Jurors will begin deliberation Wednesday on the government's tax evasion and fraud charges against Ogden businessman Jean Babilis after the federal judge refused last week to dismiss the charges.
Defense attorney Max Snow asked Jenkins to dismiss the charges because IRS expert Brett Conlin had disregarded IRS procedure in preparing documents for the government's case."This computation prepared by the government violates rule after rule of how you go about preparing a net worth computation," Snow told the judge.
If the procedures had been followed, the government would find that Babilis did not owe any taxes for 1985, 1986 and 1987, Snow told the judge.
"We stand by those numbers," Special Assistant U.S. Attorney Jeff Breinholdt said.
U.S. District Judge Bruce Jenkins ordered the government to change some of its exhibits but declined to dismiss the charges.
Babilis has been charged with tax evasion for those years and filing a false tax return for 1986 and 1987. Babilis and former partner Brent Mahaffey once operated the Mullboons restaurants and Studebaker's, a private Salt Lake club.
The ledgers and tax records compiled by Babilis' accountant for those years are missing, according to accountant Doyle Johnstun.
Johnstun testified that while he was out of the office, someone from Babilis' law firm showed up and asked for the records. Johnstun's secretary gave the unknown person all of the records without making copies, the accountant told the judge.
Babilis put those records in a storage unit, Snow told Jenkins. But someone who worked for the bankruptcy trustee managing Babilis' bankrupt business broke into the storage unit and took the records, Snow said.
"They never asked us to make those records available. They just broke the lock off, came in and took them," Snow said.
"I get a little troubled when people pretend that records don't exist when no one's traced what happened to those records," Jenkins said. "If the trustee has run off with them, then someone ought to have the trustee in here, it seems to me."
The trustee kept the documents over the winter in a trailer, Snow said. Many of the documents were destroyed by the weather, concurred Breinholt.
Defense attorneys visited the dark, cold trailer repeatedly and tried to reconstruct the records, Snow said.
"It's really not our fault that those records aren't here. They are a mess. We've never been given free access."
"The trustee is not without responsibility," Jenkins said. "If the trustee has done something she shouldn't have done, I'll call that to the attention of the appropriate people."
Jenkins said he would contact the supervising U.S. Bankruptcy Court trustee about the matter. "We're going to trace that one through."
Johnstun continued his testimony in defense of Babilis without supporting records.