Man of Many Names Now Called No. 1 Tax Cheat

[FaGal]

Man of Many Names Now Called No. 1 Tax Cheat
By DAVID CAY JOHNSTON

WASHINGTON, March 1 - Walter Anderson, the telephone entrepreneur accused of being the biggest tax cheat in American history, started playing with his name when he was 12 years old.

Acquiring aliases became a habit that the government now says is central to how he evaded taxes on at least $450 million in income.

His first alias, his mother told the government, involved unofficially shortening his given name, Walter Anderson Crump. The government says he has used at least seven other aliases to hide his income. He went on to develop what the government says are elaborate schemes to conceal his movements and money. Even after five years of investigation, the government cannot fully estimate the size of his untaxed fortune, although filings by his companies suggest it is more than a billion dollars.

Business associates said yesterday that Mr. Anderson was obsessed with keeping his actions out of sight, and even those who did business with him for years said that he revealed little other than his hatred of government and his fascination with space travel. He once told a journalist that his father worked for the National Security Agency, whose specialty is intercepting communications.

"He always dressed black - black blue jeans, black shirt, whatever he had on it was all black," recalled John D. Phillips, an Atlanta businessman who bought one of Mr. Anderson's companies, but said he never saw his home or socialized with him. "He was mysterious."

Henry G. Luken III, a wealthy entrepreneur from Chattanooga, Tenn., whom Mr. Anderson retained to bill clients of his first long-distance telephone company 15 years ago, said that even investment bankers had a hard time finding out much about Mr. Anderson. Mr. Luken said he bought several companies from Mr. Anderson and served with him on the board of a publicly traded telecommunications company.

"Who owns the entities has been questioned by his investment bankers since the early 1990's," Mr. Luken said.

"Since Day 1, he has always told us that he didn't own the entities," Mr. Luken said, adding that Mr. Anderson drove a 15-year-old Oldsmobile and that, except for part ownership of a Gulfstream IV jet, he saw no signs of a lavish lifestyle.

"Walt was a bit of a weird bird," Mr. Luken said.

Mr. Anderson has said that he was one of the early employees of MCI. It is known that he founded his own long-distance company and later, with the profits, started several space travel companies. He said in a rare interview five years ago that he had bought rights to the Mir space station for $31 million. Mir was brought down in the South Pacific in March 2001.

He later went on to finance Rotary Rocket, a failed private space travel effort, and to found and become chief executive of the Orbital Recovery Corporation, a firm that aims to extend the life of telecommunications satellites by repairing them in space. The Justice Department, in a 12-count indictment unsealed Monday, said that Mr. Anderson engaged in elaborate schemes to hide his ownership of his American businesses through two offshore entities, Gold & Appel Transfer in the British Virgin Islands and a Panamanian company named Iceberg Transport.

He paid $10 for 1 percent of Gold & Appel, creating the appearance that he did not control the firm and could take advantage of technical tax rules to escape taxes, the government said. In reality, the government charged, he paid $990 for an exclusive option to acquire the other 99 percent of Gold & Appel, which made him the sole owner and made all its income subject to tax in the United States.

The indictment charges that, in the first of his big telecommunications deals, he sold Mid-Atlantic Telcom in 1992 to the old Rochester Telephone Company for a profit of more than $4 million, money that he shipped to Iceberg Transport. At the time, Mr. Anderson had not filed a tax return for at least five years and had tax liens against him for more than $300,000. He never paid the liens, and no tax return was filed that year, the government said.

From 1995 to 1999, the indictment charges, he sent more than $450 million out of the country without paying taxes. In fact, in 1998, he paid just $494 in taxes, the government said.

Mr. Anderson has pleaded not guilty. He was arrested here last Saturday as he stepped off a plane from London, where the government says he went in November to hide money, art and records.

Until at least Thursday, Mr. Anderson will stay in a federal jail cell here. A magistrate will then consider the government's request that he be held without bail lest he flee the country like the well-known tax cheats Robert L. Vesco and Marc Rich.

Mr. Anderson never married, but court papers show he had a number of girlfriends upon whom he lavished gifts.

His French girlfriend thought he gave her a residence in Washington, according to court papers, though her ownership is not clear.

At least three other girlfriends received large cash gifts, more than $175,000 in one case, but he did not file the required gift tax returns. Carol Elder Bruce, the lawyer for one of the women, said that after Mr. Anderson came under scrutiny "he falsely characterized as a business loan a gift he made" and sued her. She noted that this would complicate any prosecution over gift tax violations and that while her client testified before a grand jury, the indictment makes no mention of gift taxes.

The government says that over the last two decades, Mr. Anderson used fake identification papers and a purloined baptismal certificate, and created at least seven aliases.

The most intriguing alias listed in court papers is Ragnor Danksjold, a variation on the character Ragnar Danneskjold in the Ayn Rand novel "Atlas Shrugged."

Danneskjold is a sort of Robin Hood in reverse who steals from the ships of socialist governments and gives the booty to the rich, including a solid gold bar he presses into the hands of an industrialist, Henry Reardon, partly to repay Mr. Reardon for taxes he paid.

According to court papers, Mr. Anderson's Gulfstream IV jet was owned by a company named Dankjold Reed, another variation on the name.

Among the volumes seized from his three apartments were "Poof! How to Disappear and Create a New Identity," "The ID Forger," and "Reborn Overseas," a how-to guide with the double subtitles "Identity Building in Europe, Australia and New Zealand" and "Methods of Disguise."

Five years ago, in the interview, he talked about his plans to build a space station, a place he wanted to operate without any government, except himself, where violence would not be tolerated.

