                                                                          F I L E D
                                                                   United States Court of Appeals
                                                                           Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                          NOV 13 2000
                            FOR THE TENTH CIRCUIT
                                                                      PATRICK FISHER
                                                                                 Clerk

    UNITED STATES OF AMERICA,

                Plaintiff-Appellee,

    v.                                                   No. 99-2327
                                                   (D.C. No. CR-98-815-JC)
    JON BARTON JACOB,                                     (D. N.M.)

                Defendant-Appellant.


                            ORDER AND JUDGMENT            *




Before BALDOCK, ANDERSON,              and HENRY , Circuit Judges.



         After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal.   See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument.

         Jon Barton Jacob appeals from his convictions for attempting to evade or

defeat tax in violation of 26 U.S.C. § 7201, and from a sentence requiring that he



*
      This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
pay all back taxes due as a condition of his supervised release. We exercise

jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742, affirm his

convictions, and remand for resentencing.


                              I. Facts and prior proceedings

       The evidence and all reasonable inferences derived therefrom is presented

here in a light most favorable to the government.       See United States v. Hanzlicek ,

187 F.3d 1228, 1239 (10th Cir. 1999).        Mr. Jacob is a long-time tax protester,    see

Jacob v. Illanes , No. Civ. 93-916 JB, 1993 WL 618334, at *2 (D.N.M. Dec. 21,

1993) (finding that Mr. Jacob belongs to “a small group of tax protesters . . .

filing frivolous complaints” in the district of New Mexico), who has refused to

file or to voluntarily pay income taxes since 1984. He considers himself not to be

“subject to the [tax] laws of the United States,” and has long argued that “the

United States is a foreign state without power to assess penalties and interest [for

failure to pay taxes] or to impose [tax] liens against his property.”        Jacob v.

United States , No. 94-2127, 1994 WL 596798, at **2 (10th Cir. Nov. 2, 1994)

(noting that “[w]e have consistently rejected such arguments as lacking in legal

merit and patently frivolous” and affirming district court’s award of sanctions and

injunction prohibiting the filing of further complaints until Mr. Jacob paid all

outstanding sanctions) (unpublished);      see also Jacob v. United States     ,

No. 94-2127, 1995 WL 18238, at **1 (10th Cir. Jan. 5, 1995) (imposing further

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sanctions because Mr. Jacob continued to restate same frivolous “tax protester”

arguments) (unpublished). The record shows that, since 1987, Mr. Jacob has

continued to refuse to voluntarily pay taxes, has sued the IRS agent who

investigated his failure to file taxes, has brought suit against a company that owed

him money and paid it to the Internal Revenue Service (IRS) pursuant to a valid

tax lien, and began hiding his assets so that the IRS could not seize them. Within

a week of receiving notice that the IRS was commencing collection proceedings,

Mr. Jacob also leased his apartment and placed his utilities under his sister’s

name. After the IRS seized his car, he bought another one and placed its

registration and insurance under his sister’s name.

      In 1998 a jury found Mr. Jacob guilty of five counts of attempting to evade

or defeat federal income taxes from 1987 through 1995. The government

presented undisputed evidence of Mr. Jacob’s tax liability (exclusive of penalties

and interest) for those years, and the district court ordered Mr. Jacob to pay that

amount as a condition of supervised release.     See R. Doc. 91 at 3. Mr. Jacob

appeals his convictions and the special sentencing condition.




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                                         II. Discussion

       A. Sufficiency of the evidence - Count I.          The essential elements of a

violation of § 7201    1
                           are (1) willfulness; (2) the existence of a tax deficiency, and

(3) an affirmative act constituting an evasion or attempted evasion of the tax.

See Sansone v. United States       , 380 U.S. 343, 351 (1965);     United States v.

Mounkes , 204 F.3d 1024, 1028 (10th Cir.),           cert. denied , 120 S. Ct. 2661 (2000).

Count I of the indictment charged that, from 1988 through 1996, Mr. Jacob

attempted to evade and defeat payment of taxes owed for the years 1987-1991 by

concealing assets, making false statements to agents, placing funds and property

in the names of others, and attempting to interfere with IRS collection efforts.

See R. Doc. 52, at 1. Mr. Jacob first argues that there was insufficient evidence

to sustain his conviction under Count I.        “[I]n reviewing the sufficiency of the

evidence to support a jury verdict, this court must review the record de novo, and

ask only whether taking the evidence--both direct and circumstantial, together

with the reasonable inferences to be drawn therefrom--in the light most favorable

to the government, a reasonable jury could find the defendant guilty beyond

a reasonable doubt.”       Hanzlicek , 187 F.3d at 1239 (quotations omitted).



1
  Section 7201 provides, in relevant part: “Any person who willfully attempts in
any manner to evade or defeat any tax imposed by this title or the payment thereof
shall, in addition to other penalties provided by law, be guilty of a felony.”

