and the issue that we take is with the last sentence of that instruction which says and i quote when monies are acquired lawfully or unlawfully without consensual recognition of an obligation to repay or restriction on their versa seaborne and followed in many cases stance which requires both a minyan and control and ownership for income to be defined one way or another and there are obviously quite a few variations on that but in this particular case we believe that the court erred badly by making a this juncture of out of that sounds by saying without consensual recognition of an obligation to repaired or restriction on or just possession allowing the jury to simply find that if there was money without restriction on disposition that that money would th came through mr bull where because he was the president c e o and major stockholder of a corporation and he handled the corporation pretty much shot him for many years out of his pocket and the monies flowed through him sometimes by him and those monies many of them can be blind as income to him if this instruction is followed and it was bought it was given to the jury so therefore us versus paul requires that there be an instruction given to the jury telling the jury what the bank deposit method of income determination is and fourteen i believe your honor and the government has such an instruction the instructions were argued but neither instruction was given by the judge this through a corner i don't see us vs hall cited in your reference to the us versus holland which as a same concept and my question to you is if you haven't we this argument by not waiving it by not presenting it in your in your opening brief our position that this argument cannot be waived your honor as a requirement of this court that such an instruction be given the government chooses to use this method of determining income i mean it may be it may be error for the judge not to do it i just don't understand how correct it has to be brought up because of the nature of the error and i would ask the court to look at the decision of us of the hall and she whether or not this is not the proper time and proper forum to make this argument has to be existing instructions and simply added the two instructions which declined the two actual crimes instruction number four an instruction number fourteen i believe and simply added to the instruction words which said quote the defendant did not have a good faith belief that he was complying with the applicable provisions of the tax law if believe maybe in good faith even if it is on reasonable does not properly instructed in good does not conform to the u s b cheek decision which requires that instruction such an instruction we have argued that there should have been a separate instruction on good faith as required by the chant and its surface but even if there was not a separate instruction that the addition of that sounds just didn't do the job there's no statement for example that if the family was not acting willfully  because that instruction is to court well know by looking at a very short instruction and doesn't cover all of points raised in cheek and there was just no what's happened to me make all the points that are required by cheek to instruct on good williamson versus united states but that doesn't go the next step and pick up all of those matters which should be on that instruction and are not the objections were raised by that and we took some issue with with all basically what we're talking about is that there was a green well suffice it to say that's our situation on destruction we also urged some others in a brief which we would ask the court to look  moving on the state court judgment in this case similar cases been tried in the hallways circuit court regarding the monies which were involved parties which were involved except for the were had to do with who owns the property mr bill werde given her certain monies and property and who own that there was a jury case the jury came back with a verdict that most of the property was owned  at the documents which we have referred to which are in the record the motion to adopt is controlling which is a c r ninety eight and the motion of nominee which is a c r one ninety one the court will find verdict form the judgment the finding of frank conclusions of law and the and on top of that the bankruptcy matter all that then went into bankruptcy so that's a different issue but all those things in state court are when they check the box that says yes is that what you're referring to i believe so i don't have the document before me judged well i mean that's the key document there's nothing th three or four minutes i still haven't found it i'll tell you i have not found it i've got findings of fact number three or just trial of this action was commenced on june sixteenth thank you seven for jury the jury referred to return to verdict by way of special verdict the court reserved for its consideration the equitable issues and so forth it says nothing about finding that property belonging to mr fuller as far as i can tell right  contest was between all three we struck out or one if i can change the subject for a second to ask you about the sentencing hearing particularly the calculation of the tax loss is i if i understand correctly what the district judge did was decide based on everything that was presented to him that no hearing was necessary that he could he could decide what the tax loss was based on what he had in writing you i took the position that a hearing was necessary but going to stand that right yes that's exactly correct can you tell me what a hearing would have established that wasn't before the judge you may agree or disagree with what the judge did but  well we have so much in writing right that's a very difficult question answer well that's what i'm saying i'm not sure what he would have gotten well we believe that there was an inability on the part of the trial judge to go through all of the material outside the status factors that he said it made you presented to him in writing and he just blew it as you see it well i hate to just say yes categorically because there might have been more stuff presented if we had a hearing but yes most of the information of material from another number and i'm talking about exhibit d in the p s r and came up with his own dollar amount that way but he didn't say that but if you do that you come up with a dollar amount that he has i wish that same