Tycoon allegedly owes $118M

A man once listed as among the richest people in America and who owes the CNMI government over $118 million in unpaid income tax plus interest on judgments has been tracked down with the help of a New York-based law firm that the Fitial administration tapped in 2010 in hopes of collecting what’s owed to this U.S. territorial government.

If the CNMI government succeeds in collecting the over $118 million in unpaid taxes from ComputerLand Corp. retail chain founder William H. Millard, then this money will help the Commonwealth’s shrinking economy.

The over $118 million reportedly owed by Millard and his wife Patricia in unpaid taxes is even higher than the CNMI government’s budget of $102 million in fiscal year 2012 starting on Oct. 1.

The Millards lived on Saipan for years during which time they sold their interests in ComputerLand for over 200 million.

They left in August 1990 and their whereabouts have been unknown, until recently when the CNMI government’s lawyers and investigators tracked Millard and his wife on Grand Cayman Island in the western Caribbean.

Gov. Benigno R. Fitial and Lt. Gov. Eloy S. Inos announced yesterday that the government initiated proceedings in the U.S. District Court of the NMI against Willard and his wife Patricia Millard in relation to a $118,043,5353 CNMI income tax claim.

The Fitial administration tapped New York-based Kobre & Kim in 2010, to lead the case in going after the Millards to collect the unpaid taxes.

Press secretary Angel Demapan, when asked for comment, said “due to the complexity of this case, the administration sought to acquire the services of a law firm with a distinct background in tax debts and international affairs.”

“Hence, the administration acquired the services of Kobre & Kim by way of retainer that will be based on the outcome of this case,” Demapan told Saipan Tribune.

Millard has also been tagged as one of the world’s most elusive tax exiles.

In a statement yesterday, the Fitial administration said court documents filed by the CNMI indicate that the Millards were the founders and majority shareholders of ComputerLand Corp., a company owning and operating a chain of retail computer stores.

The Millards briefly resided in the Commonwealth during which time they sold their interests in ComputerLand for over $200 million.

On subsequent tax returns filed by the Millards, they claimed use of the reduced income tax rate available to residents in order to lower the tax on gains from the sale of ComputerLand stock.

However, the Fitial administration said Commonwealth law specifically precludes use of this reduced income tax rate on assets acquired prior to establishing residency.

In July 1994, the Commonwealth obtained judgments against Millard in the amount of $18,317,980.80 and against his wife in the amount of $18,318,113.41 for a grand total of $36,636,094.21.

With the accumulation of statutory interest the total value of these two judgments has increased to the current value of $118,043,535.

Fitial said the “reduced tax rate available in the Commonwealth is designed to facilitate investment; not avoidance of liability that occurs prior to establishing residency.”

“The Millards should have paid the initial $36 million in income tax liability when they realized the gain on their stock sale; instead they chose to ignore the tax authority of the Commonwealth,” the governor said.

Fitial said his administration has been trying to enforce this liability, “but until recently, we were unable to identify the location of the Millards.”

“The Commonwealth intends to enforce the tax delinquency assessment that was established in 1991 against all of the property of any nature belonging to Mr. and Mrs. Millard. Information has been obtained that the Millards are currently residing in the Cayman Islands and we have requested the assistance of the Cayman Island government in enforcement of our tax claim,” he said.

‘When Millard was here’

Rep. Froilan Tenorio (Cov-Saipan) said yesterday that when he ran for governor the first time in 1989, he was meeting with Millard’s lawyer he remembers as Terry Giles, to try to settle Millard’s tax problems with the CNMI government at the time.

“The first time I ran for governor, I was working to settle the tax problems. I was meeting with his legal counsel, Mr. Giles. But I lost that election to Larry Guerrero. When I ran again for governor and won, he (Millad) was gone,” Tenorio told Saipan Tribune.

Tenorio was CNMI governor from Jan. 10, 1994 to Jan. 12, 1998. He also served as CNMI House speaker but stepped down early this year to become just a member of the House.

He said had he won the gubernatorial election the first time, he would like to think that the government would have gotten something from Millard in unpaid taxes.

Tenorio said he never personally met Millard when he was living on Saipan.

Manny Borja, a consultant for Tenorio, separately said yesterday that he’s the one who has been taking care of Millard’s “castle” on the eastern side of Saipan.

That structure is built on a property owned by a Tudela family, said Borja.

“I believe there’s still 28 years left on the lease. It’s been paid a long time ago,” Borja told Saipan Tribune.

When that lease expires, the property and the structure would go back to the land owner, he added.

Borja said since the Millards left Saipan, the castle had been vacant. He said a Filipino man used to take care of the Millards’ house but when that man died, Borja said he sent the man’s remains to the Philippines.

He said he was asked to oversee the Millards’ place, and was told he’d be paid $10,000 a month although that monetary promise never materialized. Borja said the last time he talked to Millard was sometime in 1993.

“I was not even sure if it was him because a caller would use a wine’s name, ‘Paul Masson’,” he said.

The Millards’ castle is now being used by the Marianas Christian Church, said Borja, rather than remain vacant and deteriorate.

“They are using the place for free,” he added.

Senate President Paul Manglona (Ind-Rota) said while he didn’t personally meet Millard when he was living here, he heard some things about him.

He said Millard attended or testified at a CNMI House of Representatives’ hearing on corruption in government, and that hearing could have been caught on video.

Millard also reportedly made a speech before business leaders and complained that certain officials were always asking him for bribes, a piece of information that’s also mentioned in a recent Wall Street Journal article.

The Wall Street Journal, in a Sept. 10, 2011 article, traced how Millard’s whereabouts were tracked by Kobre & Kim and a small army of private investigators that the CNMI government hired.

That article quoted Michael Kim, a partner of Kobre & Kim, as saying that Millard’s establishment of a network of over 50 shell companies, trusts, and bank accounts “is one of the most sophisticated and complicated cases of offshore asset restructuring that we have ever seen.”

A copy of that article is available at http://online.wsj.com/article/SB10001424053111904900904576554832511658872.html?KEYWORDS=Northern+Marianas.

$50M in pursued tax claims

Fitial said the tax collection effort against the Millards represents another step that his administration has been taking “to increase revenues through enforcement of long-standing tax claims.”

He said in the past 24 months, the administration has been able to bring in an additional $50 million by pursuing tax claims that had been dormant for many years.

From having an annual government budget of $200 million, the CNMI now has an annual budget that’s almost cut to half.

Fitial’s FY 2012 proposed budget to the Legislature is only $102 million, further down from the revised $122 million budget for FY 2011.

Because of limited cash collection, the government has to resort to 16-hour pay cuts biweekly for so-called non-critical government employees and unpaid holidays. Most of the affected employees also have to deal with delayed payrolls since June 2010.

The administration and the House of Representatives have been looking at developing a casino industry on Saipan to revitalize the economy especially after the demise of the garment industry. But legalizing casino gambling is something that Saipan’s voters twice rejected, the latest one in 2007. Its proponents, however, said the dismal economic conditions, unemployment, and rising living costs should give the casino industry a chance.