Uber: bankrupt engineer Levandowski hides millions of dollars from creditors

Famous freelance engineer Anthony Levandowski was forced to file for bankruptcy last year after losing a legal battle with Google over claiming to steal trade secrets on behalf of Uber. Now Uber is opposing the proposed terms of its bankruptcy, arguing that it used legally questionable techniques to shield its fortune from creditors.

Levandowski faces a skeptical bankruptcy judge. “I continue to see many deals that Mr. Levandowski engaged in immediately before the filing of this bankruptcy case with an incredibly yellowish eye,” Justice Hannah Blumenstiel said on a conference call last week.

Levandowski received tens of millions of dollars in compensation from Google in 2015 and 2016 for his work on autonomous driving technology. In October 2016, Google initiated an arbitration process to recover the money, claiming Levandowski stole trade secrets from Google on the way out. Uber alleges that Levandowski then took a number of steps to prevent Google, Uber or other creditors from getting their money back.

Among the deals that angered Uber: Levandowski used a donor-advised fund to funnel $ 175,172 to Way of the Future, an AI “church” founded by Levandowski in 2017. The church has received a detailed article from our sister publication Wired in 2017. At the time, Levandowski had said he would not receive any salary from Way of the Future.

Uber’s objection focuses on Levandowski’s claim that the courts protect against creditors of $ 17.2 million in a Roth IRA. Tax law limited Roth IRA contributions to $ 5,500 per year when Levandowski opened it in 2016 – a figure that has since risen 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 that money to buy 4,326,000 shares of Otto Trucking 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 it for $ 11.9 million, keeping the money inside the IRA. He sold the remainder of the shares to his trading 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 apply here because Levandowski violated several IRA rules when creating the account. Tax law requires that IRA money be used for arm’s length investments. Uber contends that investing in Levandowski’s own company is not eligible.

Uber says Levandowski has taken other steps to protect its assets from creditors as well. For example, in 2017, he bought a house for his father and stepmother for $ 949,000. He then “sold” it to his stepmother for $ 720,000. Rather than paying in cash, she gave him an unsecured promissory note with a lump sum payment that is due in 2048, allowing him to live in the house rent-free for 30 years.

According to Uber, Levandowski invested $ 250,000 in a business founded by his fiancee on March 4, 2020, the same day he filed for bankruptcy.

Additionally, Uber claims Levandowski has loaned more than $ 10 million to entities controlled by his college friend and longtime business partner Randall Miller. He channeled millions more to his new standalone startup Pronto.ai.

Uber urged Judge Blumenstiel not to accept Levandowski’s claim that he needed his $ 17.2 million IRA to support himself in retirement. Uber pointed out that Levandowski had more than $ 400,000 in more conventional retirement accounts that will likely be protected in the event of bankruptcy. Even as its various other assets are being stripped as part of the bankruptcy process, the company argued, the 40-year-old engineering and managerial skills should allow it to make a good living over the next 20 years.