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Prosecutors lay out gold and cash seized from a barn in Damascus, part of a treasure trove of gold bullion, coins and even Iraqui dinars that was entered as evidence in the case against tax protestor Chester Davis. Assistant U.S. Attorney Craig Gabriel said the recovered gold is only a small portion of what officials believe Davis purchased to hide his income.

(Photo by Stuart Tomlinson/The Oregonian)

A federal jury found Chester Davis, the former president and owner of a Gladstone-based company, guilty of tax evasion and numerous other tax-related charges Thursday.

Jurors returned the verdict after about two hours of deliberations. Sentencing is set for May 9.

Davis,

, headed ESA NW Inc., a company that provides power-system software and engineering services to its clients, including federal agencies.

A 10-count indictment alleged that Davis tried to avoid filing federal taxes between March 2003 and October 2011 through a variety of means, including hiding money and other assets, buying millions of dollars worth of gold and submitting false information to the Internal Revenue Service.

Chester Davis, 56.

The jury found him guilty on all 10 counts -- one count of evasion of payment of taxes, four counts of evasion of assessment of taxes, four counts of failure to file a corporate tax return and one count of obstruction of the due administration of the Internal Revenue laws.

Davis tried to avoid paying taxes on his own income, prosecutors said, but also did not file returns for his company between 2005 and 2008.

Davis did pay federal taxes from the 1980s through 1999 for himself and his company, then called Electrical Systems Analysis Inc. The firm sold software to commercial power users, including the U.S. Army Corps of Engineers, Bonneville Power Administration, and General Electric, prosecutors said. The firm has since been sold.

The indictment also alleges Davis filed arrest warrants against IRS employees and attempted to file a baseless lien against the U.S. Treasury Secretary.

In closing statements before Judge Michael Simon, Assistant U.S. Attorney Stacie Beckerman told the eight-man, four-woman jury that Davis knew he was required to file both personal and corporate income tax returns, and in fact had done so up until 1999, when suddenly he stopped, for 13 years.

Gold bars belonging to Chester Davis were stuffed into a safe found in a Damascus barn. The 1 kilo bars are worth approximately $56,000.

Then, after failing all those years, Davis began to obstruct the Internal Revenue Service from collecting taxes that were due.

“Disagreeing with the tax laws is not a defense,’’ Beckerman told jurors. In all, she said, Davis owes more than $5 million in unpaid taxes.

Prosecutors said Davis faces a

statutory maximum sentence for tax evasion of five years on counts 1 through 5; one year for the failure to file corporate returns counts 6 through 9; and three years for the obstruction count. The maximum fine for tax evasion is $100,000; $25,000 for the failure to file, and $5,000 for obstruction.



Davis

telling his court-appointed attorney that cooperating would "put him under contract" with the court, according to filings in the case. He also directed his attorney, Lynne Morgan, not to make any opening statement, question witnesses, lodge objections or offer a closing argument.

Morgan unsuccessfully sought a mental competence hearing for Davis. While Davis' positions are "unconventional," the judge wrote, they are similar to those proffered by other tax protesters and don't appear to be the result of mental illness.

That pattern continued Thursday. Following Beckerman’s 30-minute closing, Judge Simon asked Morgan if she wanted to make a closing statement. She did not. Davis, wearing a gray and black high-necked sweater, has been lodged in the Justice Center Jail since his arrest.

In response to repeated notices and inquiries by the IRS over the years, Davis sent two checks from a bank account closed six months earlier. He also submitted documents suggesting he paid IRS agents personally, returned letters with "Return to Sender" stamped across them and filed claims with the

that the court deemed "frivolous."

The prosecution said Davis also set up shell accounts, relying on employees and others to withdraw money for him and to hide his connection, gathering at least $10 million for personal use over the years.

For a time, he had customers' checks deposited into an account in Arkansas that commingled funds from many tax protesters seeking to hide their wealth.

Meanwhile, Davis used at least $5 million to buy gold bars and coins, prosecutors said. The government found about $1 million in a safe in his brother-in-law's barn. During her closing, Beckerman spoke from a lectern with three of the 1-kilo gold bars stacked on top.

In a "Declaration of Truth" submitted to the court last November, Davis said he does not recognize the court's jurisdiction, saying, "My law form is the Holy Bible, the living word of God, through the common law, the organic Oregon constitution, the organic Constitution of the United States – specifically Article 4, Section 3, Clause 1, the organic Bill of Rights, the Declaration of Independence, the Federalist papers #83, all for the several states of the union."

After sending the jury to deliberate, the judge complimented Morgan for her handling of the case and “its unique burden on you.”