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Court Shuts Down 'Warehouse Bank'

May 2, 2007 

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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, according to the Justice Department.

The warehouse bank, known as Olympic Business Systems (OBS), is operated by Des Moines, Wash., resident Robert Arant.

The government contended 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.

The court’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. In 2005 a federal court in Oregon sentenced operators of a warehouse bank to prison, after their criminal convictions.

Since 2001 the Justice Department has obtained injunctions against more than 235 tax preparers and tax-fraud promoters.

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