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       To support conviction, the government submitted, and the district court

admitted, certificates of assessment from 1987-1989 without objection and, with

objection from Mr. Jacob, a Tax Court judgment establishing Mr. Jacob’s tax

deficiency for 1987-1988. The government also presented (without objection)

testimony from two IRS agents that they calculated tax deficiencies for 1987-1991

based on income information obtained from Mr. Jacob’s employers, together with

supporting documents.

       Specifically, Mr. Jacob argues that the government’s evidence establishing

a tax deficiency for each year between 1987 and 1991 (1) was not legally

sufficient; (2) was erroneously admitted because it was irrelevant; and (3) was

erroneously admitted because it invaded the province of the jury to determine any

tax deficiency for themselves. He also argues that the Tax Court judgment was

erroneously admitted because judgments rendered in civil actions generally are

not given collateral estoppel effect in a subsequent criminal prosecution.

       Mr. Jacob concedes that his allegations of error numbered (2)-(3) are

reviewed only for plain error because of his failure to object at trial.    See Jones v.

United States , 527 U.S. 373, 388-89 (1999).        “Plain error is fundamental error,

something so basic, so prejudicial, so lacking in its elements that justice cannot

have been done.”     United States v. Burson , 952 F.2d 1196, 1199 (10th Cir. 1991)

(quotations omitted).


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       We have held that certificates of assessment are admissible in criminal tax

evasion trials as evidence “to prove the act, transaction or occurrence as a

memorandum of which the same were made or kept.”           Holland v. United States ,

209 F.2d 516, 521 (10th Cir.),   aff’d , 348 U.S. 121 (1954) (quotation omitted).

The certificates of assessment are relevant, probative, and admissible evidence of

the tax deficiency determined by the IRS. The revenue agents’ testimony, reports,

and summaries were also probative evidence from which the jury could determine

that Mr. Jacob had a substantial tax deficiency.    See Swallow v. United States , 307

F.2d 81, 83-84 (10th Cir. 1962). Although these kinds of documentary and

testimonial evidence are admittedly strong evidence of tax liability, allowing the

jury to consider the evidence did not invade the jury’s province to determine

whether a substantial tax deficiency existed, especially in light of the district

court’s instructions to the jury that it could reject the testimony of any witness

and its instruction on how to calculate income taxes. Further, although the Tax

Court judgment did not conclusively establish the existence of a tax deficiency

beyond a reasonable doubt (and the government did not request an instruction on

collateral estoppel and it was not admitted for its preclusive effect), the judgment

was admissible as prima facie evidence that a valid tax deficiency existed.     Cf.

United States v. Silkman , 156 F.3d 833, 835 (8th Cir. 1998) (certificates of

assessment are prima facie evidence of a tax deficiency in criminal tax evasion


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case). The evidence presented by the government was legally sufficient to

support a conviction for violation of § 7201.

       B. Sufficiency of the evidence - Counts II-V. Counts II-V of the

indictment charged Mr. Jacob with willfully attempting to evade and defeat taxes

owed from 1992-1996 by (1) failing to make income tax returns, (2) failing to pay

income taxes due, and (3) by concealing and (4) attempting to conceal from the

IRS the nature and extent of his true income.      See R. Doc. 52 at 2, 3, 4.

Mr. Jacob alleges that the “sole affirmative act of evasion alleged” in the

indictment on these counts was “concealing income” for those years. Appellant’s

Br. at 11-12. He also argues that, since the agents testified that they obtained

Mr. Jacob’s income figures for those years from 1099 forms, it was impossible for

him to conceal or attempt to conceal his income no matter what he did.

Appellant’s Br. at 11-12. Clearly, both arguments are without merit. The

indictment alleged more affirmative acts of evasion than concealment. Further,

just because Mr. Jacob was unsuccessful in attempting to conceal his income by

failing to report it does not mean that he did not make that attempt.     See Sansone ,

380 U.S. at 351. If he had not been audited, his attempt would have been

successful. Mr. Jacob did not, as he puts it, merely fail to file taxes. As the

record shows, he actively placed assets beyond the reach of the IRS and




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offensively resisted collection efforts. The evidence was sufficient to support the

element of affirmative acts of evasion.

       C. Exclusion of testimony. Mr. Jacob next argues that the district court

erred in restricting his testimony regarding his beliefs about the tax law, thereby

erroneously diminishing his ability to negate the element of willfulness. We

review the court’s exclusion of testimony for abuse of discretion,   see United

States v. Willie , 941 F.2d 1384, 1392 (10th Cir. 1991), and disagree. Before

Mr. Jacob took the stand, the district court ruled that he could testify about his

understanding of tax laws and about what materials affected that understanding.

