Former North Hempstead Democratic Party chairman Gerard Terry has been released as the attorney for the Freeport Community Development Agency after his arrest on charges of federal tax evasion and obstructing the Internal Revenue Service.

The Freeport agency terminated Terry’s services on Wednesday, village officials said.

Terry, 62, of Roslyn Heights, was arrested Tuesday. Federal prosecutors said he avoided paying more than $1.4 million in federal taxes since 2000, despite having been paid more than $250,000 annually. Prosecutors alleged in court papers that Terry “pressured colleagues and subordinates to not comply with IRS notices of levy.”

He was arrested on state charges of income tax fraud last year after Newsday reported Terry had compiled a $1.4 million federal and state income tax debt while battling lawsuits alleging fraud and working with a lapsed attorney registration. He has pleaded not guilty to the state and federal charges.

Terry, who said last year he did not have an office and worked out of his home basement, resigned from his position as North Hempstead Democratic chairman one day after Newsday’s report. He had also resigned or was terminated from five public attorney positions last February: as the counsel for the North Hempstead town attorney and board of zoning and appeals; the Long Beach Housing Authority; the Nassau County Board of Elections Democratic commissioner; and the Roosevelt Public Library Board.

“What you do with your personal finances is your business,” Kimberly Labrador, the Freeport Community Development Agency executive director, said in an interview Thursday, noting that it was the board’s stance that Terry’s taxes were a “private issue, a personal issue.” She said, “there was no misdoing as far as business went, anything to do with us.” Labrador said that she had believed he was “innocent until proven guilty,” but after Tuesday’s arrest, Terry’s taxes became a “much bigger issue.”

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“The CDA is not a very lucrative business for an attorney; there’s not a lot of money to be made representing us,” Labrador added.

Terry was paid a total of $128,728 since 2010 for his Freeport CDA work, Labrador said.

The federal charges “track the state charges, and we will answer them in court,” Stephen Scaring, Terry’s Garden City-based attorney, said Tuesday. He could not be reached for comment Thursday.

Terry’s contract with the Freeport Community Development Agency expired in August and had been renewed on a monthly basis, starting in September. The agency issued requests for proposals for a new attorney in September.

Terry’s arrest led to reforms in North Hempstead Town where officials said they would enforce, for the first time in 25 years, a requirement that town party leaders file financial disclosure forms. Had Terry filed the forms, the town would have had documentation of his tax debts.