United States Attorney Anne M. Tompkins
Western District of North Carolina
CHARLOTTE, N.C. – Charles A. Davis, 63, formerly of Mooresville, N.C. was sentenced today in U.S. District Court to 120 months in prison for committing tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Richard L. Voorhees also ordered Davis to serve twelve months of supervised release after his prison term and pay $538,569 as restitution to the IRS.
Following a three-day trial in March 2012, a federal jury convicted Davis of ten counts of filing false tax returns and one count of obstructing the IRS. According to evidence presented at trial and court records, from 1983 through 2011 Davis was employed as a commercial airline pilot for US Airways. From 1996 through 2007, Davis failed to file timely income tax returns despite receiving wages ranging from $129,950 to $190,510. For years 1997 through 2005, Davis’s employer withheld little or no federal income tax from his wages because Davis previously had falsely represented that he was exempt from income tax withholding. Trial evidence established that in April 2006, Davis filed five fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income in each of those years. And from April 2008 to February 2009, Davis filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. The evidence also established that during the time he failed to pay his taxes, the defendant drove a Ferrari and a Mercedes, and lived in a lakefront home on Lake Norman.
According to trial records and today’s sentencing hearing, during the IRS’s efforts to collect Davis’s tax debt, Davis obstructed and impeded the IRS by submitting fraudulent payment documentation to the IRS and concealing his assets and income in a nominee bank account. Davis also used a fraudulent address in Texas to avoid paying state income taxes, and currently owes the North Carolina Department of Revenue in excess of $150,000.
In handing down the sentence, Judge Voorhees emphasized the egregious nature of Davis’s conduct and Davis’s lack of regret and remorse.
According to filed documents and today’s sentencing hearing, Davis also took various steps to avoid IRS levies on his US Airways payroll account and his bank accounts, including filing for bankruptcy and diverting funds to his 401(k) account.
“Those who flout the tax laws by filing fraudulent tax returns, hiding assets, and obstructing the IRS risk criminal prosecution resulting in conviction and imprisonment, as well as being required to pay the taxes owed, with interest and penalties,” said Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division. “The Tax Division remains committed to prosecuting tax defier conduct throughout the United States.”
“Today’s lengthy sentence of longtime tax scofflaw Davis should send a message to those to seek to evade taxes,” said U.S. Attorney for the Western District of North Carolina Anne Tompkins. “Our office aggressively investigates and prosecutes those who attempt to cheat our tax system.”
Special Agent in Charge, Jeannine A. Hammett, IRS-Criminal Investigation stated, “As today’s sentencing shows, individuals, like Charles Davis, who engage in fraudulent schemes to evade payment of taxes face severe consequences including being convicted felons for the rest of their lives and imprisonment. Mr. Davis earned his sentence by stealing from the American Public.”
Davis has been in local federal custody since his conviction in March 2012. Upon designation of a federal facility he will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.
Assistant Attorney General Keneally and U.S. Attorney Tompkins commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Jonathan R. Marx and Assistant U.S. Attorney Jenny Grus Sugar, who prosecuted the case.