number that you came up with yes course karen cornell appearing on behalf of the united states the instruction that the district court gave the jury on the definition of income came directly out of this court's opinion and swallow and it is essentially the same language  united in james the james case out of the supreme court and if the jury was to follow that instruction it would have found that both conditions had to exist in order for the funds diverted by the defendant to constitute interviews done or in there in a way that survive above london in a box without food or water everyone would assume he was trying to do it without either of those things not without one or the other and in fact that is the commonsense application that the court gave in swallow when they is correct  without instructions you mean if it's a return of capital then that can be treated as nontaxable income certainly that's correct under this is just under the under this definition if a person receives income with no obligation to repay and no restriction question of whether this was a return of capital he would have to show about the corporation had earnings and profits what his basis was he would have to request an instruction on earnings and profits and in this case the defendant did not do so i understand your argument i speaking at a little different in fact we may be criminalized some perfectly legal activity such as region the distribution of capital or in this case their argument that it was a trust imposed or a loan depending on which piece of income you're talking  about they have various defenses and see each year and naturally the instructions in each case are going to have to be tailored to the circumstances and in this case the jury his defense was ok i couldn't do what i wanted with this money i had to give it to gin simply was going to hold it in trust so there was a restriction on disposition or it was a loan and i had to pay it back so this instruction was tailored to the specific issues raised in this case by the defense raised by the defendant you wanted it to be if you wanted to make some kind of argument that it was a return of capital then under bach for example he needs to make certain factual showings in order to get a proper instruction on that which was not done in this case so in this case under the facts faced by the jury in the questions that they had to decide this instruction was sufficient obviously as your honor mentions in other cases where facts are different this instruction may not be sufficient the jury may need to get additional clarification on issues before it but here in addressing issues before the jury transcript and what actually happened is an expert and agent for the government did an analysis and as part of the investigation of two bank accounts that the defendant used that were unknown to the controller of his corporation into which he deposited funds he received over the county over the counter copy sale and i'm certain tobacco sales i believe and the agent analyzed the deposits into that bank account and he did describe it as a bank deposits analysis although it was not if you look at the trip of the testimony not a bank deposits analysis in the traditional sense in that what he did was he took all of the deposits from those accounts he leaving him with a list of checks what he then did was send out a survey to all of the people all of the pay orders on those checks to say what did you pay these checks to the to michael bill where for forty five percent of those people responded and sent back invoices here it was for coffee it was for tobacco he inferred then that any check that looked like those forty five percent that he was able to specifically identify was in fact for tobacco or coffee sales that wasn't their income diverted from defend him from his corporation so i do not believe that this was the kind of complex tooken stanchion method of proof like the network method of proof or a traditional bank deposits method that would have required these kinds of instructions but if the court does have any concerns about this the government would like to have an opportunity to file some written supplemental briefing the good instruction given by the court well first of all the court didn't  manner of doing it in the pattern jury instructions included as a fourth or fifth element in the task offenses that the government had to prove that the defendant did not act in good faith and clearly under those instructions if the jury found that the defendant did act in good faith they would have had to acquit him because the jury was instructed they had to find each of these elements beyond a reasonable doubt so there was no need for a further instruction and if you find that the defendant did act in good faith then you must acquit him it was obvious from the way that the instructions were given furthermore she does not require any sort of specific magic language the only thing she requires is that an instruction not to inform the jury that the defendant's good faith belief must be objectively reasonable and here course there was no suggestion whatsoever that the believe had to be subjectively reasonable had to be objectively reasonable in fact the court told the jury that the good faith belief could be completely unreasonable as long as the defendant believed it in good faith the reliance on counsel instruction was correct it included all of the required elements and it properly placed the burden of going for on the defendant of course the government remain retains the ultimate burden of persuasion proving that the defendant did not act in good faith relying on his own advice of counsel and the instruction specifically told the jury that reliance on coun on the state court judgement your honour's even if the state court judgment had made the resolution of whether h i e where origen simply owned that was the owner of those fun except into the hearsay rule which is you know my command and it is a determination of property rights to me wholly inconsistent with the government's position in this case that these monies were gifted from both where case there had been a state court determination that distribution of property as between spouses was of a certain character this court said the question here was the intent of the parties and we are not going to bind the united states by this florida state court judge that this was a payment in exchange for i believe the wife's interest in property as opposed