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Founder of Americans Elect used tax shelter scheme

LetsBreakThrough/YouTubePeter Ackerman speaks at the Breakthrough Inspiration Awards 2010 gala.

The businessman behind an ambitious effort to field an alternative, nonpartisan presidential candidate has paid millions of dollars in delinquent taxes and penalties for his part in an alleged tax shelter scheme, records and interviews show.

Originally slapped with a $150 million tax bill by the IRS, investor Peter Ackerman resolved his tax disputes in June in an undisclosed settlement with the U.S. Justice Department. Ackerman is the founding chairman and president of Americans Elect, the fledgling political group he has seeded with at least $1.55 million.

Yesterday, Americans Elect began turning in 1.6 million signatures to become officially recognized as a political party on the California ballot in time for the 2012 presidential election. The organization plans to nominate a centrist, split-party ticket through an Internet vote in which any registered voter can participate.

The United States Tax Court ruled in 2005 that Ackerman was involved in a tax shelter, and the IRS determined that he owed $150 million. Another tax court ruling in 2009 found that he owed an additional $2.6 million and that his testimony in that case was not credible. Ackerman appealed both cases.

James Joseph, an attorney who handled Ackerman's federal cases, said the disputes have "nothing to do with an unwillingness to pay his fair share."

"Those disputes were resolved in a way that Peter did get some money back but he still did pay some huge amounts," said Joseph. "All of Peter’s issues with the IRS are now resolved. There's lots of people who have lots of disputes with the IRS. He pays very large amounts of taxes. That’s just the fact of someone being wealthy."

Americans Elect declined an interview request. Ackerman did not return phone calls.

The 2005 tax court opinion [PDF] found that Ackerman and his business partner had shifted $1.7 billion in tax losses from European banks to a California company. Ackerman’s lawyer argued at the time that they were trying to set up a legitimate business.

The judge ruled that the arrangement was a tax shelter because it "had no economic substance, its only purpose being to transfer built-in tax losses." The result was Ackerman received a much bigger tax deduction than he should have claimed, the court ruled. “These claimed losses passed through for the primary benefit of Mr. Ackerman,” it said.

Ackerman ended up "getting a check from the government ... for nothing," said Darryll Jones, associate dean of Florida A&M University College of Law, who wrote an article analyzing the case. "Everybody was making out like bandits except for us. Working people – we are the ones who are getting ripped off."

Based on the ruling, the IRS found that Ackerman owed more than $150 million. Ackerman paid it, but appealed. An initial settlement with the government returned $29 million to Ackerman, but he kept fighting in court, causing the government to sue back.

In a separate dispute, the U.S. Tax Court ruled [PDF] in 2009 that Ackerman and his wife had taken inappropriately large business deductions and owed the government another $2.6 million. The judge found Ackerman’s testimony “questionable, self-serving, and/or evasive.”

Ackerman appealed that decision as well, eventually settling all his cases in June.

"Peter has lots of investments. They are very complex," said Joseph, Ackerman's attorney. "He’s accepted the settlement and paid the taxes that they owed whether he agrees with them or not."

Ackerman also fought another tax dispute in California stemming from his work in Beverly Hills as a top aide to former “junk bond king” Michael Milken in the 1980s. As part of the massive financial scandal of the time, Ackerman was sued for allegedly misappropriating and diverting investments. He settled by paying back $73 million, court records show.

Ackerman sued the Franchise Tax Board in 2003 to get back $5 million in state taxes he paid on the income that he ended up giving back in his settlement. He lost his appeal [PDF] in 2005.

Ackerman’s lawyer at the time also hired a Sacramento lobbyist to get a bill introduced that would change state tax law. A Senate Revenue and Taxation Committee analysis noted that the bill, introduced in 2005 by state Sen. Bob Dutton, R–Rancho Cucamonga, appeared to solely benefit Ackerman, at a cost of $5 million to the state. The bill went nowhere.

Americans Elect websiteThe website of Americans Elect also asks, "What if there were a better way to choose our president?"

Over the years, Ackerman has invested in companies that do online grocery delivery, marketing services and Pokémon card manufacturing, among others. He’s also built a reputation as “one of the world’s leading authorities on nonviolent conflict,” as his International Center on Nonviolent Conflict calls him. A receptionist at the Center, which Ackerman founded and funds, recently answered the phone as “Rockport Capital,” Ackerman’s investment firm.

The center put out a statement this year in response to a blog post that tied Ackerman to the Milken scandal. “No allegations of wrongdoing have ever been made about Peter Ackerman or his work,” the statement said.

Ackerman has donated to Democrats and Republicans, including Barack Obama’s 2008 campaign and Carly Fiorina’s unsuccessful campaign to unseat Sen. Barbara Boxer. In 2008, he also backed Unity08, an effort similar to Americans Elect. Ackerman’s son, Elliot Ackerman, a decorated veteran of the wars in Iraq and Afghanistan, is the group’s chief operations officer.

Ackerman's donations of $1.55 million to Americans Elect are the only contributions disclosed publicly before the group changed its status to a nonprofit that is not required to disclose its funding. Ackerman initially formed Americans Elect as a 527 organization in 2010 along with Kahlil Byrd, who has done communications work for Massachusetts' Democratic governor and a Republican Senate candidate.

The group "in no way speaks with one voice," said David King, a member of Americans Elect's advisory board and a lecturer at Harvard's Kennedy School of Government. "I do not for one second think it’s a stalking horse for one particular candidate or for one particular set of interests," he said.

Any criticisms of Ackerman will likely be eclipsed by what voters think of the eventual Americans Elect candidate, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California. Either way, Americans Elect has a rough road.

"The two major parties are not good at a lot of things, but they are particularly talented at maintaining their duopoly over the election process," Schnur said. "Anything's possible, but it seems like an effort like this is more likely to succeed once there’s a particular compelling issue or policy challenge to push it forward, and it’s not clear right now what that’s going to be."


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