Assistant U. S. Attorneys Michael J. Heyman (619) 546-9615 and Joseph J.M. Orabona (619) 546-7951
NEWS RELEASE SUMMARY - Sept. 11, 2017
SAN DIEGO - J. Douglass Jennings, a practicing accountant and disbarred California attorney, pleaded guilty today to one count of Bankruptcy Fraud (Concealment of Assets) and one count of Tax Evasion.
Mr. Jennings, a Certified Public Accountant (CPA) and former attorney, once touted in a commercial that he managed “one of the nation’s leading estate and tax planning law firms." He appeared on talk-shows and authored two books, including what he claimed in court filings was “highly regarded and one of the best and most complete estate planning treatises to date." Mr. Jennings also practiced what he described in an advertisement as a “faith-based" approach to financial planning, with some referring to him as “Uncle Doug."
In his plea agreement, Mr. Jennings admitted that, beginning in January 2010, he devised a scheme to defraud his unsecured creditors by concealing numerous assets, and then filed a voluntary bankruptcy petition in the United States Bankruptcy Court for the Southern District of California, In re J. Douglass Jennings, Jr. and Peggy L. Jennings, Case No. 11-04720, in furtherance of that scheme. Mr. Jennings further admitted that, in his bankruptcy filings, he defrauded his unsecured creditors by intentionally concealing the following assets and income valued at nearly $1.5 million, including:
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A stock interest in a real-estate venture valued at approximately $1 million;
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A 53.2 foot luxury yacht known as the “Sea Eagle" valued at approximately $150,000; and
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Antique silver items valued at approximately $165,139.
During the pendency of the bankruptcy case, Mr. Jennings additionally obtained salary payments and other benefits prohibited by the Bankruptcy Court in the amount of $138,694.
In total, Mr. Jennings caused unsecured creditors to lose $1,453,833 as a result of his bankruptcy fraud.
Mr. Jennings also pleaded guilty to evasion of tax payments. From August 2011 through April 2013, Mr. Jennings had a tax due and owing to the Internal Revenue Service (“IRS") for calendar years 2005 through 2009 totaling approximately $2,852,545. He originally agreed to pay this amount to the IRS. Mr. Jennings also consented to pay a civil fraud penalty in the amount of $2,031,837, and interest in the amount of $1,042,711. Notwithstanding this agreement, however, Mr. Jennings attempted to evade and defeat the payment of taxes, penalties, and interest through his concealment of assets in his bankruptcy case. As a result, Mr. Jennings pled guilty to evasion of tax payments and admitted that a criminal judgment should be entered against him in the amount of $5,927,093.
On Aug. 16, 2017, Mr. Jennings’ wife, Peggy Jennings, pled guilty to bank fraud in a related action, United States v. Peggy L. Jennings, Case No. 17CR2306-BEN. Mrs. Jennings admitted as part of her scheme to defraud the bank that she forged her mother’s signature on loan documents, fraudulently transferred funds into her mother’s bank accounts to make it appear that her mother had substantial income, submitted false documents to the bank, and intended to cause the bank losses exceeding more than $226,000. Pursuant to her plea agreement, Mrs. Jennings has agreed to pay restitution to the bank in the amount of $145,481.71 and to pay a fine in the amount of $50,000. Mrs. Jennings is scheduled to be sentenced before the Honorable Roger T. Benitez on Nov. 13, 2017.
Following Mr. Jennings’ guilty plea to the bankruptcy and tax fraud charges, the Court set a sentencing hearing before U.S. District Judge Roger T. Benitez on Dec. 11, 2017.
“Concealing assets compromises the very core of our bankruptcy system, which is designed to protect both debtors and creditors," stated Acting U.S. Attorney Alana W. Robinson. “A bankruptcy petitioner who fails to make a full good faith disclosure risks a variety of serious consequences, including criminal prosecution."
“Bankruptcy fraud threatens the integrity of the bankruptcy system, as well as public confidence in that system," stated Tiffany L. Carroll, Acting U.S. Trustee for the Southern District of California, Hawaii, Guam, and the Northern Mariana Islands (Region 15). “I am grateful to Acting U.S. Attorney Robinson, our law enforcement partners, and the chapter 7 bankruptcy trustee for their commitment to combating bankruptcy-related crimes." The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 15 is headquartered in San Diego with an additional office in Honolulu.
“Bankruptcy fraud harms creditors and erodes confidence in the federal bankruptcy system," commented FBI Special Agent in Charge Eric S. Birnbaum. “Truth must be at the core of any bankruptcy and individuals who hide their assets during bankruptcy cases are defrauding their creditors. The FBI will reveal the truth and in this case, exposed the concealment of more than $1.4 million in assets and income."
“Mr. Jennings’ attempt to discharge nearly $6 million of tax debt through a fraudulent bankruptcy filing was a theft from the American public. It is a felony offense that carries severe consequences," stated IRS Criminal Investigation’s Special Agent in Charge R. Damon Rowe. “IRS Criminal Investigation will continue to protect the integrity of the tax system by ensuring everyone pays their fair share."
The criminal investigation involving Mr. and Mrs. Jennings arose out of a referral from the U.S. Trustee based upon findings from the Bankruptcy Court that Mr. and Mrs. Jennings engaged in fraud during their bankruptcy proceedings.
DEFENDANT Case Number 17CR2722-BEN
Douglass Jennings, Jr. Age: 72 Rancho Santa Fe, CA
SUMMARY OF CHARGES FOR J. DOUGLASS JENNINGS:
Bankruptcy Fraud - Title 18, U.S.C., Section 152(1)
Maximum penalty: 5 years’ imprisonment and $250,000 fine
Evasion of Tax Payment - Title, 26 U.S.C., Section 7201
Maximum penalty: 5 years’ imprisonment and $250,000 fine
DEFENDANT Case Number 17CR2306-BEN
Peggy L. Jennings Age: 72 Rancho Santa Fe, CA
SUMMARY OF CHARGES FOR PEGGY L. JENNINGS:
Bank Fraud - Title 18, U.S.C., Section 1344
Maximum penalty: 30 years’ imprisonment and $250,000 fine
AGENCIES
Federal Bureau of Investigation
Internal Revenue Service
Source: U.S. Department of Justice, Federal Bureau of Investigation (FBI)
