bribes from him and vowed to cooperate with federal officials. Some say that he didn't leave Saipan because of tax obligations, but because he received death threats for threatening to expose corruption and outing some shady some local politicians.

The papers report that in 2010 Governor Fitial hired the law firm of Kobre and Kim to track down Millard to collect back taxes of $36 million that reportedly has ballooned to over $118 million after adding interest.  How much did this detective work cost the CNMI government?  The Independent describes this as an elaborate mission:
The story of how CNMI officials tracked him down reads like a spy novel. A private investigator staking out one of his daughters in Florida saw him taking an afternoon stroll in her garden, after a Christmas meal last winter. He was tailed to the airport, monitored as he boarded a flight to Grand Cayman, and then tailed again on arriving in the Caribbean.

And this year, the law firm Kobre and Kim has been doing some equivalent private eyeing in the financial sphere, laying subpoenas on banks believed to have done business with Mr Millard – and stipulating that they keep the existence of the subpoenas quiet from their client, so as to prevent him moving his money around.

Kobre and Kim's cover was blown earlier this year after what JPMorgan Chase says was a clerical error, but now court cases in the US and, soon, abroad will put public pressure on Mr Millard to turn over his assets. As Michael Kim, a partner at Kobre & Kim, has noted, people don't give up $100m without a fight.
I agree everyone should pay their fair share of taxes. (That includes people in U.S. territories who pay no federal taxes, yet rake in millions of federal taxpayer dollars.)  Still, there is something disengenuous about a government that raises little revenue and depends on the federal taxpayers for handouts, changing their tax code to reap in money from a millionaire.

The CNMI government should use the same enthusiasm and effort to collect the outstanding tax debts owed by Tinian Dynasty and other businesses that are right there in the CNMI. It looks like the CNMI government sees Millard as an easy way to solve their financial woes.  His alleged debt is more than the annual CNMI budget of $102 million.

The best quote in the WSJ story has to be this one:
A few years ago, Mr. Fitial says, he pushed to start a search for the family. "The actions by the Millards in these proceedings seemed to reflect an attitude of arrogance that their wealth allows them to disregard the laws of small government," the governor said.
It is hard to feel sorry for the CNMI government when it only goes after those who it expects to profit from and ignores the crooks who steal money routinely from foreign workers every single day.  If truth be told, Governor Fitial, who called Millard arrogant may just be the most arrogant man in the CNMI.  How many laws has Fitial disregarded or dismissed with his Cheshire cat smirch? If karma comes into play here the governor won't collect a dime.


The Saipan Blogger said...

The tale you weave is true. Just think, if instead of trying to rip off this one guy, the CNMI had worked to attract 10 or 100 other like him, the islands would be in much better shape.

Anonymous said...

Retroactive tax increases? Why don't we just kill all off-island investors and hang their bodies up at the airport? We could hang signs on them that say: "I am a criminal. I invested in the CNMI."

Anonymous said...

This is not a criminal case, it's based on a civil suit. Good luck collecting. The NMI should raise some revenue the old fashioned way, with taxes.

Anonymous said...

Why do you put "assistant" in quotations regarding Lynn Knight? Lynn is a bright, focused professional who has done wonders in the CNMI. Show some respect please.

Wendy Doromal said...

Read the article. It calls her Millard's "assistant". The article was quoted.

TAGLISH said...

CNMI officials ignore to live by the golden rule. "Don't treat others in ways that you don't like to be treated."Karma is on the horizon!

It's not your money! said...

The NMI doesn't need more tax money, it needs fewer do- nothing, no-show, political hires.

Anonymous said...

This is interesting info. Scuttlebutt says Millard and Larry Hillbloom (sp?) of DHL fame had a ongoing oneupmanship battle during the early 1990's. Larry had more pull with the CNMI legislature than Millard and sabotaged him at every turn he made. I find the Lynn Knight connection interesting too. I never knew how she got out into the CNMI.

The Saipan Blogger said...

The Millard/Hillbloom scuttlebutt is documented in that documentary about Hillbloom. have you seen it?

Wendy Doromal said...

Hi Angelo, No, I didn't know there was a documentary. Do you have it? What's the name of it?