to alimony and also if you look at this court's decision in a they distinguished from and where they said insult exact same issue that the federal jury is being asked to decide what was the intent of the parties at the time of the distribution and in fact a state court jury was asked to determine what is the situation now and they found it seems to me that a jury properly instructed and with argument skillfully had to live reply government counsel that would have significantly reduced the possibility of confusion it's certainly highly relevant evidence there's no doubt about that even assuming that it is relevant and somehow we could get over the issue of prejudice under what it certainly is hearsay there's no one available for us to fourteen specifically refers only to documents that contain statements made in recorded documents now and that's documents of title means things like things like that are it's not someone who in court was this was this recorded in the harmless and i think it clearly was because the evidence in this case was overwhelming that that the money that the defendant diverted was his money and that he took it with no requirement that you pay that money and that there was no restriction on what he did with that money and the government would believes that that information submitted to the state jury during that trial did not include evidence that we put in front of our jury in this case and that therefore even if the state court judgment could have somehow come in there was not harm to the defendant by its exclusion let me let me ask you this gotten lost her feet were the relevancy years now why do you claim the judgment was not relevant recollection of what he said i apologize ok thank you ok on the second thing i think it's clear that the defendant had submitted to the court everything that the court needed to decide how to compute the tax liability what the court did was it took a number that the probation officer had calculated which included federal and state income tax losses and approximately i think twenty five million in hawaii tobacco  that the record is not clear enough to stand which ten o'clock well i'm afraid i don't know whether the government anticipated that there would be would be an evidentiary hearing obviously the defense had asked for an evidentiary hearing in the court explained when he came onto the bench that day that he had reviewed and read everything given extensive and careful consideration to everything that he had read and done considerable amount of research and he also said i'm not going to calculate the defendant's tax liability then he said i'm going to make a reasonable estimate as it's provided and the hawaii tobacco tax he took out all of the hawaii tobacco tax he said he found that was not relevant conduct that left in the remaining federal income tax and state income tax and he used to the numbers that were establ was i believe it was eight million plus twenty five million although i'm i'm not one hundred percent sure of the number for the white to back which but i mean he took he took as the starting number x dollars and mr ball were supposedly diverted from the corporation right now no this is i'm talking about the tax law so my know you have the don't you have to find out what the income is subtracted options that leaves you taxable income and based on taxable income you figure out what the tax loss is right there are ok then there were two components to the calculation one with the white tobacco tax which excluded the other one the problem is doctrine you mean i'm sorry i think i was talking over you ok i don't know hard time recreating the numbers and if i'm correct if you start with what the gross income is ok then you subtract the gross income destructions to get the taxable income and then you figure out what the tax is on taxable income that would be one way to do it  taxable income for the defendant himself was ten million dollars then there were the judge added in income tax that should have been paid by the corporation on the diverted funds and i don't know the number for that and then he took i believe twenty eight percent of those numbers and that left eight million dollars some eight million dollars so there and also i left out the defendant's state income tax that he did not made on the unreported ten million dollars so there are essentially four components to the tax loss number that the court used the defendant's federal income tax and state income tax and the made after the fact and also as in the corporate income based on your spirity that well when i report when i made this adjustment to the corporate records to adjust for this why you tobacco tax that i believe i had over pain when i did that i had actually reported more income and so that adjustment really meant that i was reporting this encounter that i was diverting even though you can't tell from the books and records that those transactions are reported because they're not because what he was doing was recouping that's alleged overpayment of tobacco tax and as we pointed out in our brief if he was entitled to do that self help on the corporate tax then what he should have reported as income was even higher because we also should have added in the diverted money because  dictionary or whichever dictionary the government cited to you to go through to find out what that sentence means it certainly is not simple court to ask the question about distribution of capital yes distribution of capital is not income but it would clearly under that instruction as income to be taxed shifting to the state court judgment a court judgment is not was used by the expert witnesses to prepare for this trial was used by attorneys and other people and giving advice to the bull where if you're going to argue about wolfowitz and intent bulwer as told and this was some of  again a year after year and a lot of that have to do with what was happening in that state court case it went on for a lot of years i tr backed away from making determinations in this whole area with actual income and she said it was close so comp lifes she didn't want to get into it when with p d got it in front of him he said it's so complex i will not do attacks on it yes i look at all some of this material raw material but i will not do exactly what i will not have a hearing and i would urge the court that all the cases we have from this court and others in that circumstance the trial judge should have a hearing to determine