Lawyer, 2 docs among 11 charged as tax cheats

Norristown-area attorney Bernard J. Bagdis and his 10 cronies were smart enough to earn more than $23 million in a little less than nine years.

Bagdis' problem, according to investigators, was that he and his pals were arrogant enough to try to hide that income from the IRS - bilking the government out of $4.6 million in taxes.

Bagdis allegedly even bragged that he could write a how-to manual on defrauding the government.

"He boasted he would write a book and call it 'Federal Tax Fraud, The User's Guide,' " said U.S. Attorney Patrick Meehan yesterday, as he announced indictments of Bagdis and 10 others on numerous counts of tax evasion and related charges.

"This was a complicated scheme. Bagdis' sole motivation was to not pay taxes; it was out-and-out fraud," said Meehan.

According to investigators, who have have been looking at Bagdis since 2001, he hasn't filed a tax return since 1990.

The indictment charges that Bagdis, who used the names Frank Benjamin, Adam Samuels, Pat Davis and Chris White in his allegedly illegal business endeavors, bought or created corporations to hide his income and that of his clients - while paying bills out of those companies.

One of the most serious crimes described by the indictment was Bagdis' alleged dealings with Basement Doctor Waterproofing Co. (BDWC).

Bagdis apparently became a part owner in 1999, after acquiring a 7 percent stake in the company. It was then, investigators contend, that he convinced BDWC principal owners Kenneth Klinger and Steven Schulz to disregard IRS reporting laws.

Officials believe that BDWC didn't file tax returns from 1999 through 2003, defrauding the government out of $1,618,299. Meanwhile, prosecutors say, Bagdis paid personal bills out of the company's accounts.

The government also outlined the charges against Bagdis' clients - including a radiologist, a vascular surgeon and an engineer.

Radiologist Dr. Bertram R. Russell, of Gladwyne, faces 14 charges, including six for tax evasion. The government alleges that Russell and Bagdis created a number of shell companies to hide the unreported money. Russell was also listed as a part owner of BDWC.

Prosecutors say Russell made more than $3 million for his work as a radiologist from 1998 to 2006, but didn't report any of those funds, resulting in a loss of $900,000 in tax revenue.

Russell, the indictment spells out, used the money he should have paid in taxes to pay for tuition at private schools and universities for his children, for country-club memberships and for expensive home improvements, and to pay off credit-card charges for lavish vacations.

Vascular surgeon Dr. John P. Leichner, of Newtown, faces nine counts, including three for tax evasion.

Leichner has not filed a tax return since 1991 - though he made $1.27 million from his medical practice from 1999 to 2005, prosecutors say. They charge that Leichner defrauded the government out of $251,000.

Investigators say that Leichner used one of the shell companies, Surging Skyward, to amass assets that working-class folks could only dream of.

Instead of reporting his income, prosecutors say, Leichner bought a Piper Aztec airplane, a Ferrari, a Lexus and a Mercedes-Benz. It is alleged that Bagdis and Leichner created illegal trusts that owned five vacation homes in Corolla Valley, N.C.

Bagdis, Russell, Leichner and Richard J. Frase, an engineer with Chrysler who set up a shell company with Bagdis to hide Frase's income, were all arrested and are due in court for a bond hearing, Meehan said.

If convicted on all counts, Bagdis is looking at a 10-year-prison sentence, along with paying a fine and making restitution.

"Defrauding the government is a serious crime," Meehan said. "These taxes pay for the people who protect us." *