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FEDERAL COURT SHUTS DOWN MULTI-STATE
WAREHOUSE BANKING” TAX EVASION SCHEME
California Man Helped Customers Hide Income
And Assets From IRS
WASHINGTON, D.C. - The Justice Department announced today that a federal
court has permanently shut down a tax evasion scheme operated by Anthony L.
Hargis, of Fountain Valley, California. Hargis and his business, Anthony L.
Hargis & Co., or ALH, helped customers attempt to hide assets and income
from the IRS. In permanently enjoining the scheme, sometimes referred to as
a “warehouse bank,” Judge David O. Carter of the U.S. District
Court for the Central District of California found that Hargis falsely promised
customers that they could use ALH as a “private banking system” to
legally hide their income, assets, and identities from the IRS. The court found
that Hargis “knew or had reason to know” that his statements to
customers were “false or fraudulent.”
The court found that ALH customers who owed substantial tax debts, were under
IRS audit, or had been criminally convicted for failing to file federal tax
returns used ALH to hide their income and assets from the IRS. Evidence submitted
by the Justice Department showed that ALH customers sent money to ALH, which
commingled the funds and deposited them in accounts at six commercial banks-four
in California, one in Nevada, and one in Minnesota. ALH then wrote checks for
the customers, enabling them to pay their bills without leaving a paper trail
with their names on it. Last August, the court preliminarily enjoined Hargis
and ALH and appointed Robert Mosier of Santa Ana as a receiver to take possession
of ALH’s records and assets, including the commercial bank accounts.
“The Justice Department is committed to taking appropriate action to
stop tax fraud schemes,” said Eileen J. O=Connor, Assistant Attorney
General in charge of the Justice Department's Tax Division.
Earlier this year, Judge Carter found Hargis in contempt of court for failing
to turn over his customer list and other records. Hargis was held at the Santa
Ana City Jail for over five months for violating the court’s order.
The court’s order requires Hargis to send copies of the injunction to
customers. The court also directed the receiver to post the injunction order
on the ALH website.
Justice Department trial attorney Michael R. Pahl handled the case which was
investigated by IRS revenue agent Shereen Hawkins.
The Justice Department has sought and obtained injunctions against a number
of tax-scam promoters. More information about this case is available at http://www.usdoj.gov/tax/txdv04562.htm.
More information about the Justice Department’s Tax Division can be found