DOJ shuts down warehouse bank

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
TUESDAY, MAY 1, 2007 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888

FEDERAL COURT IN SEATTLE SHUTS DOWN
SO-CALLED “WAREHOUSE BANK”

Customers Across the Country Allegedly
Used Scheme to Hide Income and Assets from the IRS

WASHINGTON – A federal court in Seattle has shut down a nationwide “warehouse banking” scheme whose promoter falsely promised customers they could legally hide their income, assets, and identities from the Internal Revenue Service, the Justice Department announced today. The warehouse bank, known as Olympic Business Systems (OBS), is operated by Des Moines, Wash., resident Robert Arant.

The court order, called a preliminary injunction, was signed on April 27 by Judge Marsha J. Pechman of the U.S. District Court for the Western District of Washington. A temporary restraining order freezing Olympic’s assets was previously signed on April 17 by Chief Judge Robert L. Lasnik. The court orders were initially filed under seal, but the court today ordered them unsealed.

In papers filed in support of obtaining the injunction, the government alleged that Olympic deposited almost $28 million of customer funds into accounts that OBS maintained in its own name at commercial banks. Olympic allegedly used the funds to pays customers’ bills and expenses while promising to leave no paper trail.

Judge Lasnik’s order held that Arant “is or should be aware that courts have repeatedly held that warehouse banks are tax evasion schemes.” A California federal court in 2004 permanently closed a similar warehouse bank. Details about that case are available at http://www.usdoj.gov/tax/txdv04785.htm . In 2005 a federal court in Oregon sentenced operators of a warehouse bank to prison, after their criminal convictions. Details are available at http://www.usdoj.gov/tax/txdv05070.htm .

Since 2001 the Justice Department has obtained injunctions against more than 235 tax preparers and tax-fraud promoters. Information on those cases is available at http://www.usdoj.gov/tax/taxpress2007.htm . More information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax .