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Lawyer helped clients evade millions in taxes, feds claim

Mon, Dec 3rd 2007 12:00 am
PHILADELPHIA (AP) - An anti-tax activist hid millions in income for himself and clients through an elaborate web of shell companies, federal prosecutors charged Wednesday in an 11-defendant indictment.

Bernard Bagdis, 58, a lawyer and tax preparer, was arrested after a six-year investigation that netted two doctors, an engineer, several business executives and an older woman with a small cleaning service.

At one point, Bagdis agreed to help an undercover Internal Revenue Service agent hide $100,000 in cash so that it wouldn't be taxed, officials said.

"He boasted he would write a book and call it ‘Federal Tax Fraud: The User's Guide,' " U.S. Attorney Patrick Meehan said at a news conference.

Bagdis runs a small law office in Blue Bell, Pa., a Philadelphia suburb, but has not filed an individual tax return since 1990, prosecutors said.

The 74-count indictment charges that he and his clients failed to pay $4.6 million in federal taxes on a combined $23 million in unreported income from 1996 to 2006.

At a hearing Wednesday afternoon, a judge set bail for Bagdis at $2 million and ordered him to surrender his passport and about 25 firearms he said he keeps at his Norristown home. He was also ordered to wear an electronic monitoring device. His office did not immediately return a phone message.

The others charged include two principals of the Basement Doctor Waterproofing Co., based in Pennsylvania. Bagdis came to own a 7 percent stake in the business and control much of its finances, prosecutors said.

The co-defendants also include Dr. Bertram Russell, a radiologist based in Chester County who paid no federal taxes on nearly $3 million in income from 1998 to 2006, prosecutors said.