A federal district judge has ordered Trip Hawkins, the founder of video game giant Electronic Arts, to pay over $20 million in delinquent federal and California state income taxes.
Hawkins had wanted to erase the tax obligations by declaring personal bankruptcy, but U.S. District Judge Jeffrey White rejected that attempt, according to Forbes.com. Hawkins had tried to use tax shelters to safeguard his EA profits from being taxed. Hawkins co-founded EA in 2002 and it went on to create blockbuster games like John Madden Football. But in a 16-page opinion, the judge wrote that Hawkins realized he was insolvent after the IRS disallowed his tax shelters. Hawkins had use tax shelters with exotic names such as FLIP and OPIS that were marketed by KPMG and were later disallowed by the IRS. Nevertheless, Hawkins continued to spend his money lavishly despite knowing that he owed between $20 million and $25 million to the IRS and the California Franchise Tax Board. That included the purchase of a fourth car, a Cadillac Escalade, worth about $70,000.
“Hawkins planned to defeat his taxes via bankruptcy and continue living the lifestyle to which he had grown accustomed,” the judge wrote.
Hawkins and his wife declared bankruptcy in 2006 after his second gaming company, 3DO, went bankrupt in 2003. Hawkins is currently chief executive of another gaming company, Digital Chocolate.
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