Gerard Terry, the former North Hempstead Democratic Party leader, was charged with tax fraud Tuesday by Nassau prosecutors who said more charges may be filed against the longtime party operative who compiled nearly $1.4 million in tax debts while receiving hundreds of thousands of dollars in government work.

Terry, 61, of Roslyn Heights, was arrested early Tuesday and later in the morning pleaded not guilty to one count of criminal tax fraud dating to 2010, when he did not file a personal income tax return.

Prosecutors said Terry “has regularly failed to voluntarily pay New York State personal income taxes” since 2000. Diane Peress, chief of the Nassau County district attorney’s office economic crimes bureau, said at Terry’s arraignment in First District Court in Hempstead that the charge was filed in the 2010 case to avoid having the statute of limitations expire. There “may be additional felony charges,” she said.

Terry, who surrendered to prosecutors, was released on his own recognizance, with no bail requested.

Peress, holding Terry’s confiscated passport in a plastic bag, asked Judge Darlene Harris to bar him from leaving the state until the trial was completed. She said Terry has a history of leaving the country several times a year, including for two weeks he spent in the Turks and Caicos in February after Newsday reported on his tax debts. He faces a maximum sentence of 2 1/3 to 7 years in prison. His next court appearance is April 26.

Terry, wearing a tan trench coat, did not comment during the arraignment other than to say “that’s understood,” when the conditions of his release were read. His attorney, Peter Tomao of Garden City, said Terry “has no reason to leave the area.”

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The arrest comes after Newsday reported in January that Terry, a private practice lawyer working from the basement of his Roslyn Heights home, was paid more than $217,000 last year from six government positions controlled by Democratic Party officials or in party enclaves.

“Cheating on taxes is always wrong, but it’s especially egregious when much of the undeclared income was paid from taxpayer-funded government accounts,” Nassau District Attorney Madeline Singas said in a news release. “These allegations underscore the need for robust vetting practices at every level of government to ensure that taxpayers hire only those fit for public service.”

Her office worked with the New York State Department of Taxation and Finance in the investigation.

Prosecutors said the investigation began in January after Terry released a public statement admitting his debts as Newsday questioned him about his taxes. Peress said Terry paid $8,000 for the statement, which was released by his then-spokesman Gary Lewi of Rubenstein Associates in Manhattan. At the same time, Terry wrote a $5,100 check to the IRS that bounced, Peress said.

Lewi said Tuesday that the statement cost $845.25. He added that “Mr. Terry’s law firm had a retainer agreement with the agency which was not sustained by the client and I believe the prosecutor may have been referring to one of our invoices.”

Singas’ office said Terry’s average annual income was between $200,000 and $300,000 since 2000 but he failed to “regularly” pay state income tax. The current charge is for failing to file a New York State personal income tax return for 2010, when his tax liability on more than $250,000 in income was $13,000. He did not file or pay personal income taxes in 2009, but the statute for that year has expired, prosecutors said. The investigation continues into the following years, Singas’ spokesman Shams Tarek said.

Prosecutors said that Terry, at the end of 2011, had not filed state or federal taxes on personal income, or any of his back taxes, despite having received communications from the IRS about not filing taxes in 2009 and 2010.

Tomao said the issue was a “collection matter” and that Terry was working to settle with the IRS later this month. Peress said in court that Terry has admitted he will “never be able to pay back his federal taxes.”

“Mr. Terry has pleaded not guilty and intends to fight this case in court,” Tomao said. He added that Terry “has filed returns in all years” and that they were “accurate.”

Since 2000, Terry has amassed nearly $1.2 million in federal liens from the IRS and more than $205,000 in state tax warrants, according to public records. Tomao said he has spoken with federal prosecutors and “there’s no indication of any action about to be taken by the federal authorities in connection with this.”

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Terry resigned his post as party chairman in February and stepped down from five of his six public jobs, including a $75,000 Board of Elections assistant counsel position.

North Hempstead severed its relationships with Terry, who served as the board of zoning appeals attorney and as an adviser to the town attorney’s office. He also is no longer the attorney to the Roosevelt Library Board and the Long Beach Housing Authority. Officials from the Freeport Community Development Agency have not responded to inquiries about his status as the attorney there.

North Hempstead Supervisor Judi Bosworth and former Supervisor Jon Kaiman did not respond to requests for comment about Terry’s arrest. Town spokeswoman Carole Trottere said in a statement that “we continue to cooperate with law enforcement in their inquiries.”

Nassau Democratic chairman Jay Jacobs said, “I feel very badly for Gerard and his family on a personal level. I know Gerard, and I just feel that the finances must have gotten away from him, and he got himself caught in a bind.”

North Hempstead officials have said an investigation continues into Terry’s wife, Deputy Town Clerk Concetta Terry, who did not include her husband’s tax debts on her financial disclosure forms with the town, records show. Officials who must file disclosures are required to list debts in excess of $5,000 of their spouses and dependent children.

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After Newsday’s reports on Terry’s taxes, the North Hempstead Town Board reformed its ethics laws, requiring contractors who advise town boards to file financial disclosure forms and anyone who files the forms to identify family members who work for the town.

Town officials said there is no record of having ever enforced the 25-year-old requirement that Terry or any other town party leaders file financial disclosures with the town. Without his disclosures, town officials did not have documentation of Terry’s tax debts.

— With Nicole Fuller