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San Diego businessman admits to bank fraud, tax evasion charges

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Posted at 4:54 PM, Jul 22, 2020
and last updated 2020-07-22 19:54:52-04

SAN DIEGO (KGTV) — A San Diego businessman pleaded guilty in federal court on Wednesday to charges of bank fraud and tax evasion in connection with failing to report hundreds of thousands of dollars in income and fraudulently obtaining a mortgage.

David Daughtrey, 60, of El Cajon, admitted to evading taxes by failing to report $498,612 of income to the IRS and also fraudulently obtaining a mortgage for his $1.8 million home using a third party, U.S. District Attorney officials said.

As part of his plea agreement, Daughtrey will pay $1,016,457.91 in restitution to the IRS. He's scheduled to be sentenced on Nov. 16.

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"People who cheat on their taxes are cheating all other law-abiding taxpayers," said U.S. Attorney Robert Brewer. "Mr. Daughtrey blatantly disregarded his tax obligations for years. The defendant not only abused the tax system for his own financial benefit, but conspired to commit bank fraud in order to maintain this lifestyle."

Daughtrey admitted that from July 2006 until April 2016, he conspired with others to commit bank fraud and tax evasion. As part of the fraud scheme, he directed another person to submit a mortgage application to Wells Fargo to buy a $1.8 million five-bedroom home, officials say, and falsely claim that the fund used as a down payment belonged to a third party and the third party would be the primary homeowner.

In reality, Daughtrey provided the funds and the house was intended to be his primary residence. He later submitted a false hardship letter on behalf of the third party to get the bank to modify the terms of the home loan, officials added.

He also admitted that over several years, he and his spouse, who is not charged in the case, conspired to falsely report total income in tax years 2012 through 2015. Officials say in 2012, Daughtrey omitted at least $498,612 in income and the IRA tax loss for years 2012-2014 was $456,536.

"Our nation’s tax system funds critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic," said Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation. "Honest Americans’ compliance with the tax laws is imperative. Rather than pay his fair share, David Daughtrey chose to live lavishly, while intentionally failing to report his true income and evading the payment of over $400,000 in taxes."