Slightly OT:
bayarea.com
Tech worker's suicide becomes rallying point for tax reform effort
By Elise Ackerman
Mercury News
Fred Abramson was happiest when flying 3,000 feet above Silicon Valley. Tumbling through sunlit skies in his aerobatic plane, Abramson was free from the unrealistic deadlines and muddled computer code that frustrated him at work.
When his stock options in Rambus, a Los Altos chip-design firm, soared in the first half of 2000, the San Mateo resident thought he had found a way to fly full time. Abramson, then 53, exercised his options and retired.
But the MIT-trained mathematician made a fateful miscalculation: instead of immediately selling his stock and diversifying, he held on. When the stock price plunged later that year, so did his chance to fly. The only reminder of his windfall was a crushing tax bill levied on his initial paper profits, which were long gone.
Trapped by that tax, imposed under a tricky and often misunderstood provision known as the Alternative Minimum Tax (AMT), Abramson couldn't live with the disappointment.
So on the afternoon of Jan. 22, 2002, the one-time Stanford professor and California aerobatics champion entered his hangar at the Hayward Executive Airport and locked it from the inside. He sat in a chair next to his beloved airplane, covered his head with a plastic garbage bag that was attached to a tank of nitrogen and turned on the gas, authorities said.
He died within minutes.
Thousands of people have been devastated by the same tax trap. Abramson's tragic death, which would normally be a private matter, has become a rallying cry for the grass-roots movement that is urging Congress to reform the AMT. ``How many people do we need to read about before we get some sort of remedy?'' said Jay Cena, a founding member of ReformAMT, a non-profit group that spearheads the movement.
Abramson didn't leave a note explaining why he decided to take his life, and the exact cause of his suicide is unknown. Friends said they believe the tax intensified his despair, but his story is more complicated than that, reflecting the psychic toll extracted by Silicon Valley's culture of hard work and overnight wealth.
Taking a gamble
The AMT taxes the difference between the price an employee pays to exercise an option and the market price of the stock at that time. Selling the stock immediately erases the AMT debt, but taxes the profit at a high rate.
Holding the stock for more than year brings a lower capital-gains tax rate when the stock is sold, but requires option-holders to pay the AMT upfront. If the stock drops dramatically, option-holders end up paying a bill for profits they enjoyed only in their imagination.
That was what happened to Abramson. In a story that could be told thousands of times, friends said Abramson took a gamble and held tight to his stock, believing it was undervalued.
``Ultimately, he couldn't believe he could be so stupid,'' said Andy Geosits, a close friend who was also an aerobatic pilot. ``He kept saying over and over again, `I don't trust my judgment.' ''
Others are also suffering emotional pain from financial losses, said Dr. Laraine Zappert, a clinical professor of psychiatry at Stanford University. In Santa Clara County, stock-market losses were mentioned in suicide notes left by two other men during the last year, according to the coroner's office.
``We underestimate the extent to which people feel shamed by the decisions they made,'' Zappert said.
Self-doubt was particularly painful for Abramson, who prided himself on his keen intellect. Born in St. Louis, the son of a businessman who owned a commercial printing shop, Abramson graduated first in his high school class and attended the Massachusetts Institute of Technology on a National Merit Scholarship. While at MIT, Abramson collected a bachelor's degree in mathematics, a master's in electrical engineering and computer science and a doctorate in mathematics. He also got his pilot's license.
``He was a very bright guy,'' said Fred's brother, Paul, a political science professor at Michigan State University.
Friends said Fred wasn't close to his family, walking away from his marriage in 1971 and leaving behind an infant son, Jeffrey, whom he never saw again.
Now 30, Jeffrey Abramson is a student in Berkeley and a hang glider pilot. In a brief interview, he said he wasn't close to his father and felt uncomfortable talking about him.
In 1974, Abramson joined the mathematics faculty of the University of Wisconsin-Milwaukee, where he eventually received tenure. A stint as a visiting professor at Stanford University brought Abramson to Silicon Valley in 1979.
Unhappy at work
The experience was not a pleasant one. Hoping to collaborate with people at the forefront of technological innovation, Abramson complained that his bosses were little more than flimflam artists, selling software code they knew would never work.
