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 required 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's 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's 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's customers, located throughout the United States , but primarily in California , owe an estimated $24 million in federal taxes.
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For both promoter and victim, if caught, the price can be high. Those caught using trusts to illegally avoid paying taxes, the government must be paid the original taxes with interest plus fines plus an additional penalty of 75% of the original tax. It is very realistic that, when it's all said and done, the person charged with offshore trust abuse could wind up paying more than twice the original tax.
If you have utilized offshore companies, set up bank accounts in an offshore tax haven, or were convinced that an abusive tax shelter was a good idea, we can take action on your behalf. We will work diligently to get you in compliance and try to avoid criminal prosecution. If you have already been contacted by an IRS Special Agent and the IRS is pursuing you criminally, we will try to minimize the damage and aggressively defend your rights. Our law firm performs every type of civil tax audit, including foreign tax audits, and has been successfully defending our clients in the audits, appeals and tax litigation a rena, for over twenty years.
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