Morris Zukerman spent 16 years at Morgan Stanley, at various points overseeing its energy and merchant banking practices, before starting his own investment firm in the late 1980s.

His firm’s partners have included ConocoPhillips, ExxonMobil and Kinder Morgan. He endowed a Harvard sociology professorship. He collected dozens of expensive paintings, including works he loaned to the Metropolitan Museum of Art.

Along the way, he evaded more than $45 million in taxes, the U.S. now alleges.

Zukerman avoided income and sales taxes by hiding his gains in phony commercial and charitable transactions, according to an indictment made public on Monday by a federal court in Manhattan.

The indictment arrives as tax evasion draws renewed attention from law enforcement agencies and policy makers, prompted by leaked Panama law firm documents showing how networks of international shell companies are used by the ultra-rich to shield assets. But the Zukerman allegations are a reminder of the continued prevalence of methods that are far more old school.

Zukerman failed to report profits from the sale of an oil company, lied to his accountants, created phony and backdated documents and shipped paintings to addresses in Delaware and New Jersey to avoid New York state sales tax on artwork that hangs in his Park Avenue duplex, according to the indictment. He also took charitable tax deductions for donations he didn’t make, it says.

Morris Zukerman Morgan Stanley tax evasion

Morris Zukerman walks out of the Manhattan federal court in the Manhattan borough of New York, U.S., May 23, 2016.

Zukerman, with a full head of white hair and wearing tortoiseshell glasses, pleaded not guilty in a Manhattan courtroom Monday. The judge approved his $2.5 million bond, secured by works in his art collection. The government had already taken $1 million in art from Zukerman during a search, according to Stanley J. Okula, the prosecutor at the hearing. Zukerman’s attorney, James Bruton of Williams & Connolly LLP, said that he was in talks with the government to resolve the case.

“Morris Zukerman cheated on virtually all of his various tax obligations,” Manhattan U.S. Attorney Preet Bharara said. “To top it off, when the IRS auditors examined his returns, Zukerman allegedly schemed to defraud and obstruct the IRS auditors who were examining his false tax returns.”

If convicted of all three counts against him, Zukerman could face up to 28 years in prison. A message left with his office in Manhattan was not returned.

Energy Investor

Zukerman, 71, is the chairman of M.E. Zukerman & Co. Inc., which invests in “stable assets used to produce, gather, process, transport, store, refine or distribute crude oil, natural gas and related products,” according to the company’s website.

He is a graduate of Harvard College and Harvard Business School, where he was a prestigious Baker Scholar, and studied economics at Cambridge University, according to a biography on his firm’s site. He worked in the Nixon White House, under George P. Shultz in the Office of Management and Budget, according to published biographies. He worked at Morgan Stanley from 1972 to 1988. Since then he has served as a member of the Board of Overseers at Harvard University and as a trustee of Phillips Academy, among other positions.

Along with Kinder Morgan and ExxonMobil, Zukerman’s firm, through a subsidiary, owns a significant stake in the Cortez Pipeline Company, which operates a 500-mile carbon dioxide pipeline running from Texas to Colorado.

None of those companies is accused of any wrongdoing in connection with tax charges against Zukerman. Zukerman is not accused of any wrongdoing during his time at Morgan Stanley.

Court filings show that the indictment was first filed under seal on May 11.

Unreported Gains

Securities filings show that in 2008, Zukerman’s company sold for $267 million a firm it owned with ConocoPhillips called Penreco, a maker of specialty solvents and refined petroleum products.

Although the indictment doesn’t name Penreco, it alleges that that same year, Zukerman’s firm sold a company at about that price and failed to report a gain that would have generated about $31 million in income taxes. The indictment alleges Zukerman told his accountants that he had previously transferred the investment to a family trust and that his firm’s parent company was not liable for capital gains taxes.

To bolster this claim, he created backdated and phony documents, which he showed to his tax accountants, who were not handling the taxes for the family trust. The indictment alleges the trust failed to file tax returns for the year when the sale took place.

Zukerman was audited by the Internal Revenue Service in 2012 in connection with the transaction but provided false information to his accountants and lawyers in connection with the audit, the indictment says. Zukerman divided his accounting and tax preparation work for his various personal and business interests so that no one had a full picture of his dealings, it says.

Soon after that windfall — which netted Zukerman’s entities $110 million — the indictment alleges he transferred the funds to another company, which spent $52 million to purchase 73 paintings. Although prosecutors don’t describe the specific works, Zukerman and his wife own a variety of Dutch paintings, according to the Metropolitan Museum of Art’s website, including works by Van Vliet. On the NY Social Diary website, the museum’s late curator of European paintings described him as “a friend of my department with a capital F.”

Sales Taxes

Prosecutors allege that Zukerman engaged in a complex scheme to avoid paying New York State sales and use taxes on the purchase of those paintings.

For example, local galleries – sometimes just a few blocks from his apartment — would permit him to “test drive” paintings on the walls of his Park Avenue duplex. After deciding to purchase the paintings, he’d direct them to be shipped to the addresses of companies he controlled in Delaware and New Jersey. Within hours or minutes after arriving at those addresses, the indictment alleges, the paintings were sent right back to his apartment.

He allegedly used a similar method to avoid New York state sales tax on a $645,000 pair of diamond earrings from a merchant he met at an art fair in Maastricht, the Netherlands, directing the merchant to mail them to a Zukerman entity in New Jersey.

Although he lives on Park Avenue — a similar apartment in his building is on the market for $16.5 million, a listing shows — documents filed by his U.K. company list him as a resident of Monaco, the tiny tax haven on the French Riviera. The indictment doesn’t allege any improper behavior related to his status there.

The indictment also alleges that Zukerman spent $1 million in 2010 to purchase 250 acres of land on Black Island, off the coast of Maine. Although he had discussed making a donation to the group so that it could acquire the land, he instead bought the land himself. Nevertheless, he claimed a charitable deduction for that amount on his tax return.

Felony Counts

After IRS auditors questioned the deductions, Zukerman provided misleading documentation to his advisers to respond to the audit, the indictment says.

Zukerman is charged with three felony counts including tax evasion and “corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws,” along with wire fraud in connection with his New York State tax liability.

The indictment says he made interest payments to an entity he controlled, only to send those payments back into bank accounts controlled by him and his family members. Those transactions generated improper deductions on the tax returns filed by those family members.