Chester Evans Davis, a 56-year-old Oregon City corporate tax defier, got sentenced to more than eight years in federal prison starting Monday for not filing a corporate tax return five times for his Gladstone business and then trying to obstruct Internal Revenue Service laws.
Davis is the former owner and president of ESA International, a Gladstone engineering firm specializing in power-system software.
U.S. District Court Judge Michael Simon on July 8 sentenced him to 97 months in prison, to be followed by three years of supervised release, following a federal jurys March conviction of his five counts of tax evasion, four counts of failure to file a corporate tax return and one count of obstructing IRS laws.
At the sentencing hearing, the government presented evidence that Davis currently owes over $7 million in state and federal income taxes, and Simon ordered Davis to pay his taxes and to file timely tax returns in the future.
This defendant took extraordinary measures to hide his money, said U.S. Attorney S. Amanda Marshall. He refused to pay his fair share of taxes, to the detriment of all taxpayers, but now he will be repaying his debt to society for a very long time.
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 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.
There are a number of strategies we often see people use when they try to get away with tax evasion, said Kenneth J. Hines, who heads IRS criminal investigation in the Pacific Northwest. Mr. Davis tried a lot of them. He filed frivolous lawsuits, false documents with the IRS, and false and harassing claims against IRS personnel. He used alternative banks to conceal his finances and nominees to disguise his business activities. These strategies all have one thing in common they result in criminal conviction.
Davis company earned millions of dollars in annual revenue, including revenue from federal governmental agencies such as the U.S. Air Force, 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 the gold. In response to the IRS audit, Davis sought to harass IRS employees, by filing arrest warrants, liens and bogus forms saying that he had filed taxes.
IRS special agents say yet-unaccounted-for gold not found in the search of Davis house is worth more than $7 million. While executing search warrants, IRS agents also found and seized approximately $115,000 in cash, much of which Davis hid in Bazooka tubes in his and a family members home. In Davis home, agents also found 39 firearms, body armor, tactical gear, sniper training materials, survival manuals and anti-government literature.