The U.S. Court of Appeals for the District of Columbia Circuit announced about a week ago that Walter Anderson, telecommunications entrepreneur who admitted hiding hundreds of millions of dollars from the International Revenue Service (IRS) and tax collectors of the District of Columbia, may be obliged to pay more than $200 million in restitution.
Federal appellate judges overturned a ruling that said that a Justice Department mistake made the repayment impossible. The U.S. Court also upheld the nine-year sentence for the millionaire.
The case goes back to Friedman to allow him to order restitution. Anderson started a long-distance business in the 1980s, in the period when the telecommunications industry was being deregulated. When his first company, Mid-Atlantic Telecom, merged with another company in 1992, Anderson registered companies in the British Virgin Islands to hide the income. It was said by the prosecutors that Anderson used other offshore corporations (including BVI) to disguise his ownership in other telecommunications companies while their earnings were more than $450 million between 1995 and 1999. He allegedly did not file federal income tax returns from 1987 to 1993.
The U.S. District Judge Paul Friedman ordered Anderson to repay about $23 million to the city. He said however that he could not order Anderson to repay the federal government because Justice Department’s binding plea agreement with Anderson listed the wrong statute. Appeals Court judges disagreed.
N.J. Hochman, assistant attorney general of the Justice Department’s tax division, said they were pleased with the decision. By his words, “justice in this case requires not only a prison term, but also full restitution, which the court’s ruling now permits.”