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Operator of Warehouse Bank Sent to Jail

ALLEGED TAX-SCAM PROMOTER SENT TO JAIL

California Man Found in Contempt of Court for Failing to Turn Over Company Records

WASHINGTON, D.C. - The Justice Department announced today that a federal judge in Santa Ana has ordered Anthony L. Hargis, of Fountain Valley, California, to be jailed indefinitely for failing to give records of his business, Anthony L. Hargis & Co., to the IRS. Among the records sought is a customer list for a so-called warehouse bank that the Justice Department alleges Hargis uses to help customers hide their income, assets, and identities from the IRS.

The court in December 2003 ordered Hargis to turn the records over. Yesterday, after a hearing, Judge David O. Carter of the U.S. District Court for the Central District of California found Hargis in contempt of court for failing to do so, and Hargis was taken into custody immediately. The case involves an IRS summons, which is similar to a subpoena, that require Hargis to produce his company's business records to the IRS. The United States enforces a summons by bringing a suit in federal court.

"The IRS and the Justice Department are working hard on several fronts to battle tax scams," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "Failure to comply with court orders enforcing IRS summonses is a serious matter; imposing strong sanctions on those who violate court orders ensures that the rule of law is upheld."

In a related civil injunction case in the same court, the Justice Department sued Hargis last week, alleging in court papers that Hargis' warehouse bank accepts funds from some 253 customers and then places the commingled funds in nine commercial bank accounts, held in his name or the names of his associates. Hargis then allegedly uses the commercial bank accounts to write checks to pay customers' bills. The commercial bank accounts are allegedly held in Hargis' and his associates' names, making it difficult for the authorities to trace the income, assets, expenditures, and identities of customers. The complaint alleges that Hargis' customers, located throughout the United States, but primarily in California, owe an estimated $24 million in federal taxes.

More information about the injunction case is available at www.usdoj.gov/ tax/ 04_tax_151.htm. The Justice Department has sought and obtained injunctions against a number of tax-scam promoters. Information on some of these cases is available at: http://www.usdoj.gov/tax/ taxpress2004.htm, and http://www.usdoj.gov/tax /taxpress2003.htm. More information about the Justice Department's Tax Division can be found at http://www.usdoj.gov/tax.

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