UPDATE: Sentencing scheduled for May 9 at 10 a.m.

by: PHOTO COURTESY: U.S. DEPARTMENT OF JUSTICE - IRS special agents seize over $1 million in gold, as well as approximately $115,000 in cash, while executing search warrants at an Oregon City residence and his business.A federal jury on Thursday convicted 56-year-old Chester Evans Davis of Oregon City of five counts of tax evasion, four counts of failure to file a corporate tax return, and one count of obstructing the Internal Revenue Service laws.

Davis is the former owner and president of ESA International (formerly ESA NW, Inc.), a Gladstone engineering firm specializing in power-system software; he currently owes approximately $5 million in state and federal personal income taxes.

“This verdict shows that wealthy business owners have to pay taxes, just like hardworking people do every day,” said U.S. Attorney S. Amanda Marshall. “Evading taxes and obstructing the IRS are serious crimes with serious consequences.”

The government presented evidence during the four-day trial that Davis evaded payment of his federal income taxes for 1999, 2000 and 2001. He also evaded assessment of these taxes throughout 2007 to 2010. Davis’ company, ESA NW, Inc., earned millions of dollars in annual revenue, including revenue from federal government agencies such as the Army Corps of Engineers and Bonneville Power Administration.

Davis transferred money from his company to various shell corporations and a warehouse bank, and then used the money to purchase more than $5 million in gold bars and coins.

IRS special agents seized over $1 million of that gold, as well as approximately $115,000 in cash, while executing search warrants at Davis’ residence and business.

Davis also failed to file corporate returns for ESA NW, Inc., and obstructed the IRS by filing a bogus 1099-OID, legitimately used by people to pay taxes on income from the interest on bonds investments.

The maximum penalty for each count of tax evasion is five years imprisonment and a $100,000 fine; the maximum penalty for obstructing the internal revenue laws is three years of prison and $25,000 fine; and the maximum penalty for failure to file tax returns is one-year imprisonment and a $5,000 fine.

This case stemmed from an investigation by the IRS Criminal Investigation department, and was prosecuted by Assistant U.S. attorneys Craig Gabriel and Stacie Beckerman.

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