U.S. sues Monex, spinoffs for 1980s taxes By
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
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
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
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."