A Rancho Santa Fe couple was sentenced Thursday to federal prison for their roles in a multi-million bankruptcy fraud and tax evasion scheme, prosecutors announced Friday.
San Diego accountant and disbarred attorney J. Douglass Jennings Jr., 73 of Rancho Santa Fe, pleaded guilty in September 2017 to bankruptcy fraud and tax evasion, according to the U.S. Attorney's Office.
Jennings filed a voluntary bankruptcy petition in January 2010.
However, Jennings failed to include nearly $1.5 million in assets including stock, the yacht “Sea Eagle” and antique silver items, according to federal prosecutors.
Prosecutors said Jennings also collected more than $183,000 in salary.
Jennings owed the IRS $2,852,545 in tax payments for years 2005 through 2009, the U.S. Attorney's Office said. He had agreed to pay more than $2 million of the amount due as well as more than $1 million in interest.
The U.S. Attorney's Office said Jennings evaded payment of taxes through his concealment of assets in the bankruptcy case.
"The bankruptcy system is designed to provide honest debtors a fresh start," United States Attorney Adam L. Braverman said. "Manipulation of that system through fraudulent acts can cause significant harm and suffering to innocent victims, and will be vigorously pursued."
U.S. District Court Judge Gonzalo Curiel said Jennings' conduct was "callous, uncaring and deceitful."
Curiel sentenced Jennings to 2 years and 10 months in prison for his conduct and lack of remorse, prosecutors said. The sentenced was imposed to deter Jennings from plotting his comeback, which he was already planning, prosecutors said.
The judge also ordered Jennings to pay $1,453,833 in restitution to his victims and $5.927 million in restitution to the IRS.
"Mr. Jennings’ abuse of his position and manipulation of the system for his own personal gain will not be tolerated," IRS criminal investigator Charge R. Damon Rowe said. "This case is an example of fraud and deceit at the highest level. Jennings utilized his reputation and experience to lure victims and perpetrate his scheme."
Jennings was disbarred in May 2016 and is prohibited from practicing law in the state of California.
His wife, Peggy Jennings, 72, who pleaded guilty August 2017 to bank fraud, was sentenced to four months in prison. She had forged her mother's signature on loan documents and moving money into her mother's bank account to give the appearance that her mother had substantial income, prosecutors said.
She was ordered to pay a $50,000 fine and more than $145,000 in restitution.