United States v. Jerry Hall and Kenneth Uranga

Appellants Hall and Uranga were convicted on jury verdicts of two counts each of tax evasion under 26 U.S.C. § 7201 . They claim the District Court’s failure to instruct the jury on the “bank deposits” and “net worth” methods of proof constituted “plain error”; that the Government relied on inaccurate figures in its calculations utilizing these methods; that the Government did not negate the appellants’ explanations of the source of their increased wealth; and that they were prejudiced by unconstitutionally inadequate assistance of counsel. We note jurisdiction under 28 U.S.C. § 1291 and reverse and remand.

We agree that the omission of instructions on the inferences and assumptions underlying the “net worth” and “bank deposits” methods of proof was plain error which prejudiced the appellants.

I. Background

Appellants Hall and Uranga were equal business partners operating several retail stores selling antiques, men’s and women’s clothing, jewelry, cosmetics, and novelty items. In 1975, the Internal Revenue Service discovered that they had failed to file individual or partnership tax returns for 1970-1974. A criminal investigation commenced and the appellants filed tax returns…