"I'm not saying it's fair," he said, "but I've been thinking a lot about human rights in space, and in my space station, people would all be peaceful or I'd throw them out the air lock."

John Schwartz contributed reporting from New York for this article, and Glen Justice from Washington.

[FaGal]

Entrepreneur Charged With Tax Evasion

By Mary Dalrymple
Associated Press
Monday, February 28, 2005; 3:45 PM

Telecommunications entrepreneur Walter Anderson was arrested and charged with evading $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 Washington taxes, according to the indictment for fraud, tax evasion and obstructing the IRS.

He was arrested Saturday.

"He was living the high life," said IRS Commissioner Mark Everson. "Because of his dishonest dealings, Mr. Anderson's lavish life style was subsidized by honest, hardworking Americans."

If convicted, Anderson could face up to 80 years in prison. His attorney, John Moustakas of Goodwin Procter LLP, 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 said.

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 Attorney Eileen O'Connor said countries known as tax havens have been cooperating with U.S. investigations more often since the Sept. 11, 2001, terrorist attacks.

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

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

The indictment charged that Anderson owes $170 million in federal taxes and $40 million in Washington income taxes.

Among the taxes allegedly owed to Washington are use taxes, equivalent to sales taxes, on art, jewelry and wine. The indictment alleges that Anderson bought a painting by Salvador Dali and several paintings by Rene Magritte, an 18-karat gold bracelet and more than $47,000 in fine wines.

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.

[FaGal]

Sponsor of Russian Space Program Faces Fraud Charges in U.S.
www.mosnews.com - MosNews - March 1, 2005




The Justice Department on Monday filed its biggest personal tax evasion case ever, accusing the man who once tried to rescue Russia’s Mir space station, Walter Anderson, of failing to pay more than $200 million in personal income taxes by stashing income in offshore bank accounts, NBC reports.

The allegations mark the largest criminal tax case against an individual, said Mark Everson, commissioner of the Internal Revenue Service.

Anderson, 51, earned millions by dealing in telecommunications companies after the AT&T breakup and became a global figure about five years ago when he embarked on a mission to rescue the ailing Mir space station.

The Justice Department arrested him over the weekend at Dulles International Airport as he was returning on a flight from London. A grand jury indictment accuses him of, over a five-year period, conducting business through offshore corporations in Panama and the British Virgin Islands to make it appear he was not personally earning the income. Those ventures earned nearly a half billion dollars.

Anderson pleaded not guilty to the tax evasion charges Monday and was ordered held without bail until a hearing Thursday.

If convicted on all the charges, he could face up to 80 years in prison. This case is part of a recent push by federal prosecutors to crack down on use of offshore accounts to evade U.S. taxes.

Five years ago, Anderson put up $20 million to try to salvage Mir, destined to burn up on eventual re-entry. He hoped to lease it to drug companies or firms interested in micro-gravity research, but the only market that showed any promise was space tourism. Dennis Tito, a high-rolling investor, agreed to pay over $20 million for a visit to Mir to become the world’s first space tourist. And reality TV producer Mark Burnett signed a contract with MirCorp for a show, “Destination: Mir.” Contestants would train in Russia, with the winner getting a trip to the space station.

[FaGal]

Businessman's arrest marks 'biggest US fraud case'
news.ft.com - By Stephanie Kirchgaessner in Washington - March 1, 2005


An American businessman alleged to have hidden nearly half a billion dollars in earnings in offshore accounts has been arrested by US authorities and charged with tax evasion, obstructing the Internal Revenue Service and fraud. This is the biggest criminal tax fraud prosecution in US history.

Walter Anderson, a telecommunications entrepreneur who also used the pseudonym Mark Roth, was arrested by law enforcement agents on Saturday at Washington's Dulles airport after arriving from London.

He was charged with evading more than $200m (€151m, £104m) in taxes over five years and faces up to 80 years in prison if found guilty.

Mr Anderson, an art collector who frequented Christie's in New York and London, allegedly hid more than $450m in profits from federal and local authorities by creating an elaborate network of offshore investment companies, disguising his ownership of the two primary companies - Gold & Appel and Iceberg Transport - and concealing his US citizenship.

Mr Anderson also allegedly set up two bank accounts at Barclays Bank in Jersey, falsely stated he was a citizen of the Dominican Republic, and used private mailing addresses in the Netherlands in order to evade tax.

Mark Everson, commissioner of the IRS, yesterday acknowledged that the US tax authority's efforts to pursue tax evaders had declined in the mid-1990s, but said yesterday's news was a sign that the IRS was getting back on track.

The IRS and Justice Department said it received co-operation from four un-identified countries during its investigation of Mr Anderson, but refused to comment on what prompted the investigation. The indictment indicates that tax authorities have been pursuing the case since an audit in April 1998. According to the charges, Mr Anderson transferred his holdings in three telecommunications companies - Mid-Atlantic Telecom, Esprit Telecom, and Telco Communications - to G&A and Iceberg in the early 1990s.

It is claimed that each investment "became much more valuable" in the ensuing years, generating enough profit to enable Mr Anderson to invest in other companies and reap a $450m profit for G&A and Iceberg between 1995 and 1999 - only a fraction of which was ever reported to the IRS and local Washington tax authorities.

During the years he was allegedly evading federal and local income tax, Mr Anderson is also claimed to have failed to pay tax on the pieces of artwork and jewellery. According to his indictment, he failed to file tax forms on a $1.2m René Magritte painting that he bought in 1998, and a $516,618 painting by Salvador Dali bought in London in 1998.