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The Boston Globe

Politics

US calls Big Dig chief a tax cheat

This 1997 photo shows then-Massachusetts Turnpike Authority Chairman James J. Kerasiotes at a groundbreaking in West Roxbury.

This 1997 photo shows then-Massachusetts Turnpike Authority Chairman James J. Kerasiotes at a groundbreaking in West Roxbury.

Former Big Dig chief James J. Kerasiotes, an iron-willed taskmaster who was forced to resign because of hidden cost overruns on the massive highway project, was charged in federal court Monday with filing false tax returns.

The 60-year-old former chairman of the Massachusetts Turnpike Authority faces up to three years in prison, one year of supervised release, and a fine of $100,000. US Attorney Carmen M. Ortiz’s office said, however, that actual sentences for federal crimes are typically less than maximum penalties.

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Ortiz’s office alleges that Kerasiotes, now a self-
employed consultant to transportation and construction companies, filed income tax returns in 2010 and 2011 that reflected only a portion of his earnings during those years.

By underreporting his income, Ortiz’s office said, Kerasiotes avoided paying federal income taxes.

Representing Kerasiotes are a pair of high-powered Boston attorneys: former governor William F. Weld, who was Kerasiotes’ boss when he was state transportation secretary in the 1990s, and Juliane Balliro, a prominent defense lawyer.

In a statement, Weld and Balliro said Kerasiotes has been cooperating with the US attorney’s office and “wishes to acknowledge that he failed to include a portion of his income on his 2010 and 2011 tax returns, and takes full personal responsibility for the same.”

They said Kerasiotes looks forward to a court’s determining the amount he owes the government and is “anxious to make full restitution to the Internal Revenue Service.”

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“As counsel, we believe the amount of the tax loss is among the lowest to have been charged through criminal process in this judicial district,” the statement from Weld and Balliro said.

Balliro said in a telephone interview that Ortiz’s office alleges Kerasiotes owes $31,000, while Kerasiotes maintains that “it’s significantly less than that.”

Kerasiotes faces potential prison time, depending, in part, on the amount of the government’s loss as determined by the court, Balliro said.

The burly son of a restaurateur, Kerasiotes was for years a powerful figure in state government, capable of inspiring considerable fear on Beacon Hill.

A true believer in smaller government, he kept a toy hatchet on his desk and readily fired employees whom he considered lazy or superfluous.

He oversaw the Big Dig as state commissioner of public works from 1991 to 1992, secretary of transportation from 1992 to 1997, and Turnpike Authority chairman from 1996 until 2000.

In April of that year, he was forced to resign after federal officials released a scathing audit of the Big Dig that found Kerasiotes had intentionally hid a cost overrun of $1.4 billion. The report, from the Federal Highway Administration, said the failure of state managers to disclose the project’s true cost “stands as one of the most flagrant breaches of the integrity of the federal-state partnership in the history of the nearly 85-year-old federal-aid highway program.’’

Governor Paul Cellucci asked Kerasiotes to resign, which cleared the way for his secretary of administration and finance, Andrew S. Natsios, to assume control of the Big Dig, promising a new era of transparency.

But Cellucci continued to defend Kerasiotes as a zealous manager and said he would be remembered fondly as “the builder of the Big Dig.”

Jim O’Sullivan of the Globe staff contributed to this report. Levenson can be reached at mlevenson@globe.com.

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