thank you your honor good morning i'm evan davis and i represent mr del mar hearty i'd like to reserve five minutes and watch the clock will try to help you will do your honors this case was about a busy lawyer running a six attorney office who was convicted solely because he relied on his internal bookkeeper and his accountant to gather appropriate records and prepare accurate tax record that's a that's a good jury argument but the jury didn't buy it so did you telling us there's not sufficient evidence here to support the conviction no your honor why not why am i saying there's not sufficient yeah i mean  putting plainly there the reports that were filed were not accurate here great yes there was certainly circumstantial evidence that your client knew the reports were not accurate  the book keeper said i told him that our proper our profit and loss statements would be different if we included cash receipts and there was evidence that he told people i'll keep you know this is a better way to keep the cash because i  this is a better way for me to do it divide it up right here let's not put it in the books that you know not overwhelming evidence but why not sufficient we didn't argue sufficient well that's what you say asking you're making a jury argument saying you're making the argument does say he was convicted solely because he relied on others but the jury obviously concluded differently so tell me what the legal error in the case was so the problem was that the jury instructions as giv n were directed to whether mr hardie made a mistake in essence in whatever information was provided to the accountant in essence the jury instructions if you read them closely appeared to assume that the taxpayer who is being charged was involved in the preparation of documents in the transmission of documents to return prepare and if there was a mistake in those documents that's a defense that the instructions do not directly address whether there was reliance and mr hardy is not unusual in the way that he relied to small business owner because what i was trying to get out of really with the first line is a small business owner who specific intent instruction is given of course that did occur in this case right it that occurred in this case except my reading of solomon and dora hitch is it goes back to whether the instructions were in over review by this panel not simply was there an instruction but the court this court actually has to look at the instructions in the context of the other instructions in the evidence let's turn to it let's say that we have done that we've looked at this we see the specific intent instruction dorsett says that's sufficient you don't have to give a reliance on the accountant and then as my colleague indicated evidence was produced showing that your client specifically told the barkeeper why cash was not included even the keeper said you know that that's not going to work very well and there were other people are told as well the jury bought that rather than your client position what's wrong with that so there are a number of things that i would take issue but first on the your the court's explanation of the record what i heard the court say is that the evidence was that mr hardie said don't put the cash in the record and i think that the record is very clear that ms mack testified repeatedly the reason cash didn't end up in quick quick books is because she couldn't figure out cases say if you give this other instruction that's enough why is this the case were to acquire it this is the case where it's required for three reasons the first is as i was mentioning earlier if you read the instructions normally when you're talking about reliance there is in most cases there is more involvement by the taxpayer in the return preparation and as i was discussing if you look at the standard instructions assume that a taxpayer gathers documents handsome over to an accountant and if there is a mistake than that then the instructions adequately cover the fact that the tax payer missed a document that that's a perfect example of where the instructions cover the instructions do not address where there was no mistake at all by the taxpayer but you keep c c you keep saying that as if it were a fact and the problem here is that there was sufficient evidence you say you don't dispute to for a jury to conclude that your client just and simply make a mistake and the jury was instructed that it could only convict him if he had the specific intent to provide false information so i'm trying to figure out why that why that instruction isn't enough to cover your your argument mr hardy didn't provide any information hey that the process was a regular process his accountant was not simply someone who had documents delivered once a year to return to prepare returns he was the regular accountant for the for the law practice he was physically on site the c p a physically on site about once a month as my recollection of the record  driving up from las vegas to serino as i recall for that or at least he was specifically onsite so you have someone who is interacting with the bookkeeper who was delegated entirely the responsibility of gathering information and transmitting and countless let things go in a different way your your client evidence showed was very careful with money and yet he had this really big lifestyle you know all these bells and whistles and gadgets and trips and all kinds of things and yet the tax returns show basically that he must make any money you smart guy how does that in a jury entitled to say you know knew perfectly well what he was doing in that the basically solve the specific intent problem so that goes i think most directly to the jewel instruction which is this is the government's argument is in essence what the court just said which is look