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Famous self-employed engineer Anthony Levandowski was forced to declare bankruptcy last year after losing a legal battle with Google over allegations that he stole trade secrets on behalf of Uber. Uber is now opposing the proposed terms of his bankruptcy, arguing that he used legally dubious techniques to protect his wealth from creditors.
Levandowski faces a skeptical bankruptcy judge. “I continue to see many of the transactions in which Mr. Levandowski was involved immediately prior to the filing of this bankruptcy case with an incredibly jaundiced eye,” Judge Hannah Blumenstiel said during a telephone conference last week.
Levandowski received tens of millions of dollars in compensation from Google in 2015 and 2016 for his work with autonomous driving technology. In October 2016, Google initiated an arbitration process to recover the money, arguing that Levandowski had stolen Google’s trade secrets when he walked out the door. Uber claims that Levandowski then took a series of measures to make it difficult for Google, Uber or other creditors to get their money back.
Among the transactions that drew Uber’s ire: Levandowski used a donor-advised fund to channel $ 175,172 to Way of the Future, an AI “church” that Levandowski founded in 2017. The church received a detailed article from our sister publication Wired in 2017. At the time, Levandowski said he would not receive any salary from Way of the Future.
The focus of Uber’s objection is Levandowski’s request that the courts protect $ 17.2 million from creditors in a Roth IRA. Tax legislation limited Roth IRA’s contributions to $ 5,500 a year when Levandowski opened it in 2016 – a figure that has since increased to $ 6,000. So how did he accumulate $ 17.2 million in five years?
According to Uber, Levandowski deposited $ 4,326 in cash around April 2016 and used the money to buy 4,326,000 Otto Trucking shares at a price of 0.1 cents per share. When Uber acquired Otto, those shares were worth millions of dollars. Uber says Levandowski sold half of them for $ 11.9 million, keeping the money within the IRA. He sold the rest of the shares to his partner, Robert Miller, in exchange for a $ 5.3 million promissory note.
Retirement accounts are often protected from creditors in bankruptcy proceedings. But Uber argues that this rule should not be applied here because Levandowski violated several IRA rules when setting up the account. Tax law requires that IRA money be used for distance investments. Uber argues that investing in Levandowski’s own company does not qualify.
Uber says Levandowski has also taken other measures to protect its assets from creditors. For example, in 2017, he bought a house for his father and stepmother for $ 949,000. He then “sold” back to his stepmother for $ 720,000. Instead of paying cash, she gave him an unsecured promissory note with an initial payment due in 2048, which effectively allowed her to live in the house without paying rent for 30 years.
According to Uber, Levandowski invested $ 250,000 in a company founded by his fiancee on March 4, 2020, the same day he filed for bankruptcy.
In addition, Uber says Levandowski has lent more than $ 10 million to entities controlled by his longtime college friend and business partner Randall Miller. He channeled millions more to his new autonomous startup, Pronto.ai.
Uber asked Judge Blumenstiel not to accept Levandowski’s claim that he needed $ 17.2 million in his IRA to support himself in retirement. Uber pointed out that Levandowski has more than $ 400,000 in more conventional retirement accounts that are likely to be protected in bankruptcy. Even if his many other assets are destroyed in the bankruptcy process, the company argued, the 40-year-old’s skills as an engineer and manager should allow him to earn a good living over the next 20 years.