RE: I.R.S. Accuses Man of Hiding $450 Million

But later, questioned by reporters, Mr. Everson noted that the I.R.S. law enforcement staff has been cut by at least a quarter in recent years. Mr. Wainstein, the United States attorney, said one of his prosecutors had spent a year developing the case.

Anyone gigling? Notice that the amount he cheated the government out of could have easily payed the salaries of a bunch more IRS agents. This guy should receive an Official Cypherpunk award. Or does he not deserve one 'cause he got caught? -TD

From: "R.A. Hettinga" To: cypherpunks@al-qaeda.net Subject: I.R.S. Accuses Man of Hiding $450 Million Date: Tue, 1 Mar 2005 13:00:43 -0500

http://www.nytimes.com/2005/03/01/business/01tax.html?th=&pagewanted=print&position=

The New York Times March 1, 2005

I.R.S. Accuses Man of Hiding $450 Million By DAVID CAY JOHNSTON

ASHINGTON, Feb. 28 - A prominent telecommunications entrepreneur who once tried to mount a rescue of a Russian space station has been arrested and charged with evading taxes by hiding at least $450 million of income through offshore corporations.

According to a 12-count indictment released on Monday that federal prosecutors called the largest criminal case of individual tax evasion, the entrepreneur, Walter Anderson, 51, did not pay over $210 million in federal and local income taxes he owed for the years 1995 through 1999 alone.

"Mr. Anderson ran the table when it came to violating the tax laws," Mark W. Everson, the Internal Revenue Service commissioner, told a news conference Monday. "Because of his dishonest dealings, Mr. Anderson's lavish lifestyle was subsidized by honest, hard-working Americans."

In 1998 Mr. Anderson, who lives in Washington, reported a total income of $67,939 and paid a tax of just $494. Mr. Everson said Mr. Anderson actually made at least $126 million that year that he never reported. From 1987 through 1993, officials said, Mr. Anderson failed to file a tax return.

Mr. Anderson is the chief executive of Orbital Recovery, a company trying to extend the life of telecommunications satellites. He was arrested Saturday at Dulles Airport outside Washington as he stepped off a plane from London, according to Kenneth L. Wainstein, the United States attorney for the District of Columbia.

In court on Monday, Mr. Anderson pleaded not guilty to the charges. His lawyer, John Moustakas, told Magistrate Judge Alan Kay that the government's case was based on "innuendo and rumor."

If convicted, Mr. Anderson faces as much as 24 years in prison.

Judge Kay ordered Mr. Anderson held without bail until a bond hearing on Thursday. Susan Menzer, a prosecutor in the case, called Mr. Anderson "a flight risk" who "can't be trusted."

"He hasn't been listening to judges for years," she added.

Since a search warrant was executed in 2002, Mr. Anderson has moved artwork and cash to Switzerland to defeat both tax collectors and creditors who have civil court orders, the Justice Department said in court papers.

Mr. Moustakas did not return a phone call seeking comment.

Mr. Anderson has long attracted a certain level of public attention, especially when he tried to arrange a rescue of the Mir space station five years ago. He frequently flew in a private jet and made deals involving millions of dollars. At conferences on space travel he often spoke of his hatred of government.

But he came under scrutiny, law enforcement officials suggested, only because of a tip from a disgruntled business associate.

Mr. Anderson, according to the indictment, formed an offshore corporation, Gold and Appeal Transfer, in the British Virgin Islands in 1992 to hide his profits from deals involving a telecommunications company he started in the 1980's.

Over the next three years, the indictment charged, Mr. Anderson set up a network of offshore corporations, including one in Panama under the alias Mark Roth, that were used to hide his ownership of three telecommunications companies and allow him to earn hundreds of millions of dollars without paying taxes.

While Mr. Anderson at times insisted publicly that he was worth no more than $4 million, he serves as a senior business adviser to Constellation Services International, a fledgling satellite rescue company that disclosed his ownership of several companies, including Gold and Appeal. Its Web site said Gold and Appeal was worth at least $100 million and described Mr. Anderson as selling the Esprit Telecom Group in 1998 for $900 million.

In extensive filings with the I.R.S. and the Securities and Exchange Commission, the indictment charged, Mr. Anderson claimed that he was merely an employee of Gold and Appeal, the offshore bank that the indictment says was central to his tax-evasion effort.

"The I.R.S. holds all Americans, even the very wealthy, to the same standard," Mr. Everson said. "This indictment sends a strong signal that we will not tolerate abuse of the tax laws."

But later, questioned by reporters, Mr. Everson noted that the I.R.S. law enforcement staff has been cut by at least a quarter in recent years. Mr. Wainstein, the United States attorney, said one of his prosecutors had spent a year developing the case.

Prosecutors noted that it was difficult to catch determined tax cheats but said that some countries known as tax havens had been cooperating with American investigators more often since the 9/11 terrorist attacks. The government has stepped up investigations but managed to recommend only 1,400 tax prosecutions out of the 130 million tax returns filed annually.

For budgetary reasons, the I.R.S. relies almost entirely on data reported to it on computer files, not on traditional detective work, to help identify tax evaders.

Gary Hudson of Redwood City, Calif., said that Mr. Anderson invested $30 million in his Rotary Rocket, the primary backing for a private rocket launching and recovery firm that ultimately failed.

"One condition of his investment was that we could not take any government money," Mr. Hudson said in a telephone interview on Monday.

Besides avoiding federal taxes, the indictment charges, Mr. Anderson also evaded at least $40 million in income taxes owed the District of Columbia and $254,000 in local sales taxes he should have paid on jewelry, wine and art, including a painting by Salvador Dalm and several by Reni Magritte.

Copyright 2 -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' -- ----------------- R. A. Hettinga The Internet Bearer Underwriting Corporation http://www.ibuc.com/ 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'