Biggest Tax Cheat Ever Pleads Guilty

Telecommunications entrepreneur Walter Anderson pleaded guilty to tax evasion and fraud today in connection with what authorities said was the nation's largest-ever criminal tax case.

Under the plea deal with prosecutors, he faces up to 10 years in prison at his sentencing hearing in January.

Anderson was indicted in 2005 on charges that he evaded $200 million in federal and local taxes. Prosecutors said Anderson used offshore corporations and bank accounts to hide income from tax collectors.

He pleaded guilty to two counts of tax evasion and one count of fraud Friday. He admitted hiding hundreds of millions of dollars in income from the IRS and Washington, D.C., tax collectors during 1998 and 1999.

"Taxes build the bridges and pave the roads that deliver our supplies and transport our goods," Assistant Attorney General Eileen J. O'Connor said in a statement after Anderson's plea. "Yet some people who have benefited the most from taxes believe they are not obligated to pay them, and that they can avoid doing so by hiding their income and assets in offshore accounts. They are wrong on both counts."

In the courtroom today, Anderson's lawyer Michelle Peterson made a plea for Anderson to be released until the January sentencing, arguing that his 18-month stay in a Washington jail during the trial was more like six years, because her client sat in 120 degree temperatures and was denied treatment for his respiratory condition.

Peterson said Anderson needed the time out to "complete the community service, spend time with his parents -- his mother wants him to clean out the garage, and he has agreed to do that while he also cleans ups his current tax returns."

Judge Paul Friedman denied the requested bond time, saying Anderson is still a flight risk and could flee the country if released from jail at this time.

Anderson started a long-distance telecommunications business in the 1980s as the industry was being deregulated. When his first company, Mid-Atlantic Telecom, merged with another company in 1992, Anderson formed corporations in the British Virgin Islands to hide the income, prosecutors said.

Authorities said Anderson used other offshore corporations to disguise his ownership in other telecommunications companies that earned more than $450 million between 1995 and 1999.

Anderson, who allegedly failed to file federal income tax returns from 1987 to 1993, has been held without bail since his arrest. Prosecutors say he owed $170 million in federal taxes and $40 million in Washington income taxes.

In court documents, the government said Anderson could be linked to at least seven aliases, and that officials seized from his apartment forged identification and manuals detailing ways to create fake identification and hide from authorities.

Among them were "Poof! How to Disappear and Create a New Identity" and "The ID Forger: Homemade Birth Certificates and Other Documents Explained," the documents said.

Among the taxes allegedly owed to Washington are use taxes, equivalent to sales taxes, on art, jewelry and wine. The indictment alleges that Anderson bought a painting by Salvador Dali and several paintings by René Magritte, an 18-karat gold bracelet and more than $47,000 in fine wines, then had them shipped to a Virginia address to avoid Washington taxes.

Jennifer Duck of ABC NEWS and The Associated Press contributed to this story