See Tr. Vol. VI at 385. A review of the transcript of the hearing shows that

Mr. Jacob testified at length about his study of tax statutes and laws, Supreme

Court tax cases, and the Constitution.    See id. at 400-12. He explained why he

did not file returns beginning in 1985 based on his understanding. He further

testified about the influence that published tax protesters like Otto Skinner and a

Mr. Richey had upon his understanding of tax laws and why he now believed his

income from working could not be validly taxed, making him exempt from filing

income tax returns.   See id. at 413-47. The only thing the district court did not

allow Mr. Jacob to do was read from the materials he brought with him or admit

them into evidence, or to expound without limitation on what he thought the law

should be. In Willie , we held that legal materials may be properly excluded when


                                            -8-
they may confuse the jury or be used for an improper purpose, relying in part on

our prior holding in United States v. Hairston , 819 F.2d 971, 973 (10th Cir.

1987), that “direct testimony regarding [the] effect of publications on defendant’s

understanding of tax law filing requirements [is] more probative than [the]

publications themselves.”    Willie , 941 F.2d at 1395. We further explained that

“[a] normative belief that the law should not apply to him leaves [the defendant]

fully aware of his legal obligations and simply amounts to a disagreement with his

known legal duty and a studied conclusion . . . that [the law is] invalid and

unenforceable,” and is irrelevant.    Id. at 1392 (quotation omitted). The court did

not abuse its discretion in limiting Mr. Jacob’s testimony or in excluding the

exhibits.

       D. The special sentencing condition. Finally, citing    United States v.

Franks , 723 F.2d 1482, 1487 (10th Cir. 1983), Mr. Jacob argues that the court’s

imposition of a special condition of supervised release requiring him to pay back

taxes in the amount of $154,444 was improper. We review the court’s imposition

of a special sentencing condition for abuse of discretion.    See United States v.

Ensminger , 174 F.3d 1143, 1148 (10th Cir. 1999). Under       Franks , a court may

order a defendant to pay a specific amount in unpaid back taxes as a sentencing

condition if the specific amount has “been acknowledged, conclusively

established in the criminal proceeding, or finally determined in civil


                                            -9-
proceedings.” 723 F.2d at 1487. Mr. Jacob argues that none of these

requirements were met as to the amounts due from 1989-1995 because the jury

made no specific determinations on the amount of back taxes owed for those years

and his tax liability for those years has not been finally determined in a civil

proceeding. Citing no authority, the government argues that presenting evidence

of Mr. Jacob’s income, filing status, and deductible business expenses was

enough to conclusively establish the taxes due for 1989-1995 at the criminal trial.

       We first note that the government does not have to establish the exact

amount of back taxes due in order to establish a violation of § 7201 - it must

simply establish that a substantial tax deficiency exists.     See U.S. v. Kaatz ,

705 F.2d 1237, 1246 (10th Cir. 1983).        In Franks , we reversed the district court’s

special condition of probation because the government conceded that it was

arbitrarily imposed.   See 723 F.2d at 1487. However, we also noted that “there

was no factual determination made at the trial . . . of the amount of tax that the

defendants might owe the United States,” and cited several cases for the

proposition that restitution in a specific amount for the back taxes could not be

required absent acknowledgment, conclusive establishment at the criminal trial,

or existence of a civil tax judgment.     See id. Several of these cited cases indicate

that “conclusively established” means a definitive determination or adjudication

by a court or jury of the amount of taxes owed.       See, e.g., United States v.


                                             -10-
Touchet , 658 F.2d 1074, 1076 (5th Cir. 1981);      United States v. Stoehr , 196 F.2d

276, 284 (3rd. Cir. 1952) (holding that since the exact amount due is not normally

determined in the criminal action, determination of the amount owed must await

the defendant’s acquiescence or final civil judicial determination). Thus, in order

to comply with Franks , absent the defendant’s acquiescence, if the government

wishes restitution of back taxes in a criminal action for tax evasion without first

civilly litigating the exact amounts due, it must give notice of its intent to

establish (by a preponderance of the evidence) the amount due and obtain

a special jury verdict as to the exact amount.     Cf. United States v. Helmsley ,

941 F.2d 71, 102 (2d Cir. 1991) (noting majority view stated in      Franks but

holding that defendant had acquiesced in amount by failing to object to the

amounts submitted in the presentence report and by adopting the figures while

arguing mitigating circumstances). The district court abused its discretion by

requiring, as a special sentencing condition, payment of back taxes that have not

been conclusively established. We therefore reverse Mr. Jacob’s sentence as to

the amounts imposed for taxes due except for the amounts established by the

Tax Court judgment.




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      The judgment of the United States District Court for the District of New

Mexico is AFFIRMED; the sentence is AFFIRMED IN PART and REVERSED IN

PART; and the case is remanded for resentencing.


                                                   Entered for the Court



                                                   Robert H. Henry
                                                   Circuit Judge




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