November 19, 2014

Initially gaining fame for attempting to rescue Russia’s Mir Space Station and turn it into a tourist destination, Walter Anderson went down in history as the perpetrator of the largest case of personal tax evasion in U.S. history. The former telecommunications executive hid much of his earnings in a dizzying labyrinth of off-shore shell companies and bank accounts that the IRS never completely unraveled.

Anderson’s high-flying life as an international traveling tax evader ended abruptly in 2005 when the Justice Department filed its biggest tax evasion case in history. A grand jury indictment attested that Anderson conducted business through corporations in the British Virgin Islands and Panama to hide the fact that it was personal income. During that period he is reported to have earned a half a billion dollars of income.

Walter-Anderson

Authorities arrested Anderson at the Washington Dulles International Airport as he returned from London. They placed him in the D.C. Jail where he proceeded to serve 2 ½-years of his eventual nine-year sentence which later took him to federal prison and ended with him on house arrest at his parent’s home in Virginia. His sentenced completed at the end of 2012.

From Not Guilty to Guilty and Back Again

Although Anderson originally pled “Not Guilty,” while on trial in 2006 he admitted to hiding $365 million of income during the 1990s, which resulted in a nine-year sentence and a fine of almost $400 million in back taxes, fees and penalties. While serving his sentence, Anderson later proclaimed his innocence of tax evasion, saying that conditions in the D.C. Jail where they held him in solitary confinement were so barbaric, that they ended up coercing him to declare his guilt.

“I was tortured for 2 1/2 years by the conditions in the D.C. Jail, which included sleep deprivation, sensory deprivation, denial of medical care, threats and intimidation,” wrote Anderson about his experience, saying that ten years in federal prison would have been better than the time he spent in the D.C. Jail. He did add that “federal prison’s no picnic, either.”

Anderson grew up in Silver Spring, Maryland and later lived in Fairfax, Virginia, where in 1971 he graduated from Woodson High School. He attended various colleges, although he never earned a degree. Those learning institutions included George Mason University, University of Richmond and Northern Virginia Community College. Anderson began working as a telecommunications salesman in 1979 for MCI Communications. In the 1980s, he became involved in various entrepreneurial ventures, which continued through the 1990s and into the early 2000s. Early on in his business ventures, he invested in various telecom companies that he later sold for hefty profits.

High-Flying Space Ventures

Anderson was enamored with commercial space ventures and the idea of space tourism. He was one of the early backers of the International Space University (ISU) founded in 1987 that offers a Master of Science in Space Studies. He provided funding and advice to the founding team. Anderson is reported to believe that development of space is the answer to issues facing our planet, such as overpopulation. He also supported the Space Frontier Foundation when it was established in 1988.

Mir Space Station Retrospective

Prior to going to prison, Anderson headed up a variety of space-related businesses, such as serving as Chairman and CEO of Orbital Recovery Corporation and Chairman of the Board for Satellite Media Services, among others.

The investment in space for which Anderson became well-known was the creation of MirCorp in the 1990s, which sought to privatize Russia’s aging Mir Space Station. Anderson is reported to have invested $30 million into the concept of creating the world’s first space tourism destination. He also hoped to use the Mir to lease it to drug companies and other businesses that needed to do micro-gravity research.

Space tourism was the only money-making prospect to emerge from the MirCorp venture. Investor Dennis Tito planned to pay more than $20 million in order to be the world’s first space tourist and reality TV producer Mark Burnett also signed a contract with MirCorp to do a television show called “Destination: Mir.”

Anderson’s plans to use the Mir Space Station ran aground when NASA and the U.S. government pressured the Russian Space Agency to de-orbit the Mir Space Station, also warning other companies against partnering with Anderson on the venture. In April 2001, the Russians de-orbited the space station into the Pacific Ocean.

Typographical Errors Spell Tax Relief

In June 2007, a federal district judge determined that Anderson wouldn’t have to pay from $100 to $175 million of his fine to the federal government because of a typographical error in the plea agreement written by the government. He still has to pay the D.C. government $23 million.

Since his release, Anderson’s tune hasn’t changed much. He insists on his innocence and remains unrepentant and poised for his next entrepreneurial ventures, which have been reported to be tangentially once again “up in space” in the area of cloud computing. In September 2012, he appealed the 2011 U.S. Tax Court filing that requires that he pay his taxes and penalties from 1998 and 1999, but lost.

taxes owed

Anderson claims that he is broke and even had a public defender represent him during his criminal case. Some believe he has money socked away. Considering the maze of a money trail he created, whether he has hidden funds to pay off his debt is anyone’s guess.