A $365 Million Dollar Tax Fraud
According to a press release, Mr. Walter Anderson's tax fraud resulted in the "largest personal income tax evasion case brought by the Department of Justice". Pursuant to his September 8, 2006 plea agreement, telecommunications entrepreneur Walter Anderson pleaded guilty to violating two counts of 26 U.S.C. § 7201 (Attempt to evade or defeat tax), and one count of Title 22 District of Columbia Code § 3221 {a}, (Fraud in the first degree). The Court sentenced Mr. Anderson on March 27, 2007 to nine years of prison for his failure to report about $365 million in income between 1995 and 1999; and also ordered him to pay the District of Columbia restitution in the amount of $22,809,032.
The superseding indictment filed on September 30, 2005 essentially alleged that Mr. Anderson had hidden his undeclared revenue through offshore shell companies and bearer shares, (i.e. negotiable stocks filled out in the name of the "bearer", for which no register of ownership is kept). According to the specific allegations in his indictment, Mr. Anderson had hired Arias, Fabrega & Fabrega Trust Co. (BVI) to first secretly incorporate a nominee shell company for him known as Gold & Appel Transfer, S.A. He then used Gold & Appel in connection with his ownership of other shell companies, as partly demonstrated by the attached stock certificate from Aurora Telecommunications Limited. For example, by owning the bearer shares of a shell company called Iceberg Transport, S.A., (which in turn owned the stock of Gold & Appel), Mr. Anderson concealed the hundreds of millions he beneficially owned via Gold & Appel.
Given the hundreds of millions hidden by Mr. Anderson, I thought about the tax gap. The tax gap is the difference between the overall amount of tax revenue the Internal Revenue Service receives compared to what it estimates it is actually owed. The latest figures published in "Reducing The Federal Tax Gap" dated August 2, 2007, indicate that the tax gap was estimated to be $345 billion in 2001. That amount however has since been reduced to $290 billion because of Internal Revenue Service enforcement efforts and its receipt of late payments. I then wondered how many there were that still remained, who were just like Walter Anderson.
Copyright 2007 Fred L. Abrams
The superseding indictment filed on September 30, 2005 essentially alleged that Mr. Anderson had hidden his undeclared revenue through offshore shell companies and bearer shares, (i.e. negotiable stocks filled out in the name of the "bearer", for which no register of ownership is kept). According to the specific allegations in his indictment, Mr. Anderson had hired Arias, Fabrega & Fabrega Trust Co. (BVI) to first secretly incorporate a nominee shell company for him known as Gold & Appel Transfer, S.A. He then used Gold & Appel in connection with his ownership of other shell companies, as partly demonstrated by the attached stock certificate from Aurora Telecommunications Limited. For example, by owning the bearer shares of a shell company called Iceberg Transport, S.A., (which in turn owned the stock of Gold & Appel), Mr. Anderson concealed the hundreds of millions he beneficially owned via Gold & Appel.
Given the hundreds of millions hidden by Mr. Anderson, I thought about the tax gap. The tax gap is the difference between the overall amount of tax revenue the Internal Revenue Service receives compared to what it estimates it is actually owed. The latest figures published in "Reducing The Federal Tax Gap" dated August 2, 2007, indicate that the tax gap was estimated to be $345 billion in 2001. That amount however has since been reduced to $290 billion because of Internal Revenue Service enforcement efforts and its receipt of late payments. I then wondered how many there were that still remained, who were just like Walter Anderson.
Copyright 2007 Fred L. Abrams
