WASHINGTON — Entrepreneur Walt Anderson, the financier behind many long-shot commercial space ventures, was denied bail March 3 during a bond hearing and was ordered to remain in jail at least until his next court appearance on the largest federal tax evasion case in U.S. history.
During a March 3 hearing, U.S. Magistrate Alan Kay ordered Anderson held at the District of Columbia jail until his next status hearing, set for March 11, according to Channing Phillips, principal assistant U.S. attorney for the District of Columbia.
Government attorneys maintain that Anderson constitutes a flight risk, given his overseas financial holdings, and pressed the court to keep him in jail until his trial.
Anderson, 51, was arrested Feb. 26 on tax evasion charges as he stepped off a flight from London at Dulles International Airport outside Washington. He was charged in federal court Feb. 28 with evading federal and local taxes by hiding more than $450 million in offshore companies.
According to the 12-count federal indictment released Feb. 28, Anderson failed to pay more than $200 million he owed to the Internal Revenue Service and the District of Columbia for the years 1995 through 1999. If convicted of all charges, Anderson faces up to 80 years in prison.
In a lengthy interview with the Washington Post after his March 3 detention hearing, Anderson said he is not a tax cheat and that the money the government claims he hid belongs to the Smaller World Foundation, which he endowed with ownership of various companies he runs.
He described what the government calls tax evasion as a legitimate and long-standing plan to send money offshore in order to use it to promote arms control, human rights, family planning and space exploration.
“I don’t need to steal money from the U.S. government to be successful,” the Washington Post quoted him as saying. “I don’t want their money.”
Anderson is known to the space community as the angel investor behind such long-shot space ventures as MirCorp and Rotary Rocket. Over the years he has put millions of dollars into both for-profit enterprises and grass-roots groups that shared his vision of opening up space to the masses.
Anderson grew up in suburban Washington during the height of the Vietnam War. His father worked for the National Security Agency on nuclear weapons targeting decisions and casualty calculations, according to friends and associates who described him as a libertarian and a pacifist who tends to be very outspoken about the American use of military force.
“Everybody who knows Walt knows he is not a fan of big government. People have told Walt he was just asking for the government to come after him,” said Charles Miller, president of Constellation Services Inc., a Woodland Hills, Calif.-based company that received start-up capital from Anderson and is currently working on low-cost international space station re-supply concepts for NASA.
Miller said Anderson once told him that one of his driving ambitions was to create profitable space businesses independent of government-sponsored space programs that depend on the military industrial complex.
Miller said Anderson is a minor shareholder in the company and a senior business advisor dating back to the investment he made three or four years ago. Miller said he would not be surprised if Anderson took steps to minimize his taxes. “Every American tries to minimize their tax bills and avoid taxes,” he said, “but that does not mean that he did anything illegal.
“Nobody should assume that Walt is going to prison,” Miller said. “He will get his day in court.”
Anderson, by both his own accounts and the charges laid out by the U.S. government, made his money starting niche telecommunication firms to compete in newly deregulated markets in Europe and the United States, building the firms into worthy competitors and selling them at considerable gains.
Anderson told Space News in 2002 that he netted nearly $1 billion when he sold Esprit Telecom to Global Telesystems Inc. in 1997.
The U.S. government maintains that Anderson went to great lengths to conceal his earnings and hide his ownership of American businesses through two offshore firms, Gold & Appel Transfer in the British Virgin Islands and Iceberg Transport SA in Panama.
Associates said that the name of his holding firm, Gold & Appel Transfer, is a sly reference to The Golden Apple, the second book in Robert Anton Wilson’s 1975 Illuminatus! trilogy, a complex spoof of paranoid conspiracy theories, Gnostic mysteries and world domination.
Long-time associates said that when Anderson started a new business, he would give his new partner a golden apple. “But it wasn’t even real gold,” said one former business partner, who noted that Anderson went to great lengths to explain that his token of esteem was made of ordinary metal and did not cost him very much.
