Former Bellevue Developer Convicted of Tax Evasion

A former Bellevue based developer and lender who spent millions on gambling, thoroughbred horse racing, private aircraft, country club fees, a Bellevue penthouse, and two Palm Springs, California, homes was convicted late yesterday of two counts of tax evasion following a nine day jury trial, announced Acting United States Attorney Annette L. Hayes.   THOMAS R. HAZELRIGG, III, 68, of Redmond, Washington, was indicted in July 2013.  The jury deliberated three and a half hours before finding HAZELRIGG guilty.  He faces up to five years in prison on each count when sentenced by U.S. District Judge Thomas S. Zilly on March 12, 2015.

“This trial laid bare Mr. Hazelrigg's wide ranging deceit and manipulation -- all in the service of greed,” said Acting United States Attorney Annette L. Hayes.  “The failure to pay taxes -- especially by someone with this defendant's financial means -- tears at the fabric of our public trust.  When Mr. Hazelrigg chose not to pay his fair share, he effectively cheated everyone.”

Evidence presented at trial described how HAZELRIGG first agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt while living a lavish lifestyle that included multi-million dollar property purchases and remodels and expensive artwork. HAZELRIGG also evaded payment of his taxes owed for 1994, for which he had filed a return showing tax owed, but for which he made no payments.  According to testimony at trial, between 1997 and 2007, HAZELRIGG illegally funneled income from his businesses into accounts that he controlled but that he kept secret from the IRS. HAZELRIGG used these accounts to pay for the multimillion dollar purchase and remodel of a Bellevue penthouse, two Chihuly glass chandeliers worth more than $460,000, and two luxury homes in Palm Springs, California.  HAZELRIGG used these secret accounts to pay various household expenses including the use of a butler.

“Thomas Hazelrigg III, wrongly thought he could hide from his tax liability,” stated Special Agent in Charge Teri Alexander of IRS Criminal Investigation.  “What makes this case so egregious is that he consented that he owed the tax and then immediately took exceptional actions to avoid his obligation to pay, all while living a lavish lifestyle. This verdict today sends a strong message that tax evasion will not and cannot be tolerated.  Americans who pay their fair share can be confident that IRS Criminal Investigation will pursue those who do not.”  

HAZELRIGG hid his assets for ten years, until the IRS liens expired.  After the liens were removed, HAZELRIGG sent an email saying he was "legit again."  Following that email, HAZELRIGG took out loans in his own name, and purchased a condo in his own name.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case was prosecuted by Assistant United States Attorneys Matthew Diggs and Brian Werner.