THE hotelier Beatrice Tollman used secret codes to hide $35 million (£18 million) from the taxman, a court was told yesterday.

Her husband, Stanley, who is also fighting extradition to the US, took part in a $90 million fraud against bankers, it was claimed. The Tollmans, friends of the Thatchers and White House guests of the Reagans, became immensely rich through a pattern of deliberate dishonesty, it was alleged.

Once the couple realised that the Channel Island authorities had handed incriminating evidence about their bank accounts to America, they abandoned their three luxury homes in the US and stayed in Britain, a judge was told.

A lawyer representing the US Government outlined for the first time in an English court details of the allegations against the couple.

The Tollmans, both excused attendance at Horseferry Road Magistrates Court, London, because of poor health, deny any wrongdoing.

Mr Tollman, 75, is also wanted for bank fraud. Both claim that they are victims of an overzealous New York prosecutor who targeted Mr Tollman’s family to pressure him into surrendering to US custody for trial.

The pair say that Britain should throw out the extradition claim for “abuse of process”. Although the US has sought the Tollmans under fast-track extradition since August 2004, the millionaires are each represented by senior and junior counsel.

Legal arguments are scheduled to last until at least next March. Mrs Tollman’s role in alleged large-scale tax fiddles was outlined in evidence read to the court by Alun Jones, QC, for the US. The Tollmans were said to have opened accounts in the Channel Islands in their own names, which received $35 million during the 1990s.

As US citizens, they were required to report their worldwide income on tax returns but are said to have failed to declare this cash. A special agent of the Internal Revenue Service studied thousands of documents obtained from Guernsey and interviewed witnesses.

“Beatrice Tollman would telephone certain employees in the US and speak in code or use false names,” Mr Jones said. In her codes, brochures or books referred to amounts of money, so “five or six brochures” meant “five or six thousand”. By reference to individuals’ names, Mrs Tollman, 73, would signal to staff which currency was required.

“Mr and Mrs Tollman have enriched themselves to an almost unimaginable extent by careful and repeated swindles,” Mr Jones said. “The defendants have tried at all stages to avoid any examination of the facts, preferring just to throw abuse.”

Mrs Tollman has three residences in the US: the entire 11th floor of a block in Park Avenue, New York; a compound in Connecticut and a home in Palm Beach, Florida.

US prosecutors seek the forfeiture of these assets.

The case continues.

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