2010-06-24 / Local & State

Pa. Lawyer Gets Decade In Prison For $5M Tax Fraud


PHILADELPHIA (AP) – An anti-tax advocate who claimed to have discovered secret loopholes in the U.S. tax code will spend a decade in prison for cheating the government out of $5 million, a judge ruled Wednesday.

Engineer-turned-tax lawyer Bernard “Jay’’ Bagdis of Norristown deployed an elaborate web of shell companies to help doctors, other clients and himself hide millions from the Internal Revenue Service.

The 60-year-old Bagdis has been in custody since a jury convicted him and two co-defendants at trial last year. Nine others pleaded guilty.

The group includes radiologist Bertram R. Russell of Gladwyne, who paid no taxes on $3 million in income. Together, the 12 defendants hid $24 million in earnings from the IRS. Russell is serving more than five years in prison.

Bagdis, a Princetontrained aeronautical engineer who later studied law, told a judge that engineering had trained him to think outside the box.

“As an aeronautical design engineer, I was trained to push the envelope,’’ Bagdis said, explaining his conduct. “Sometimes, the project can crash and burn.’’

Defense lawyers had asked for two to three years, arguing their client was a nonviolent, white-collar offender.

“He believed that he had made a discovery, and it was only a matter of time before the rest of the world caught up,’’ lawyer Michael Shapiro argued. “Jay Bagdis is intrinsically good, but he did one bad thing. He had one idea that was off in left field.’’

U.S. District Judge Curtis Joyner found the long-running scheme amounted to several conspiracies, not one bad deed. He sentenced Bagdis at the bottom of federal sentencing guidelines, but refused to depart downward.

Federal investigators spent seven years trying to untangle Bagdis’ shell games and yet more time prosecuting him.

“White-collar crimes are worse than blue-collar crimes because they cost the taxpayers so much more,’’ Joyner said. “He’s had opportunities that the drug dealer ... on the corner has never even imagined.’’

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