Mogul Sentenced to 9 Years For Tax Evasion and Fraud

By Carol D. Leonnig
Washington Post Staff Writer
Wednesday, March 28, 2007

Eccentric Washington telecommunications mogul Walter C. Anderson was sentenced yesterday to nine years in prison for failing to pay $200 million in taxes -- but a federal judge ruled the Internal Revenue Service won't be repaid for now because prosecutors botched the plea agreement.

Anderson, the biggest convicted tax cheat in U.S. history, received the longest punishment ever given in a tax crime case for his admitted effort to hide $365 million in personal income in the 1990s. He avoided paying taxes by using aliases, shell companies, offshore tax havens and secret drop boxes abroad.

"I agree I'm responsible for what I did . . . but I'm not a criminal person," Anderson told U.S. District Judge Paul L. Friedman before he was sentenced. "I believe I've tried to do the right thing most of my life."

In a major embarrassment to the government's seven-year prosecution of Anderson, the judge ruled he could not order Anderson to make restitution to the IRS for an estimated $140 million of his unpaid federal income taxes. Friedman blamed prosecutors for making a sloppy plea agreement with Anderson.

But Friedman ordered Anderson to pay the D.C. government $22 million in restitution -- barely half the taxes he owed the District.

IRS spokeswoman Peggy Thomas said the agency will "do everything in our power to get this money" from Anderson in civil proceedings.

The punishment came after a tense four-day sentencing hearing during which federal prosecutors described D.C. public schoolchildren, ailing and elderly D.C. residents, and even inmates at the crowded D.C. jail harmed by Anderson's avoidance of more than $40 million in taxes he owed to the District over the past decade. Prosecutors say Anderson also failed to pay an estimated $140 million to $178 million in federal income taxes.

"At the Dunbar High School gym, the place is an embarrassment," said prosecutor Karen E. Kelly. "The toilets don't work; soap, paper towels and toilet paper are missing; . . . and students choose to go back to class rather than use the showers.

"The Cardozo High School pool has been closed for 10 years, and the sports program for the entire D.C. school system is run on $1.9 million." she continued. "Do you dare to imagine the program they could have implemented with $40 million of Anderson's tax money?"

Friedman said Anderson had "no excuse" for his crimes given all the advantages he had in life compared with other defendants: supportive parents, economic opportunities and business acumen.

"This is a serious crime, and it requires a serious punishment," Friedman said. "It is taking money from taxpayers."

During the sentencing hearing, Anderson's relatives, friends and business colleagues described a caring man who made the mistake of trying to avoid paying his fair share of taxes. They said he wasn't motivated by personal greed or a pursuit of luxury. They told the judge how Anderson made billions in the telecom boom, then gave away millions to explore space, nurture budding entrepreneurs and start a philanthropic foundation devoted to promoting world peace.

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