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Eduardo Saverin Might Not Be Allowed Back In The U.S., According To Citizenship Law

The Huffington Post  |  By Posted: Updated: 05/17/2012 12:06 am

Eduardo Saverin

Facebook co-founder Eduardo Saverin might not be allowed to return to the United States.

Billionaire Saverin, who ditched his U.S. citizenship ahead of Facebook's mega IPO, is said to own a 4 or 5 percent stake in the social network. Bloomberg reported last week that he is moving to Singapore, possibly to slash taxes he might owe the U.S. government.

According to a U.S. immigration law highlighted by Talking Points Memo (TPM), Saverin might face difficulty re-entering the country due to the timing of his expatriation. From Sec. 212. [8 U.S.C. 1182] of the law, per TPM:

Former citizens who renounced citizenship to avoid taxation.-Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States is excludable

Facebook is seeking to raise as much as $18 billion in it what is expected to be the largest Internet IPO ever. Based on a regulatory filing the social network submitted to the Securities and Exchange Commission on May 16, the stock's planned price range is currently between $34 and $38 dollars per share; the company may be valued as high as $104 billion as a result. Bloomberg reports that Saverin likely saved himself $67 million in federal income taxes on his shares; the Times pegs his savings at $100 million or more.

A separate TPM post links to a document that one would have to file with the U.S. State Department's Bureau Of Consulate Affairs in order to relinquish citizenship. An item in that document also mentions possible exclusion of a person who has renounced citizenship in order to dodge taxes:

My renunciation/relinquishment may not exempt me from United States income taxation. With regard to United States taxation consequences, I understand that I must contact the United States Internal Revenue Service. Further, I understand that if my renunciation of United States citizenship is determined by the United States Attorney General to be motivated by tax avoidance purposes, I will be found excludable from the United States under Immigration and Nationality Act, as amended.

A spokesman for Saverin has emailed multiple media outlets to say that Saverin, who was born in Brazil, did not become a resident of Singapore to avoid taxes in the U.S. "Eduardo recently found it to be more practical to become a resident of Singapore since he plans to live there for an indefinite period of time," the spokesman wrote. "He still has very strong ties to Brazil and is extremely passionate about not only his homeland, but also the U.S."

Saverin told the New York Times in an interview, “I’m not a tax expert [...] We complied with all the known laws. There was an exit tax.”

An exit tax is applied to an expatriate's capital assets, including unsold stock. Forbes estimates that, even though Saverin settled up with the government before the imminent spike in the value of Facebook's shares, he probably paid nearly $500 million to leave the country.

While still a Harvard student, Saverin served as the first CFO of Facebook. He held that position from 2004 until Mark Zuckerberg and other execs muscled him out in 2006 and diluted his 34 percent stake in the company. Saverin established his current stake in the social network as a result of a settlement with Facebook in 2009. Exact terms of the settlement were not disclosed.

Also on HuffPost:

For a look at 6 people Mark Zuckerberg burned on his way to the top, check out the slideshow (below).
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  • The Winklevoss Twins

    The infamous Winklevoss twins have been giving Mark Zuckerberg grief ever since Facebook's launch back in 2004. The pair and a business partner (more on him later) commissioned Mark Zuckerberg to program a social networking site they had founded called ConnectU, but they later alleged in a lawsuit that Zuckerberg ripped off their idea and launched Thefacebook (later, Facebook) instead. After settling with the company for $65 million in cash and stock, the twins claimed that Facebook misled them about the value of the company's stock. They appealed the settlement <a href="http://www.huffingtonpost.com/2011/05/16/winklevoss-twins-appeal-denied-circuit-court_n_862758.html" target="_hplink">all the way up to the Ninth U.S. Circuit Court</a> -- just one appeal shy of the Supreme Court -- before <a href="http://www.huffingtonpost.com/2011/06/22/winklevoss-twins-facebook-lawsuit_n_882618.html" target="_hplink">throwing in the towel in June 2011</a>.

