Shang

MEMORANDUM *

In this tax evasion case, the government chose to employ the net worth method, a circumstantial method of proof requiring “the exercise of great care and restraint,” Holland v. United States, 348 U.S. 121, 129 , 75 S.Ct. 127 , 99 L.Ed. 150 (1954), and as to which the government “assumes a special responsibility of thoroughness and particularity” in its investigation. United States v. Hall, 650 F.2d 994, 999 (9th Cir.1981).

Because the government proved a reasonably certain opening net worth and a sufficiently thorough investigation for tax years 1996 and 1998, we affirm the denial of Shang’s motion for acquittal as to these two counts.

However, we reverse the conviction on the 1999 count because the government’s efforts resulted in a net worth calculation lacking the required “thoroughness and particularity.” Hall, 650 F.2d at 999 . The government admitted that its net-worth calculation for tax year 1999 was off by some $47,000 in two respects: (1) making a “substantial understatement” of Shang’s 1999 tax liabilities by failing to discover a $34,000 credit line; and (2) missing seven checks totaling approximately $13,000 that did not clear before the end of 1999,…