Internal Revenue Service agents raided the Orange County office of a nationwide group of tax protesters Wednesday, seizing records and membership lists that may support allegations that the group and its members have failed to report income and file tax returns, IRS spokeswoman Nancy Dixon said.
The raid, which involved about 10 agents and lasted six hours, was part of a West Coast sweep of the offices of the National Commodity Exchange, a financial services affiliate of the Denver-based National Commodity and Barter Assn. The group's offices at 2140 W. Chapman Ave., Orange, and residences of some of its members in Seattle, Sacramento and Medford, Ore., also were searched, Dixon said.
The National Commodity Exchange was set up as an alternative to conventional banks for members of its parent organization, which espouses a return to a metal-backed currency and less governmental interference in what it says are private economic matters. The exchange performs most of the usual banking services, but it does not issue loans or buy or sell U.S. Savings Bonds, Dixon said.
Members send deposits to the exchange, which converts the money into precious metal, real estate or other assets, said John Voss, publisher of the association's newsletter in Denver.
"We see inflation occurring all the time in our economy. Most people see that, and we think it makes no sense to maintain a savings account in paper money," he said. "When they need their account turned back into the currency of the realm, we do that, too."
The IRS revealed few details of Wednesday's raid. Dixon said that no arrests were made and that the organization would be permitted to continue its "normal course of business." She did not say what information was contained in the seized files except that they related to "account information and membership lists that might indicate a failure to file tax returns."
No Loans, Interest
In addition to buying and selling gold and silver for members, the exchange will pay depositors' bills for them, Voss said. Members do not have checking accounts and the association does not believe in creating money, so no loans are made nor is interest paid on deposits, he said.
Since the exchange is not a bank, it does not fall under the purview of any federal regulatory agencies and it does not make records of some transactions available to the government, as banks are required to do.
In a similar sweep last April, the IRS raided exchange offices in seven cities, including the association's headquarters in Denver. It seized what Voss said was $3 million in gold and silver bullion. Even though the IRS has been directed by a federal judge to return the confiscated metal and documents to the group, it has failed to do so, Voss said.
"When you're critical of the government, it sends its bullies--the IRS--out to get you," he said.
Group Critical of Policies
The nonprofit, unincorporated association, founded by 1982 Colorado gubernatorial candidate John Grandbouche, is critical of deficit spending, federal taxation methods and gun registration laws. The group rejects being labeled as right-wing or libertarian.
"We have no particular brand of political philosophy," said Pat Detches of Huntington Beach. "We'd like to do what Ronald Reagan promised he would do six years ago: get big government off our backs."