11/19/2008

News / D.C. Court of Appeals Clears Way for $200 Million Restitution Order in Tax Fraud Conviction

Court Also Affirms Nine-Year Prison Sentence for Telecommunications Entrepreneur Walter C. Anderson

WASHINGTON – The U.S. Court of Appeals for the D.C. Circuit ruled that Walter C. Anderson, a local telecommunications entrepreneur and venture capitalist sentenced to nine years in prison for tax evasion, can be held accountable for the more than $200 million in restitution that he owes to the Internal Revenue Service (IRS), the Justice Department announced today. Reversing the opinion of U.S. District Judge Paul L. Friedman, the D.C. Circuit held that there was no ambiguity in the plea agreement between the United States and Anderson; and reversed Judge Friedman’s holding that the court lacked authority to order the restitution to the United States as provided in the plea agreement.

In September 2006, Anderson pleaded guilty to two counts of income tax evasion and one count of defrauding the District of Columbia. According to court documents, Anderson evaded payment of taxes on more than $450 million he earned through business ventures between 1995 and 1999 through the use of an elaborate evasion scheme involving offshore corporations.

After a three-day sentencing hearing in March 2007, Judge Friedman sentenced Anderson to nine years in prison and ordered Anderson to pay restitution to the District of Columbia in the amount of $22,809,032. However, Judge Friedman declined to enforce a clause in the plea agreement regarding restitution to the United States based on his interpretation of certain language in the plea agreement. In issuing his ruling, Judge Friedman invited the government to challenge his interpretation, stating, "I hope the government will appeal me on the federal restitution issue." The Court of Appeals agreed with the government's interpretation of the plea agreement and sent the case back to Judge Friedman to allow him to order restitution. The Court of Appeals also affirmed the nine-year prison sentence imposed by Judge Friedman.

"We are pleased that the Court of Appeals affirmed the nine-year sentence for Anderson's tax fraud. This is a serious crime that calls for a severe sentence," said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. "Justice in this case requires not only a prison term, but also full restitution, which the court's ruling now permits."

Assistant Attorney General Hochman thanked the Justice Department attorneys who represented the federal government in the criminal case against Anderson and the IRS-Criminal Investigation agents who assisted them. Tax Division attorney Karen E. Kelly and Assistant U.S. Attorney Susan B. Menzer handled the case in the federal district court. Tax Division Appellate Attorney Elissa R. Hart-Mahan represented the government in the Court of Appeals.

Information about this case, as well as the Justice Department’s Tax Division, is available at www.usdoj.gov/tax.
http://www.usdoj.gov/opa/pr/2008/November/08-tax-1014.html

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