SANTA ANA — The Internal Revenue Service has apparently launched an investigation into whether a family of prominent mobile-home-park owners violated federal tax codes by allegedly taking business tax deductions for millions of dollars in personal and political expenses, including meals and trips for local politicians.
Donald Dougher of Newport Beach said agents from the criminal investigations division of the IRS picked up more than 100,000 financial documents last week from his attorney's office, including mobile-home park bills, invoices, credit card charges and canceled checks. Donald Dougher, his children, brother Gerard Dougher and his family own a dozen mobile-home parks in Orange County.
The IRS refused to confirm the probe. But Donald Dougher's attorney, Ronald Cordova, said the IRS, using an administrative summons, picked up the documents at his office last Friday. He maintained that the agency's investigation focused on his client's brother and business partner, Gerard. Asked if his clients, Donald Dougher and his son, Donald Dougher II, were offered immunity by the IRS, Cordova said, "They need no immunity. They didn't do anything wrong."
The FBI and the district attorney's office already are investigating Orange County Supervisor Don R. Roth's relationship with the Doughers and others who had business before the County Board of Supervisors.
Just last month, Superior Court Judge William F. McDonald tossed out fraud allegations in a civil suit filed by Donald Dougher, which accused his brother of misappropriating at least $4 million from partnership accounts in the last five years.
Attorneys for Gerard Dougher argued in court papers last month that Donald Dougher's lawsuit had not given specific instances of damages or lost profits resulting from his brother's alleged actions, as required by law, to sustain an allegation of fraud.
In the suit, Donald Dougher alleges, among other claims, that Gerard secretly siphoned funds from the corporations that they jointly controlled and into others held by Gerard's three children. He alleges that Gerard used much of this money to pay for furniture, a car stereo, a speeding ticket and even wife Dorothy's trip to West Germany with a delegation headed by Supervisor Roth.
Cordova, who represents Donald Dougher in matters other than the civil suits, said the judge dismissed the fraud allegation on a technicality because McDonald believed that the law did not provide that one business partner could sue another for fraud. The matter will be appealed, he said.
George Cary, the attorney for Dorothy and Gerard Dougher, declined to discuss the IRS investigation. But in the matter of the Doughers' sparring lawsuits, he said Cordova's claim that the fraud allegation was thrown out on a technicality is "ridiculous."
"That makes no sense," Cary said. "Basically, there was just nothing to support these allegations. It's real simple: The court did not make out a cause of fraud. And that's very important for our" defense in the rest of the lawsuit.
McDonald's decision leaves intact Donald Dougher's other allegations of breach of contract and breach of fiduciary duty against his brother, among other claims.
Gerard Dougher, meanwhile, is suing his brother for trespass, invasion of privacy, and other allegations over the manner in which documents were seized from his Emerald Bay home last December by people working for Donald Dougher.
Among the documents collected by IRS agents last week were receipts for at least $2,000 worth of meals, trips, tours and other gifts Gerard and Dorothy Dougher purchased for Roth, his former wife, Jackie, and his fiancee, Diane Bonner. The Doughers treated the Roths to dinner numerous times on trips to Palm Springs and Santa Catalina Island.
Asked if he would cooperate with the IRS investigation, Donald Dougher said: "Sure. When they say 'jump,' I say 'how high?' "