Man Ran Secret Bank From His Washington Home

Submitted by Dmitri Davydov on Thu, 2007-05-03 08:52.
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A man operated a "warehouse bank" out of his suburban home in Washington, taking at least $28 million from people around the country who wanted a discrete bank account, according to court documents.

An IRS investigator said Robert Arant had hundreds of customers, many of whom apparently used his bank, Olympic Business Systems LLC, to conceal assets for the purpose of evading taxes.

On his now-defunct Web site, Arant advertised his services to those "who would rather not deal directly with the banking system," court records said.

Arant took customers' money -- promising to keep their identities private -- and pooled it in six accounts at Bank of America, U.S. Bank and Wells Fargo Bank, IRS agent Susan Killingsworth said in court papers.

Arant would pay the customers' bills from those commercial bank accounts, charging about $75 a year in fees for the service, plus fees for wire transfers and for initial account set-up, court record said. For $30, customers could buy debit cards to access their money more easily; otherwise, they could access it by check, money order or wire transfer, she said.

Reached by phone at his home Tuesday, Arant said he intended to represent himself in court, but declined to comment further.

"I'm not where I need to be as far as responding to the IRS at this point," he said.

A civil complaint charges Arant with promoting abusive tax shelters and unlawfully interfering with internal revenue laws. And a federal judge has frozen the assets of Arant's bank.

Agents seized computers and financial records last month from the home where Arant lives with the property's owner, Martin F. Dugan.

Killingsworth was initially assigned to investigate Arant's failure to file income tax returns since 2001.

She said she has been able to identify 13 people who used Arant's service while underreporting or not reporting their income from 2002, when the bank opened, to 2005.

Arant could face civil penalties of $1,000 per false statement he made in promoting the scheme -- typically calculated as one false statement for each of his customers.

Warehouse bank schemes were popular as illegal tax shelters in the 1980s, but several have been busted in more recent years -- including one broken up in Boring, Ore., in 2000, involving $186 million in deposits from 900 people over 14 years. The six organizers of that scheme were sentenced to up to four years in prison.

[Via - SouthFlorida.Com]

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