The Justice Department and Internal Revenue Service (search) announced Monday the indictment of a Washington, D.C., telecommunications entrepreneur accused of failing to pay $200 million in federal and local taxes.

The indictment charged that Walter Anderson (search), 51, concealed more than $500 million in personal income earned through business ventures conducted through offshore operations designed to conceal his involvement in the transactions. Anderson was arrested Saturday.

IRS Commissioner Mark Everson (search) said the allegations mark the largest criminal tax case against an individual.

Anderson started a telecommunications business in the early 1990s as the industry was being deregulated. The indictment charged that he formed offshore corporations in the British Virgin Islands and Panama to hide taxable income generated from company mergers.

"Honest taxpayers deserve the assurance that those who willfully dodge their tax obligations will be investigated, prosecuted and punished," said Assistant Attorney General Eileen O'Connor.

Federal laws require U.S. citizens to report their earnings and pay taxes. The indictment charged that Anderson claimed to be a resident of Florida when he lived at two homes in Washington, D.C., and that he owes $170 million in federal taxes and $40 million in local income taxes.