Jury Convicts Tax Protester
Former Owner and President of Gladstone Engineering Firm Convicted of Tax Charges
Portland, Ore. — A federal jury today convicted Chester Evans Davis, 56, 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 laws. Davis is the former owner and president of ESA International (formerly ESA NW, Inc.), a Gladstone engineering firm specializing in power system software.
“This verdict shows that wealthy business owners have to pay taxes, just like hard-working 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 jury trial that Davis evaded payment of his federal income taxes for tax years 1999, 2000, and 2001, and evaded assessment of his federal income taxes for tax years 2007, 2008, 2009, and 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. Special Agents with the Internal Revenue Service - Criminal Investigation 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 Internal Revenue Service by filing bogus Forms 1099-OID with the IRS. The government presented evidence that Davis currently owes approximately $5 million in state and federal personal income taxes.
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 imprisonment 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 Internal Revenue Service - Criminal Investigation. The case was prosecuted by Assistant U.S. Attorneys Craig Gabriel and Stacie Beckerman.