Former Big Dig chief pleads guilty to tax crimes
The controversial former chief of the Big Dig construction project, James J. Kerasiotes, pleaded guilty in federal court in Boston Thursday to charges of filing false tax returns, and could serve up to a year in prison.
Kerasiotes, 60, the former chairman of the Massachusetts Turnpike Authority, was forced to resign because of hidden cost overruns on the massive highway project. He is slated to be sentenced Dec. 10 for underreporting his income by more than $100,000 over 2010 and 2011.
US District Court Judge William G. Young agreed to first hold a hearing in November to determine Kerasiotes’s total tax fraud amount, a determination that could make a difference between a sentence of probation or a sentence of a year in prison.
“You knew you were underrepresenting income, you knew that?” Young asked.
“Yes,” Kerasiotes replied.
Kerasiotes’s lawyer — former governor William F. Weld, who had also been Kerasiotes’s boss — told Young that the total of Kerasiotes’s actual fraud would be less than $30,000 once tax deductions are accounted for, making Kerasiotes eligible for probation.
Assistant US Attorney Kristina E. Barclay argued that the total fraud, after the deductions, would still be more than $30,000, and she argued that Kerasiotes would face a sentence of 10 to 16 months in prison under sentencing guidelines. Young agreed to hear arguments Nov. 21.
Kerasiotes told the judge he was pleading guilty because “it is the appropriate response, the appropriate thing to do, the correct thing to do.”
Kerasiotes 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. He was forced to resign that year after a federal audit showed he had intentionally hid a cost overrun of $1.4 billion.
The audit, by 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.’’
On Thursday, Barclay told Young that Kerasiotes began working as a business strategy consultant for various companies in the transportation and construction industry.
He did not receive tax forms from the companies, so he reported his income directly to his tax preparer, she said. But in 2010, Barclay said, he underreported more than $100,000 in income, and more than $20,000 was underreported in 2011, she said.
Kerasiotes appeared to have several supporters in the courtroom Thursday including Weld, who was his boss when he was state transportation secretary in the 1990s.
He was also represented by prominent defense lawyer Juliane Bailliro.