you've got someone who is a successful lawyer who was paying attention at least in some respects to finances taxes may have been a different issue but he was at least paying attention of finances and he spent a lot of money paying attention to taxes too because there was testimony that he had specific instruction with the accountant about the x y z corporation the debt that's not that's not the basis of the of the charges you're not talking about but he there was evidence that he paid attention to his tax return and it was also evidence from m saying that whenever he prepared the tax returns mr harding never had a single question so you know the court is correct that there was that evidence there was also contrary evidence but getting back to the the difference between the expenditures and the were what was reported on the tax returns the i r s had a c p a who testified on behalf of the government precisely to that that here's a chart there's a million dollars of expenditures and the tax returns reported there was income reported from the business but a court for two of the three years but that was offset by various deductions as you would expect with a business owner with rental properties that cetera so he you see this huge number of a million dollars and zero zero next to it for taxable income mr harding was prevented from rebutting that by reflecting but by having a a testify that the actual tax loss when the c p a went through things that were not claimed on the tax return was about twelve thousand dollars over those three years four thousand dollars a year so if a if a taxpayer if the jury heard a million versus zero and was prevented from hearing well it was only four thousand dollars that's a number that any one of us might miss on a tax return given i  know we've certainly heard the evidence in favor of the government there was substantial evidence that mr hardy was not paying attention to to his taxes his personal income tax returns and he simply relied on the process b we give we're talking what a jury determined here i mean you could your argument of course is one way to approach this but the reality is at this point the jury has spoken if you're going to overturn this to show that there just doesn't add up and what i struggle with is this lifestyle the fact that virtually no tax owed jury i think it was a three year period when there are millions of dollars taken in how in a jury entitle to infer based on the specific intent instruction that he knew perfectly well what he was doing and he was pocketing the money with cash he kept it out in no question i don't think either from him or other people that he did not deposit the cash into the quick course right there's no question ok so at the end evans got a lifestyle big lifestyle no tax that satisfies a specific intent instruction does it not i understand that you think the jury goofed but we can't fix that we have to look at the legal issue well in the legal issue is were the instructions sufficient so let me ask about the expert because i want to understand you wanted to put you back sport was allowed your expert was allowed to testify about some things but not others correct correct and one of the things he wasn't allowed to testify about was that if i reconstructed mister hardy's tax returns over that period he would have had a lot of liability anyway correct like if he'd included this million dollars or so or five hundred thousand dollars and so in the income that he left out he would have had offsetting deductions correct which was the expert prepared to it was i didn't see a proffer on that first issue so for example if the if you the expert had been his accountant who said i told him at the time don't worry about income taxes because you got lots of deductions that would be one thing but we have as an expert later saying gee i'm an expert and i can go back post hoc and reconstruct the the circumstances of those years and i can now put together a tax return even with this income that doesn't result in a lot of liability  how relevant that is to his mens rea and if he didn't know about those deductions it it directly rebuts the idea that a million well also i don't own only a few only if he would have known that all these other deductions were there now an expert later who smart enough to find them doesn't tell me what his mentor area was at the time you honestly i do i the only thing i would like to add is mr hardy testified ms mack his bookkeeper and mr miller all testified that they believed that the cash was included in the tax returns at the time this wasn't just mr hardy everyone involved thought it was included and mr hardy simply relied on the others to make sure that it happened thank you good morning good morning ma'am please the court the heart may hand for the united states and the evidence in this case demonstrated that the defendant designed his office procedures to keep the cash receipts off of the books he was adamant that the cash not be deposited into bank accounts and that and that that evidence was provided by whom primarily patty mcewan's defendants bookkeeper but there were other and the testimony about the cash not being deposited in the bank account was confirmed by several other witnesses but it was pattee mak who testified that the defendant knew that the cash was not entered into the quick books that she notified the defendant that the profit and loss statements that he regularly reviewed did not include cash and that defendant was the one who made the decision not to enter the cash into quick books there was other evidence that he kept a close eye on the firm's profitability costs income  that he was the decision maker in the office that she followed his instructions all of that leads to the conclusion that he did in fact people that knew and caused the cash