On the surface, David Erickson appeared to be an average tech entrepreneur who had long worked in developing and operating online-payment-processing businesses.
But federal prosecutors say the Erickson, a certified public accountant by training, had quietly amassed a fortune through an overseas adult webcam business, and then evaded paying millions of dollars in taxes by claiming that the money he used to buy a mansion and a car worth nearly $200,000 was from loans and not income.
The case against Erickson involves a wide network of interlocking offshore web-marketing and payment-processing companies, which prosecutors say he used to funnel money made through the webcam site, Cam4.com, to his U.S. accounts.
According to an indictment unsealed on Thursday in federal court in Minnesota, prosecutors say that between 2014 and 2018, Erickson used the accounting trick to avoid paying taxes on $5 million he moved to a U.S. holding company that he controlled.
Erickson was taken into custody on Thursday in Puerto Rico, where he now lives. He was awaiting his first appearance before a judge and could not be reached for comment. It was not immediately clear if he had retained an attorney.
A father of seven who has been involved in tech since the early days of the World Wide Web, Erickson has described himself in online profiles as “a lifelong entrepreneur and establishment disturber.” He has also said he “is obsessed with the concept of money as energy.”
The trick prosecutors say Erickson employed was to instruct his accountants to claim on his tax returns that the payments were actually loans from the offshore entities and therefore weren’t taxable income. He then used the money to make down payments on a $1.3 million house in Excelsior, Minn., and a $182,000 Tesla Model X, prosecutors said. But when he took out bank loans for the remainder of those purchases, prosecutors say, Erickson didn’t list any existing loans on his applications and claimed to have assets of over $10 million, along with over $41,000 in monthly income.
The tax dodge raised the concern of accountants Erickson had hired, prosecutors said, prompting several of them to quit and forcing Erickson to find someone else to do the work.
“I’m not comfortable with the accounting here,” one accountant wrote to Erickson, according to court documents.
“I’m not comfortable with this sort of judgment,” Erickson allegedly replied.
Investigators with the Internal Revenue Service say they managed to track the source of the income back through a web of companies registered in Curacao, Anguilla, Ireland and Ontario, Canada, to a business called Surecom Corp. N.V.
That company was the 100% owner of Cam4.com, a platform for amateur pornography producers to sell access to live-streaming videos of themselves performing sex acts, according to the court filings.
Erickson had structured the purported loans to be made to a Minnesota-based consulting company called Halstead Bay Holdings, of which he was the sole owner, investigators said.
