Gerard Terry charged by Feds with tax evasion, officials say

Former North Hempstead Democratic Party leader Gerard Terry was arrested by federal agents Tuesday and indicted on charges of federal tax evasion and obstruction of the Internal Revenue Service, officials said.

Terry, 62, of Roslyn Heights, a formerly influential party operative, resigned or was terminated from multiple public positions last year after Newsday reported that he had compiled nearly $1.4 million in state and federal tax debt.

On Tuesday, Terry was charged in a two-count indictment with a complex scheme to avoid paying federal taxes totaling over $1.4 million since 2000. This, despite earning more than $250,000 a year, according to a statement by Eastern District U.S. Attorney Robert Capers.

Following the Newsday report, the Nassau district attorney’s office said it was investigating Terry, who was charged in April and August on a total of eight counts of tax fraud relating to state income taxes.

“These charges track the state charges, and we will answer them in court,” Stephen Scaring of Garden City, one of Terry’s attorneys, said by telephone before a hearing in federal court in Central Islip.

Terry pleaded not guilty to the federal charges.

In addition to the prison time he already potentially faces if convicted on federal and state tax charges, Terry is also “being investigated for his role in kickback, bid rigging and other procurement fraud schemes in Nassau County,” Assistant U.S. Attorney Artie McConnell wrote in a court document asking that Terry be detained without bond.

McConnell also noted that when federal agents arrested Terry at his home Tuesday morning they found and seized $30,000 in cash and were trying to determine if it was part of Terry’s scheme.

Susan Carman, of Garden City, one of Terry’s lawyers, who was in court, said the money belonged to Terry’s wife.

U.S. District Judge Joanna Seybert, noting that it was highly unusual to detain somebody on tax charges, released Terry on a bond, backed by $600,000 worth of property owned by a brother-in-law, with conditions that he be confined to his home and monitored by an electronic bracelet.

Carman declined to comment afterward.

Capers said in his statement “the defendant knowingly and willfully refused to pay his federal income taxes. That he did so while earning hundreds of thousands of dollars from government and civic positions only makes his conduct more offensive.”

Even when the IRS repeatedly attempted to collect his taxes, Terry filed tax forms, as part of his scheme, “that contained false information and failed to report income . . . to obstruct internal revenue laws,” Capers said.

Among other techniques Terry used to avoid having the IRS collect the tax money he owed, Terry cashed $500,000 worth of wage and compensation checks rather than depositing them in bank accounts where they could be seized, Capers said.

And when he deposited checks in bank accounts, Terry only deposited “the minimum amounts necessary to cover . . . personal expenses and luxury items” leaving insufficient money for the IRS to seize, Capers said.

Terry also created and used a checking account in the name of a fictitious person to conceal income, and had one employer make payments to one of his credit cards instead of issuing him a paycheck to a bank account that could be seized by the IRS, court papers said.

Terry also “pressured colleagues and subordinates” not to respond to IRS levy notices and “instructed subordinates” at an unnamed municipality not to open letters sent from the IRS, court documents say.

Newsday’s report found that Terry, in 2015, made more than $217,000 in six public positions: as a lawyer for the Democratic commissioner at the Nassau County Board of Elections; attorney for North Hempstead’s board of zoning appeals; counsel to the North Hempstead Town Attorney; and as the attorney for the Freeport Community Development Agency, Roosevelt Library Board, and Long Beach Housing Authority.

Terry has said his tax situation was the result of a “cascading series of serious health issues,” citing his open heart surgery, and he promised to settle with the IRS on the back taxes.

Terry’s issues led North Hempstead to pass a series of ethics reforms, including the requirement that contractors who advise town boards file financial disclosure forms with the town. However, Terry was required to file financial disclosure forms in his role as town party chairman, a requirement that was never enforced in 25 years, officials acknowledged last year.

Carole Trottere, a spokeswoman for North Hempstead Town, said “the Town is fully cooperating with the authorities.”

— With Scott Eidler

By Robert E. Kessler

Robert.Kessler@newsday.com

Bob Kessler covers federal law, including law enforcement agencies such as the FBI, DEA, IRS and ATF, as well as the federal courts.