Before his arrest, friends and associates often said that what was most remarkable about Anderson was how low key he was for someone who had so much money during the telecom boom. Aside from his private jet, a taste for fine wine and some expensive paintings bought at auction and displayed in his Georgetown apartment, friends said they saw no evidence that Anderson was given to lavish excess.
Anderson usually dressed in the slightly rumpled garb favored by college students and software engineers, wore a Mickey Mouse watch and drove late model cars. One visitor to his Georgetown apartment said Anderson’s bed appeared to be a mattress on the floor.
People who know Anderson said he can be quick tempered and stubborn, choosing confrontation where others might choose diplomacy.
Anderson told Space News in an October 2004 interview that he regretted his $35 million investment in Rotary Rocket and blamed the failure of Redwood City, Calif.-based rocket start-up on its chief executive officer, serial entrepreneur Gary Hudson.
Hudson, whose current venture Transformational Space Corp. won a $3 million NASA contract last year to help the U.S. space agency develop its lunar exploration plans, declined to respond to Anderson’s charges at the time. Associates of the two men told Space News last week that Anderson publicly criticized Hudson last year knowing that Hudson was soon due to testify in front of the grand jury investigating Anderson for tax evasion.
Rick Tumlinson, a longtime Anderson friend and business associate, described the telecommunications entrepreneur as a space visionary with the financial means to try to make his dreams come true.
“Whatever is going on between Walt and the government is between Walt and the government,” Tumlinson said. “What I can tell you is that when other people have been hesitant, he’s been willing to step up again and again to support the cause of getting people into space and actually put his money where his mouth is. He’s helped keep the dream alive.”
Tumlinson resigned in November as the director of the Foundation for Non-governmental Development of Space, a charitable endowment Anderson established in 1997 to fund innovative space projects. Anderson also used some of his telecom earnings in the late 1980s to help start both the Mars Society and the Space Frontier Foundation, which is an activist organization co-founded by Tumlinson.
In 2000, Anderson put up $30 million in an effort to keep the Mir space station on orbit as a commercial platform after Russia — under pressure from the United States — announced it would deorbit the aging station into the ocean and focus on building the international space station.
Anderson’s investment kept Mir in space an additional year. During that time, Amsterdam-based MirCorp signed a contract with Los Angeles businessman Dennis Tito to fly to the Russian space station. Tito never got the chance to visit Mir before it was steered into the ocean in March 2001, but later that year, over the initial objections of NASA, Russia flew Tito to the international space station for a week long stay.
After investing more than $60 million in MirCorp and the failed Rotary Rocket, Anderson started a satellite servicing venture in 2002 called Orbital Recovery Corp. and took on the role of chairman and chief executive, an unusual step given his tendency to keep a low profile in his space businesses.
Anderson told Space News in 2002 that unlike some of his previous forays into space — which he admitted could be characterized more by their underlying idealism than hard-nosed business acumen — the driving motivation behind Orbital Recovery was to make money.
“The joke is I make money in telecom so I can [throw] it away in space,” Anderson said. “I’m done being an angel investor for crackpot space enthusiasts. I want to be the guy who really commercializes space.”
Anderson no longer has an operational role in Orbital Recovery, according to Jeffrey Lenorovitz, president of a Fairfax, Va.-based public relations firm that represents the company.
“Walt Anderson contributed to the early stages of the structure of Orbital Recovery. He has not been involved in the operations of the company since early 2004,” Lenorovitz said. “The recent events are a personal matter for Mr. Anderson and have no relevance to the company.”
Lenorovitz said the London-based company changed its name to Orbital Recovery Ltd. in 2004 and hired Phil Braden to serve as chief executive officer. He said the company does not depend on Anderson’s money and is funding the development of the ConeXpress Orbital Life Extension Vehicle through investments from its major European industrial partners, including Dutch Space, the Swedish Space Corp. and Kayser-Threde of Munich, Germany.
Lenorovitz declined to comment on how much of the new company, if any, Anderson still owns. “As a private company we do not provide such information,” he said.