By Katy Stech From stream wsj

William H. Millard, once one of America’s wealthiest chief executives at the helm of the ComputerLand Corp. retail chain, has sought creditor protection in the U.S.

William H. Millard, once one of America’s wealthiest chief executives at the helm of the ComputerLand Corp. retail chain, has sought creditor protection in the U.S., telling a New York bankruptcy judge that he’s not a notorious tax fugitive but the target of a decades-old vendetta from lawmakers on the Pacific island of Saipan.

The 80-year-old entrepreneur, a college dropout who grew ComputerLand throughout the 1970s and 1980s, has been portrayed as a Cayman Islands tax exile who, with his wife Patricia, has managed to dodge a 1987 tax bill that’s climbed past $118 million. In papers filed last week with the U.S. Bankruptcy Court in Manhattan, Millard said he faces more than $62 million in debt, largely owed on taxes, while his net worth has dwindled to $46 million.

Millard paints himself as a victim of political corruption that he discovered in the late 1980s after leaving ComputerLand. He moved to Saipan to protect his wealth using a generous tax incentive that island leaders once promised to U.S. citizens who relocated there. In fact, Millard said in court papers, the outstanding tax bill came as a surprise to him two years ago.

“Had we been aware of the [tax collection] proceedings we would have contested them,” Millard said in court papers, asking the New York court to shield his U.S. assets pending a Cayman Islands bankruptcy proceeding. “Despite our efforts to challenge the default judgments there has not yet been any determination on the merits as to whether they are valid.”

Millard’s story, as told in court papers, contrasts with the picture painted by private investigators who said they’ve spent years chasing his far-flung assets across the globe. When they finally located the Millards at their Cayman Islands home three years ago, one of the investigators told The Wall Street Journal that his network of shell companies, trusts and bank accounts to be one of the most “sophisticated and complicated” he’d ever seen.

But in their own words, the Millards’ story goes like this:

“After we moved to the island we became heavily involved with the local society and invested significant resources towards improving living conditions for its residents; we also invested in property and began construction of a home there. Unfortunately it did not take long for us to become aware of extensive corruption by public servants of the [Commonwealth of the Northern Mariana Islands]. We became vocal opponents to the corruption and we were contacted by the Federal Bureau of Investigation to assist them with its investigation into corruption within the [islands’] government. We cooperated with the FBI and this became public information both in the [commonwealth] and in the United States; as a result of media reports confirming my assistance to the FBI, and willingness to testify before a grand jury, we became subject to significant harassment and threats of violence.”

Island lawmakers later passed the Tax Source Act of 1987, which the Millards’ attorneys stated in court papers was nicknamed the “Millard Bill,” and “specifically targeted the Millards and was intended to prohibit them from receiving the [tax] rebate or any other tax benefits.”

Unaware of the changes, the couple sold their shares of a ComputerLand affiliate for $76.8 million, court papers said. The couple filed their taxes in 1988, each reporting a net long-term capital gain from the stock sale, taking into account what was essentially a 95% rebate of the taxes they would have owed under U.S. law, according to court papers.

Tax authorities who later contacted the Millards’ attorney to say they owed more money on account of the tax changes appeared to resolve the issue, they said in court papers.

But the tax debt remained even after the Millards left Saipan for the Cayman Islands after receiving death threats related to the purported FBI investigation. In 1994, the island got a tax judgment against Millard and his wife for $36 million from the U.S. District Court in the Northern Marianas, though tax officials didn’t try to collect that money right away.

“We were never served with the default judgments nor were we made aware that they had been obtained,” Millard said in bankruptcy-court papers.

They said they found out about the island’s tax collection efforts in 2011 when a bank accidentally revealed to the couple that private investigators were on their trail. The couple has since filed a lawsuit in federal court in Florida to get rid of the judgments.

Earlier this year, a judge in that case blocked the Millards from transferring assets among shell entities or their daughters, and they were told to provide sworn answers to various questions relating to their assets across the world, according to court papers. At a hearing set for May 20, island officials were prepared to ask for a court order “directing turnover of the [their] assets,” according to court papers.

On May 16, the couple sought Chapter 15 protection in the New York bankruptcy court to put the legal proceedings in Florida on hold while a bankruptcy judge determines the best course of action.

The Chapter 15 case is meant to supplement a May 10 request for bankruptcy relief filed in the Cayman Islands, according to court papers.

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