EA, 3DO founder owes $20 million in back taxes - Report

Trip Hawkins is in trouble. According to Forbes, the Electronic Arts founder has lost his court battle to erase a California state and federal tax bill totaling over $20 million. Last week, US District Judge Jeffrey White upheld a previous bankruptcy court ruling that said that Hawkins continued to spend lavishly on his personal lifestyle even though he knew he was facing a massive tax obligation.

Court records showed that in 2005, Hawkins claimed monthly expenses of $94,900, which included $40,550 in undefined "other expenses." In October 2004, Hawkins and his wife also purchased a Cadillac Escalade for nearly $70,000, despite already having three cars in the two-driver household.

Hawkins' whopping tax bill stems from the 1990s, when he allegedly used complicated offshore tax shelters to conceal income. The bulk of this income came from selling his ample stock in EA, which he founded in 1982, in part so he could raise funds for his 3DO console company. Released in 1993, the 3DO would go on to become a failure, being discontinued in late 1996. (The company held on as a software publisher until 2003.)

From 1996 to 2000, Hawkins claimed $56 million in business losses via his tax shelters and the 3DO Company. In 2001, the IRS began cracking down on the type of shelters that Hawkins used, called FLIP and OPIS shelters. As a result, the IRS audited Hawkins, leading to his current predicament.