Earlier this year, U.S. District Judge Larry A. Burns sentenced El Cajon businessman David Daughtrey to 18 months in prison for tax evasion and bank fraud. Judge Burns also ordered Daughtrey to pay more than $1.5 million in restitution. The sentence was the culmination of an investigation of fraud stretching a decade from 2006 to 2016.
The FBI arrested Daughtrey in July of 2020, alleging that he had evaded income tax by underreporting his income and orchestrated an "illegal scheme to fraudulently obtain a mortgage" for his $1.8 million home. The U.S. Department of Justice reported that the income loss to the United States was more than $1 million.
Federal Fraud Charges
The government's first charge against Daughtrey was "Conspiracy to Commit Bank Fraud and Tax Evasion" under the U.S. Code. See 18 U.S.C. § 371 (1994). This statute is broadly titled "Conspiracy to commit offense or to defraud the United States." Conspiracy to commit bank fraud and tax evasion under this statute carries a maximum penalty of five years in prison and up to a $250,000 fine.
Federal Income Tax Evasion
The government also charged Daughtrey with "Making a False Tax Return." See 26 U.S.C. § 7206(1) (1982). Under this statute, titled "Fraud and false statements," any willful written declaration made under penalty of perjury is a crime. The maximum penalty for making a false tax return is three years in prison and a fine of up to $250,000 or twice the gross gain or loss from the offense, whichever is greater.
The federal government vigorously pursues some defendants accused of fraud, as noted by statements from the FBI in this case. According to FBI Special Agent in Charge, Suzanne Turner, "The FBI and our partners at the IRS uncovered David Daughtrey's mortgage fraud and tax evasion scheme using our team's financial and fraud expertise. Today's sentencing serves as a warning to those who attempt to personally gain by deliberately cheating the government and the integrity of the banking system through financial fraud. Our team of fraud experts will bring justice in these white-collar cases."
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