not to be entered into the court b you should finish the record also demonstrates that and excuse me i lost my train of thought your question you know i thought you were done for i was just wanted to ask you about the instruction on the reliance on accountants instruction some  as i recall the government's position below was that mr harvey was not entitled to that instruction because he couldn't show that he had made full disclosure of the right of the relevant facts right we also argued that there was not evidence that the accountant advised gave advice so that was a secondary argument but the primary argument was the lack of focus ok so on the first argument i guess i'm just maybe trying to understand how far your argument sweeps because let's say that i thought that i had made full disclosure in the sense that i instructed my bookkeeper to make all of the relevant records available to the account and i had no reason to believe that she had done that but in fact she had not i'm not even saying that that's necessarily what happened here because i know mr hardy says no actually the accountant had access to everything but let's just say i reasonably think that full disclosure has been made but just as an objective factual matter it was not in my in title to the instruction and under the circumstances  know he should have he should have i relied on him perhaps mistakenly why not i'm not i think the other side has a hard time getting over the fact that a specific intent instruction was given but  for perhaps i don't know whose question suggests that i'm a little mystified about why the government opposes and the advice of the accountant struction what you seem to be saying is we're going to win on the merits so you shouldn't get that instruction the jury doesn't believe for probably very good reasons but isn't that the jury's function wash and structured and the government argued below and we believe now that that was an argument that the defendant could and in fact did make to the jury that i believed i had made full disclosure i believed that my tax returns were correct it may be harmless error i'm just i don't understand the government's position on the advice of accounting structure and it seems to me it should have been given it may have been harmless not to give it because the specific but i don't understand the argument you didn't make full disclosure and when the guy says i did i mean he there's a difference between a belief that full disclosure was made and actual full disclosure and this court's decision and bishop rejected the idea the count all the relevant records i gave my accountant access to all my relevant records that testimony may be not credible it may not be believable but it least was his position and he supported by evidence that's correct and defended does not mean that the specific intent the court gave both a specific intent instruction for willfulness and an independent good faith instruction both of which came from the ninth circuit pattern instructions defendant does not challenge those instructions they adequately informed the jury of the government's part well ok i'm not really focused yet on harmlessness because i'm just trying to figure out if there even was error and that's why i'm asking about this even though only just might be right it won't affect the outcome but i guess i don't understand why the the good faith belief that i have made full disclosure is not sufficient i don't understand how you can argue that just because as an objective matter full disclosure wasn't made even though i had no i don't knowledge of that i thought that the accountant have access to all of the records because i directed my bookkeeper to make that happen and for whatever reason she failed to do so how do i not get the instruction as as we read this court's precedents the full disclosure requirement is an absolute requirement there must have been full disclosure and the defendant can argue i believe i made full disclosure i was acting in good faith i did not know that the tax returns were incorrect i did not know that my bookkeeper you know made mistakes or did not do what i told her to do and all of that is a defense and under the under the under the court's instructions here if the jury had credited those statements they would not have convicted but if it's a defense why don't i get an instruction telling the jury that they should acquit me if they believe my account i again refer to the fact that the good faith and specific intent instruction subsume the good faith reliance instruction as this court has held many times not just in door attach but in more recent cases as well both in the advice of counsel contacts and the advice of a county can any event this court may not reach that question because of the harmlessness issue we just discussed but also because ever advised never provided advice to defendant to the fact that he did not have to report the cash receipts the defendant didn't seek his advice he didn't provide that advise defendant didn't rely on that advice in good faith there's no i don't understand that argument either because it's just i mean i don't know maybe i base it too much on my own personal experience but when i give all of the information to my accountant and i get the tax returns back when i'm relying on is that they did it right i'm not asking them a specific question per se but my goodness i would hope that if there is some mistake on there but i didn't catch  that i'm not going to be criminally liable for that there's a distinction i think between a factual mistake or ignorance and good faith reliance on advice and i think the cases that we cite in our brief are instructive here the case distinguishes between ignorance where the defendant said i thought the return was correct i didn't know what was in there and this