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RESTAURATEUR'S LIFESTYLE IS UNDER ATTACK, JURY TOLD

The government is prosecuting restaurateur Jean Babilis only because he lives well on his wife's inherited money, defense attorney Max Wheeler told a federal jury Wednesday.

Wheeler urged the 12 jurors to acquit Babilis of allegations of tax evasion and filing false returns because the government has not proved its case. He said prosecutors have played a numbers game with income schedules but that they haven't provided a shred of proof to show Babilis committed a crime.Wheeler said the money prosecutors say Babilis took from two of his eateries - Mulboons Restaurant and Studebaker's - was actually payback on loans Babilis made to the businesses.

Babilis is not required to report such paybacks as taxable income, the attorney said.

"They want you to convict Mr. Babilis because he lives in a big house, he drives expensive cars, and he puts red ribbons on expensive gifts to his wife. The government says he must then be guilty of something.

"But people who inherit millions of dollars usually live in big houses, drive expensive cars and spend lots of money."

John Lindquist, Babilis' father-in-law, testified that during the tax years in question he gave $ 1.7 million to Babilis and his wife.

"Of course they are going to live (well). But that doesn't mean they evaded taxes," Wheeler said. "You can live well on inheritances without paying any taxes . . . people do it every day."

The defense hired an accounting expert to testify previously in Babilis' behalf, attacking the government's income schedules as inaccurate and outside normal accounting procedures. Wheeler reminded the jury of that during closing arguments, noting that the government's figures were different at trial then they were five years ago when Babilis was indicted.

Babilis' business partner, Brent Mahaffey, has testified, however, that money Babilis paid into Mulboons and Studebaker's was not loans.

"That was the price Babilis paid to purchase interest in the eateries," Mahaffey testified during the two-week trial. He said Babilis took money out of the partners' restaurants to spend on a swimming pool, travel, a Peruvian nanny and luxury cars.

But Wheeler attacked Mahaffey's credibility before the jury Wednesday, calling Mahaffey the "witness on a leash."

Besides Mahaffey, the government has no evidence the money taken from the restaurants was not loan payback, he said.

"This is not Communist Russia, where the defense has a burden of proving they are innocent. This is America, where the government has the burden of proof," Wheeler told jurors. "The government has not met that burden."

Babilis' former major holdings - three restaurants, a private club and a bicycle dealership - have all gone bankrupt in recent years. Four of the eateries - three Mulboons and a Studebaker's - have been bought out by other investors.