$200-Million Tax Dodge Alleged

Telecommunications entrepreneur Walter Anderson was arrested and charged with evading more than $200 million in federal and local taxes, the largest criminal tax case filed against an individual in U.S. history.

The indictment, announced Monday, charges Anderson with hiding income from tax collectors through offshore corporations and bank accounts and claiming to be a Florida resident to avoid paying income taxes in Washington, D.C.

Anderson, 51, also was accused of purchasing fine art and wine and having it shipped to Virginia to avoid paying District of Columbia taxes, according to the indictment on charges of fraud, tax evasion and obstructing the IRS. He was arrested Saturday.

“He was living the high life,” IRS Commissioner Mark Everson said. “Because of his dishonest dealings, Mr. Anderson’s lavish lifestyle was subsidized by honest, hardworking Americans.”

If convicted, Anderson could face up to 80 years in prison.

His attorney did not immediately return a call seeking comment.

Anderson started a long-distance telecommunications business at the time the industry was being deregulated. When his first company merged with another company in 1992, he formed offshore corporations in the British Virgin Islands to hide the income and mask his involvement in the companies, the indictment says.

After additional mergers, Anderson is alleged to have tried to obscure his ownership further by creating another offshore corporation in Panama, under the alias Mark Roth, and using a mailbox in the Netherlands.

Assistant Atty. Gen. Eileen O’Connor said countries known as tax havens had been cooperating with U.S. investigations more often since the Sept. 11, 2001, terrorist attacks.

The indictment alleges that Anderson used the assets and profits of his telecommunications corporations to earn more than $450 million from 1995 to 1999 that he failed to report to the IRS.

Anderson also is alleged to have failed to file federal income tax forms each year from 1987 through 1993, and to owe the IRS millions of dollars in taxes, interest and penalties.

The indictment says that Anderson owes $170 million in federal taxes and $40 million to the District of Columbia.

Among the taxes allegedly owed to the District of Columbia are use taxes, equivalent to sales taxes, on art, jewelry and wine.

Under U.S. tax laws, citizens must report and file taxes on income earned worldwide. They must also disclose foreign financial accounts with a combined balance of more than $10,000.