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Philadelphia-area newspaper headlines regularly described Nicholas Panarella Jr. as “The Tax Commando.” Panarella’s company, Municipal Tax Bureau Inc., would collect money local municipalities didn’t even know they were owed, then take a slice. MTB’s favorite targets: visiting sports stars, entertainers, doctors — and lawyers. In short, says Assistant U.S. Attorney Gregory Paw, “high-income earners who might have just been passing through town but were making a lot of money while at it.” But Panarella made enemies — including well-connected physicians and lawyers, who began lobbying fiercely. By 1997, facing a proposed tax law change that threatened his business, Panarella turned to state Senate Majority Leader F. Joseph Loeper Jr. In return for bottling up the legislation, Loeper was secretly put on MTB’s payroll as a highly paid “consultant.” Paw, then a young lawyer in the Philadelphia U.S. Attorney’s Office, had grown up in Chicago, where he thought he had “seen it all” when it came to corruption. But the City of Brotherly Love, he says, “had a lot to teach me.” After an informant tipped off the Federal Bureau of Investigation about the Panarella-Loeper relationship, Paw was assigned the case. What followed was a two-and-a-half-year combined investigation by the Federal Bureau of Investigation, the Department of Justice, and the Internal Revenue Service. Paw, 39, says he benefited from the undergraduate journalism degree (from the University of Illinois at Urbana-Champaign) that he had gotten before going to the Marshall-Wythe School of Law at the College of William & Mary. “The best training I had for this job was being a reporter,” he says. Paw recalls the effort required “reading through thousands of pages of legislative record and then interpreting cryptic legislative maneuvers designed by men who did not intend for their work to be found out.” The result: Both men pleaded guilty — Loeper to interference with internal revenue laws, Panarella to wire fraud — and both got six months in federal prison. Defense attorney William Winning, a partner at Philadelphia’s Cozen O’Connor, was co-counsel for Loeper. “Even though I was on the other side,” says Winning, “I came away with great respect for Greg. You can disagree with him. He can disagree with you — and strongly too. But he’s strictly a gentlemanly adversary — and a smart one.” Says Timothy Rice, head of the Official Corruption and Tax Fraud Section in the office: “Greg, in his five years here, has done every type of major case.” Paw, Rice adds, is “an excellent writer, an excellent trial lawyer, and he gets along well with defense lawyers. He’s clearly a star.” So much so that Paw was promoted in August 2002 to chief of the narcotics unit. But Paw insists he’ll still be found in the courtroom. None of this surprises Judge Richard Leon of the U.S. District Court for the District of Columbia, who mentored Paw at Baker & Hostetler’s D.C. office. Leon also employed him as assistant counsel when Leon was tapped by a congressional task force in 1992. Paw’s job required a high-security clearance — “and a strong commitment to work,” says Leon. Paw, the judge adds, “did very, very well in that context. He’s a prodigious worker.” And his prediction for Paw from here? “Great success. A section chief at Main Justice or a partner in a top-flight firm.” He pauses, then says, “Personally, though, I look forward to the day when Greg joins me on the federal bench. He’s a natural.”

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