court said that's ignorance is different than a good face really good faith reliance defense and then also the van allen case from the seven circuit where the defendant claimed there was disclosure to the lawyer but there was no evidence that the lawyer advised the defendant to take the course of action that he did tend cases i want to ask you about the expert evidence that they wanted to present to us because the judge let you put in a lot of evidence about lavish lifestyle right and from which the jury was supposed to infer that anybody with that kind of lifestyle would have what it when he saw his returns that only had a little bit of end a little bit of taxable income at the end complex liability put it differently would have known they were wrong and he wanted to say no i wouldn't have known they were wrong because the nature of the business i run is such that i've got offsetting  why why isn't that evidence he should have been allowed to present so the record here demonstrates that that the district court excluded the evidence of tax us and on a couple of occasions that i'm you know we're not here to determine how much the defendant  was in taxes you know with references to enter a confusion the district court recognized that the defendant was entitled to present evidence as part of his case in chief about offsetting to duction zur expenses that could have been included but weren't and defend expert techs testified at length about dr rice but that the difficulty was that so the evidence gets in front of the jury but your argument the government's argument to the jury is come on somebody with this lifestyle must have known his returns were wrong because he had so little taxable liability and they were on a they were not able to support with that final i got lots of deductions but the jury wasn't told that had they been claimed his taxable liability would have been about the same as it was the jury the evidence before the jury included that i think i believe i'm correct that the evidence for the jury included the size of the sum of the deductions that were made as i actually don't scroll  an e mail from the defendant to his accountant that defendant made a deliberate choice not to claim those deductions when his returns were being prepared the first time around because he so that the e mail said don't don't worry about claiming the stock write off don't worry about claiming the stock losses we have enough write offs just leave it suggesting that he knew that if his deductions greatly exceeded his income that the i r s you know might take interest and that it was a deliberate choice not to claim those deductions false return counts the record demonstrates there was no spillover and there was no prejudice and i think that the main factor that motivated the district court in its order denying deny defendant a new trial was the fact that the jury rendered a selective verdict here the jury was correctly instructed to consider each count separately the jury acquitted on count one which was the conspiracy to structure financial transactions which dealt with acts words which also dealt with x y z correct so so the jury did deliver a selective verdict as we are you in our brief that evidence that went to count five about how x y z was characterized on the tax return was admissible both for count one conspiracy to structure financial transactions which involved x y z and also counts two through four because the amended  returns that were filed in two thousand and twelve after that were prepared in two thousand and twelve after the i r s after an i r s agent came to interview the defendant indicated that they were being revised in order to correct the characterization of z and the evidence also demonstrates that the defendant interacted with his accountant about how to characterize x y z on his tax return suggesting that he didn't in fact just sign whatever his accountant gave him he actually was involved  making decisions about how certain transactions should be characterise characterized it was actually going to show that when the tax returns were amended iras interview the senate was very much in in that decision and the way it was implemented that is correct that it was the defendant who came in and told pattee mak we need to tally up all the cash receipts only for two thousand and nine in two thousand and ten which were the only years that the agents asked about even though you know two thousand and eight also was missing attention was through the the the fund i'm providing these amended returns i think because it seems like it started out with an investigation of the x y z matter and that i don't understand how this cash stuff got infuse into the case that's not in the record i up with the reliance defense and i would suggest that it doesn't the one i think essential difference in this case to solomon dora to which we've addressed in our briefs is and it reliance instruction was in fact given here it was given for count five it was a big signal to the jury that reliance was not a defense to counts two through four because reliance was specifically identified as being  five that doesn't exist in solomon it doesn't exist in dora to it doesn't exist in any of the cases we're talking about and this court we suggest has to look on a dyno basis not simply check the box that he a specific intent instruction was given but in the context of this case in the context of all of the instructions was it needed here and given the level of reliance which is different than in most cases where everything was delegated the return preparer in the taxpayer conspired a bunch of the cases the government sites there was a conspiracy that's not what happened here this was simply an error by the return prepare than allen's bankruptcy case that doesn't involve cheek as a consequence