  • Divya Narendra

    Divya Narendra partnered with the Winklevoss twins on their ConnectU project during their time at Harvard. Narendra fought Zuckerberg in court alongside the twins and <a href="http://techcrunch.com/2010/05/21/connectu-co-founder-launches-professional-investment-community-sumzero/" target="_hplink">founded his own investor community, called SumZero,</a> before claiming his share of the $65 million settlement with the social network. A plotline in the film "The Social Network," which dramatized Facebook's founding, portrayed the Harvard students' working relationship and subsequent fallout with Zuckerberg.

  • Eduardo Saverin

    Here's another name you probably recognize from "The Social Network." The film portrayed Zuck's deteriorating friendship with Facebook co-founder and fellow Harvard student Eduardo Saverin, culminating in a blatant betrayal on the part of Zuckerberg that ended his working relationship with Saverin. <a href="a href="http://www.businessinsider.com/how-mark-zuckerberg-booted-his-co-founder-out-of-the-company-2012-5?page=1" target="_hplink"" target="_hplink">A new piece by Business Insider indicates</a> that Saverin may not have been as much of a victim. As noted by BI, Zuckerberg planned to cut Saverin out of the company because he had failed to secure funding or set up a business model and had used the social network to run free ads for Joboozle, a side-project Saverin had developed. (<a href="http://www.businessinsider.com/how-mark-zuckerberg-booted-his-co-founder-out-of-the-company-2012-5?page=1" target="_hplink">Business Insider also published emails and instant messages</a>, purportedly written by Zuckerberg, that shed light on the methods Zuck used to oust Saverin and dilute his shares in the company.) After a 2009 settlement with Facebook, Saverin retains an <a href="http://www.forbes.com/profile/eduardo-saverin/" target="_hplink">estimated five percent stake in the company</a>. (His original stake was higher than 30 percent.) He recently <a href="http://www.huffingtonpost.com/2012/05/11/eduardo-saverin-us-citizenship_n_1510099.html" target="_hplink">renounced his U.S. citizenship</a>, presumably to avoid the capital gains taxes on the profit he stands to make off Facebook's imminent IPO.

  • Sean Parker

    Napster creator Sean Parker, who also served as Facebook's first president, played a huge role in the development of the social network. <a href="http://nymag.com/news/features/mark-zuckerberg-2012-5/index3.html" target="_hplink">According to Henry Blodget's recent profile of Mark Zuckerberg</a>, Parker was also instrumental in securing Zuck's power over the company. However, <a href="http://nymag.com/news/features/mark-zuckerberg-2012-5/index3.html" target="_hplink">as Blodget explains</a>, despite Parker's contributions, Zuck and the company cut him loose a year after his arrival due to his "<a href="http://nymag.com/news/features/mark-zuckerberg-2012-5/index3.html" target="_hplink">party-boy ways</a>."

  • Owen Van Natta

    Zuckerberg also had a hand in the departure of Owen Van Natta, Facebook's former chief operating officer and the <a href="http://allthingsd.com/20080219/owen-van-natta-to-leave-facebook/" target="_hplink">mind behind big deals</a> like Microsoft's $240 million investment in the social network. "His greatest strength was deal-making, not management," <a href="http://nymag.com/news/features/mark-zuckerberg-2012-5/index3.html " target="_hplink">writes Henry Blodget</a>. "In early 2008, in the wake of the disastrous launch of an advertising product called Beacon, Facebook's senior team determined that the company needed a different kind of executive running the business." <a href="http://allthingsd.com/20080219/owen-van-natta-to-leave-facebook/" target="_hplink">AllThingsD's Kara Swisher notes that</a> Van Natta had long been gunning for a CEO spot, which he was unlikely to find a Facebook. "He has said to me many times that he had been hesitant to come to Facebook then, as he had been looking for a CEO job at the time," wrote Swisher when Van Natta left Facebook.

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