The great escape: Meet the mastermind behind America’s largest $450 million tax evasion case

The IRS ramped up efforts in 2023 to track down tax cheats capitalizing on funding it received from the Inflation Reduction Act of 2022. A year after the agency began it reported that it had recovered $1.3 billion in unpaid taxes from wealthy Americans. They had either shortchanged the government or failed to file a tax return.

Depending on how they dealt with their audit the IRS holds the right to bring criminal charges against tax cheats. Especially those who blatantly try to hide their income from Uncle Sam to avoid paying taxes. One of the biggest tax cheats in US history found that out the hard way.

Meet the mastermind behind one of America’s largest tax evasion cases

Walter Anderson was a prominent American entrepreneur in telecommunications and private space travel. He perhaps gained his most public attention when he tried to rescue the Russian Mir space station in 2000. The US wanted Russia to deorbit the platform to focus on building the International Space Station with NASA but Anderson’s $30 million investment kept it orbiting for another year.

At the time the New York Times wrote an article about Anderson titled ‘American Megamillionaire Gets Russki Space Heap!’ in which they describe, despite growing up and living in Washington DC, it is “a city he hates.” He avoided getting into his personal life but instead talked about his professional successes. Anderson told the outlet how he got his start in the telecoms business in 1979 as one of the first 300 employees at MCI.

Five years later he founded Mid Atlantic Telecom and 10 years after that Esprit Telecom Group to get a foothold in the newly regulated European market with money he got from selling the former to a seed company called Gold & Appel. Esprit Telecom fetched nearly a billion dollars when he sold that one.

The proceeds from that deal went into his passion to get off this planet and into space. Both his first foray into the commercial space business, the Roton rocket, and MirCorp ended up costing him a pretty penny, around $60 million according to Space News.

He didn’t give up though and told the outlet in 2002 that unlike those previous venture “which he admitted could be characterized more by their underlying idealism than hard-nosed business acumen,” he intended to make money with his next project, Orbital Recovery. However, that was the year that the IRS came knocking at his door.

Sentenced to 9 years for $450 million tax evasion

Anderson was arrested at Dulles Airport outside Washington in March 2005 as he stepped off a plane from London The New York Times reported. He was hit with a 12-count indictment by federal prosecutors which at the time was the largest criminal case of individual tax evasion.

(His case would be eclipsed by a $1.6 billion tax fraud committed by attorney Paul Daugerdas. He got a 15-year jail term in 2022.)

Prosecutors accused Anderson of hiding $450 million of income from tax authorities through an elaborate system of offshore corporations and bank accounts. One of those was Gold & Appel in the British Virgin Islands. They said that for the years 1995 through 1999 alone he owed more than $210 million in federal and local income taxes.

In 1998, he reported just $67,939 in total income and paid a tax of just $494. Mark W. Everson, the Internal Revenue Service commissioner said that Anderson in reality made at least $126 million that year which he never reported. For the tax years 1987 through 1993 he didn’t even bother to file a tax return according to officials.

“Mr. Anderson ran the table when it came to violating the tax laws… Because of his dishonest dealings, Mr. Anderson’s lavish lifestyle was subsidized by honest, hard-working Americans,” Everson told a news conference.

Anderson spent two years in jail before he pled guilty to two counts of federal tax evasion and one count of defrauding the District of Columbia. He was sentenced to nine years in prison and ordered to pay $23 million in restitution. He spent the last few months of his confinement at his home in Virginia.

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