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U.S. sues Monex, spinoffs for 1980s taxes
The Orange County Register

Government seeks $378 million from Newport Beach precious metals dealer.

Monex, the giant Newport Beach precious metals dealer, is fighting the federal government again.

The stakes this time: $378 million in taxes and penalties that the government says Monex has dodged for more than two decades.

Monex attorney Michael Cohen predicted the U.S. would drop the lawsuit and settle the case "without any material impact on Monex's business."

Assistant U.S. Attorney Andrew Pribe did not return two phone calls seeking comment.

Starting 40 years ago with a Long Beach coin shop, Louis Carabini built Monex into a multibillion-dollar business. Along the way he has repeatedly battled the federal government in court over regulations and taxes. The Commodity Futures Trading Commission, Securities and Exchange Commission and Federal Trade Commission all have sued Monex or other Carabini companies.

He has gotten the closest scrutiny from the Internal Revenue Service. In a series of cases the IRS demanded back taxes from 1975 through 1984. The IRS claimed that Monex dodged taxes by investing in abusive tax shelters.

The new lawsuit, filed June 13 in U.S. District Court in Santa Ana, seeks to collect on a 1998 settlement for more than $100 million. With interest and penalties, the bill now totals $378.2 million, according to the complaint.

But the 1998 settlement was with Monex International – a company that no longer exists.

"The government is trying to recover tax obligations that are owed by an entity that hasn't been in business for over 10 years," Cohen said.

Not so fast, the government says.

The government alleges that Carabini and other Monex insiders shifted employees, office space, even phone numbers from Monex International to several new entities to avoid paying the tax bill.

Those new entities – including PCCE Inc., Monex Credit Co. and Monex Deposit Co. – are new in name only, the government says. Monex created the new companies "in an attempt to escape liability for the federal tax liabilities of Monex International."


Monex U.S. sues Monex spinoffs for 1980s taxes

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