KT, make sure you are paying taxes on your poker winnings. -g-
Executive Allegedly Evaded
Paying $200 Million in Taxes
By ROB WELLS
DOW JONES NEWSWIRES
February 28, 2005 2:54 p.m.
WASHINGTON -- U.S. authorities on Monday unveiled the largest individual criminal tax case ever, accusing a Washington telecommunications executive with failing to pay about $210 million in taxes.
A federal grand jury in Washington returned a 12-count indictment last Wednesday under seal that charged Walter Anderson, 51 years old, with a scheme to evade federal and District of Columbia taxes.
Mr. Anderson was arrested Saturday at Washington Dulles International Airport after he stepped off a flight from London. He was scheduled to appear later Monday before a U.S. magistrate judge, said Kenneth Wainstein, U.S. attorney for the District of Columbia.
The indictment alleges Mr. Anderson earned nearly $450 million through investments and offshore operations that he established to make it appear as if he wasn't personally earning the money, the Justice Department said. The indictment describes a variety of fine art, wine and jewelry Mr. Anderson purchased between 1997 and 2000, including a Salvador Dali painting. The items were shipped to neighboring Virginia to avoid District of Columbia use taxes, the indictment said.
Mr. Wainstein said Mr. Anderson owes $170 million in income taxes to the Internal Revenue Service and $40 million to the District of Columbia. "This is the largest individual criminal tax proceeding in U.S. history," IRS Commissioner Mark Everson said. He added that Mr. Anderson was probably "operating on his own."
The indictment said Mr. Anderson "refused to cooperate with the IRS in its efforts to audit, assess and collect the taxes he owed for 1987 through 1993."
Mr. Wainstein said Mr. Anderson "completely failed to file annual tax returns" for those years. The indictment encompasses a broad period between January 1987 and 2002 and alleges during this time that Mr. Anderson "corruptly obstructed and impeded" IRS auditors and investigators.
The IRS audited Mr. Anderson between April and September of 1998. The IRS later filed a $390,000 federal tax lien against Mr. Anderson for tax years 1987 through 1993. Mr. Everson noted the length of time in bringing the case. "Am I satisfied we're moving fast enough on cases like this? No, I'm not," he said.
Complex Case
He and other officials emphasized the complexity of the case, involving several tax haven countries and the complex corporate structures.
The grand jury indictment said Mr. Anderson, beginning in 1992, successfully engineered a merger involving his Mid-Atlantic Telecom, a transaction that would result in large taxable earnings. Mr. Anderson "created an elaborate evasion scheme" that involved formation of an offshore corporation named Gold & Appel Transfer, based in the British Virgin Islands, the Justice Department said.
He structured the company to hide his ownership while "still able to maintain complete control" of its assets, the department said in a press release.
After involvement in telecommunications mergers, "Anderson further obscured his ownership of Gold & Appel" by forming another offshore corporation, Panama-based Iceberg Transport SA. Anderson also sought to disguise his ownership in Iceberg, the indictment said.
Between 1992 and 1996, Mr. Anderson transferred his ownership interests in Mid-Atlantic Telecom, Esprit Telecom and Telco Communications Group to Gold & Appel and Iceberg, the Justice Department said. The indictment alleges Anderson was required to report the net earnings of Gold & Appel as income on his federal and District of Columbia individual income tax returns.
That income was substantial. The Justice Department said that between 1995 and 1999, Mr. Anderson's business dealings generated more than $450 million in earnings for Gold & Appel and Iceberg. Mr. Anderson faces a maximum 24 1/2 years in prison under federal sentencing guidelines and 60 years under District of Columbia laws, Mr. Wainstein said. |