``One of Fred's major points was that EDA tools were a fraud,'' said Ray Hoegstadt, one of four employees at Intellisys, an EDA company Abramson founded in 1984.
Intellisys had a contract with Advanced Micro Devices to create software that would help write programs for AMD's microprocessors. The product had the potential to be a blockbuster, but the project was discontinued.
This was the flip side of the Silicon Valley ideal, where smart people become rich pursuing their intellectual passion. In this parallel world, people spend their lives at jobs they barely tolerate as their dreams fade away.
After Intellisys shut down in 1991, Abramson became an employee for one EDA company after another. ``He didn't enjoy working,'' remembered David Knapp, an old friend and former co-worker. ``There were times when he actively hated it.''
However, work made it possible to fly, and flying made life worth living.
Other pilots jokingly dubbed Abramson ``Fast Freddy'' because the methodical mathematician did everything so slowly. Whether it was suiting up, preparing his airplane or teaching another pilot a hair-raising aerobatic maneuver, his approach was deliberate and analytical.
His style suited competitive aerobatics, where contestants must twist and dip and loop and dive inside the bounds of an imaginary box of sky. In 1990, Abramson won the California championship for unlimited freestyle aerobatics, the most difficult category, and he dreamed of competing in the world championships as part of the U.S. team.
A few years later, he bought a Sukhoi 26, then the premier aerobatic airplane, and started training with Sergei Boriak, a coach for the U.S. team. Boriak said Abramson had potential, but he needed to train full time.
Since he worked full time, Abramson's dream remained out of reach for the rest of the decade. Then, in 2000, the stock of Rambus, Abramson's employer, soared after Intel affirmed its support for its memory-chip architecture and large memory-chip makers agreed to license another piece of Rambus technology. His options to buy stock at $1.25 to $2 a share, adjusted for a split, were suddenly worth more than $100 apiece. On paper, Abramson was a multimillionaire.
He exercised as many options as he could, and in June 2000, he retired, his dream apparently secured by about $5 million in Rambus stock, according to estimates by close friends.
But before Abramson could live out his retirement fantasy, Rambus' stock started dropping. From June 30 to Dec. 29, 2000, shares fell 65 percent. Yet Abramson continued to owe hundreds of thousands of dollars in taxes on the paper profit he had on the day he exercised the options.
Confident that shares of the volatile stock would rise again, Abramson refinanced the Sukhoi the following year. But the money wasn't enough to cover all his bills, and he returned to the chip-design industry last spring, taking a job at Get2Chip, a San Jose start-up. Friend said he hated being back at work.
In the fall, Abramson decided to sell his Rambus shares and settle with the Internal Revenue Service. ``I think he was surprised at how upset it made him,'' said Pamela de Castro, a flight instructor and his girlfriend of 3 1/2 years.
But Rambus' stock had fallen so much that it only covered a portion of his debt. Abramson told de Castro that he would also have to sell the Sukhoi. He couldn't afford to fly anymore, he said. Still, Abramson postponed selling the plane.
``He was so invested in the idea of being Fast Freddy and the unlimited champion,'' de Castro said. ``It was more than a dream to him. It was part of who he was.''
Danger signs
``What it really came down to is he couldn't stand Monday mornings,'' Jones said. ``He thought he had to work for the rest of his life at a job he hated because he had no hope for getting back to a reasonable retirement.''
Nevertheless, when they said goodbye after their mid-January meeting, Jones thought Abramson was doing better.
De Castro had the same reaction on the morning of Jan. 22, as she circled her Cessna above the Hayward airport and saw Abramson take the Sukhoi out of the hangar and show it to a broker.
Abramson and de Castro had lunch later, splitting a sandwich in her office. He was quiet, de Castro remembered, and when he got up to leave, he blew her a kiss.
In the evening, de Castro went by Abramson's hangar and was alarmed to find it locked from the inside. She called for help, and a fireman arrived, prying open the door with a crowbar.
They found Abramson sitting in a chair behind his plane. He faced the hangar door, now open, and an expanse of inky sky. |
