Telecom Mogul Guilty of Tax Scam

By Eric M. Weiss
Washington Post Staff Writer
Saturday, September 9, 2006

A former telecommunications tycoon accused by prosecutors of being the biggest tax cheat in U.S. history pleaded guilty yesterday in a deal that calls for him to serve no more than 10 years in prison.

Walter C. Anderson, a Washington-based businessman who amassed a fortune during the tech boom of the 1980s and 1990s, admitted to hiding $365 million in income by using aliases, shell companies, offshore tax havens, secret accounts and drop boxes in the Netherlands. He was so wealthy that he talked at one point about leasing the Russian space station Mir -- all the while dodging his taxes, officials said.

Prosecutors said Anderson avoided paying $200 million in taxes from 1995 through 1999 in what they say is the largest personal income tax evasion case brought in the United States. As part of his plea deal, Anderson agreed that the court could order restitution. But how much the government can collect is a big question: The onetime mogul, 52, who had a multimillion-dollar art collection and other trappings of success, has filed for bankruptcy.

Anderson pleaded guilty at the federal courthouse in Washington to three felony charges -- two for evading federal taxes and one for defrauding the D.C. government with a phony tax return. Among other things, Anderson admitted earning more than $126 million in 1998, a year that he claimed an income of $67,939 on his federal tax return. He paid $495 in taxes that year, authorities said.

"This case sends a strong signal to anyone thinking about going offshore to avoid taxes," IRS Commissioner Mark W. Everson said in a statement. "We have stepped up our efforts to pursue high-income tax cheating, whether it takes place in the United States or overseas."

In return for his guilty plea, prosecutors dropped nine felony charges. According to the agreement, Anderson and prosecutors have settled on a maximum sentence of 10 years. In court yesterday, U.S. District Judge Paul L. Friedman indicated that he will go along with the agreement at sentencing Jan. 16.

Anderson, rail-thin with a thinning crown of silver hair, has been jailed without bond since his arrest Feb. 26, 2005, at Dulles International Airport, where he was returning from a trip to London.

His attorneys -- including a federal public defender -- have repeatedly sought to have Anderson released on bond. They urged the judge yesterday to cut him loose until sentencing, saying Anderson needed the time to, among other tasks, clean up his aging parents' garage and file his taxes.

Prosecutors said Anderson should be kept behind bars, saying they think he still has plenty of money socked away and homes, contacts and girlfriends around the world. In searches of Anderson's Georgetown apartment during their criminal investigation, authorities found fake documents and books titled "Poof!" and "Disappear Without a Trace."

Friedman turned down Anderson's request to be freed pending sentencing.

Anderson's admission of guilt was a turnaround for a defendant who maintained his innocence and was openly scornful of the prosecutors' case. At one early hearing, he defiantly stood up to complain about the government's case.

In an interview with Washington Post reporters at the D.C. jail soon after his arrest, Anderson denied any wrongdoing and mocked the prosecution. "I don't need to steal money from the U.S. government to be successful," he said.

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