After Bay Area attorney Harry Margolis was acquitted on the last of 24 counts of alleged criminal tax fraud Monday - exactly two years to the day after he was indicted - he walked into the jury room to talk to the nine men and three women responsible for his freedom.
What he told them came as a surprise even though he has been saying it publicly for years.
"There is nothing more corrupting to our society than the system of taxation," he said. He accused Congress of making the laws that he could use to save his wealthy clients money. He said he would be overjoyed if the government put him out of business by passing better laws. But, he added, he would continue to exploit the tax system so long as he was able to do so legally.
And so, one of the longest, most complex tax fraud trials in history has ended - raising more questions than it has answered. Are there crimes that our judicial system cannot deal with adequately? Are our tax laws now too complex and unmanageable to be understood by the average citizen?
The 56-year-old Margolis claimed all along that his trial, which lasted more than six months, should have been fought in the tax courts and the halls of Congress. He said the government really was harassing him only because he was good at his job and some civil servants resented how much he saves his wealthy clients.
Margolis was accused of conspiring to cheat the government out of $1.4 million in taxes. According to the government indictments, he used a network of "paper" companies that he allegedly controls to set up phony transactions, which he in turn used to justify huge tax deductions.
His well-known clients included singer-entertainer Barbara McNair, Olympic diving star Dr. Sammy Lee and Werner Erhard, founder of est, a sensitivity training group. All three testified during the trial.
The government further alleged that Margolis was able to hide the true nature of many of the transactions and questions because some of his "paper" companies were located on off-shore tax haven islands which prohibit IRS scrutiny.
But Margolis staunchly defended his acts as legal. He said he was doing nothing that many of the nations' largest banks and companies don't do every day.
"The trial is a challenge to the entire system of taxation," said U.S. attorney Martin Schainbaum in an interview at the outset. "We have a fragile system. It used to be all right for everyone to pay as little as possible. Now, how much you pay is relative to how much you know and what counsellors you have."
If this trial and the expenditure of hundreds of thousands of taxpayer dollars have accomplished anything, they have brought under public scrutiny what promises to be an increasingly serious problem.
How can a case so complex that it deals with laws fully understood by only a handful of the top tax attorneys in the country be tried before a lay jury? Could that jury ever convict "beyond a reasonable doubt?"
The results do not read well for the Justice Department and the IRS. For more than a decade, those two agencies have tried to pierce the cloak of secrecy surrounding the many islands in the Caribbean and elsewhere that are serving as tax havens for the wealthy Americans able to afford their benefits.
The efforts involved in Project Haven and other code-name IRS intelligence probes into tax havens have been aimed at exposing what may be the most complex and calculated crimes in history - alleged money laundering and tax evasion involving as much as $500 million.
Besides the accusations that offshore banks were used by rich individuals and corporations to create transactions that would lead to tax deductions, there were darker implications. There have been persistent rumors than "skim money" from Las Vegas and mob operations around the country is being laundered through the tax haven islands. Those islands are protected from U.S. scrutiny by local bank secrecy laws.
Even when the federal probe was at its height, and actual bank records with the names of depositors were acquired through controversial breakins and the use of informants, it was never clear to the government how its cases would fare in the courts. The difficult part would be explaining the complex deals to lay juries, government attorneys theorized.
After the Margolis acquittal and after several other courtroom setbacks in other jurisdictions, Project Haven is now all but dead. But the gnawing fact is that the investigation has died not necessarily because the charges are not true, but because the government has not yet found a way to explain and prove the highly complex charges successfully to judges and juries "beyond a reasonable doubt."
In interviews with The Post after the trial, many of the Margolis jurors indicated they were overwhelmed by evidence. There were more than 1,700 pounds of documents in scores of cartons. And 1,100 pieces of paper were entered into evidence.
The jury deliberated for seven days on the remaining 6 counts. The other 18 had been thrown out two months earlier by the judge, who said the government could not substantiate them in its case. He told them, in effect, that if he could not understand the charges, the jury could not be expected to.
The jury said it could not find the "smoking gun," the final piece to the puzzle that could prove guilt. They said that despite the mounds of evidence, documents were missing from each of the dozens of transactions that took place.
"I felt the government took the shotgun approach," said juror Robert Brodine, "and they didn't focus on any one thing. They tried to show a conspiracy, but we couldn't find anyone Margolis conspired with."
Another juror, who asked not to be identified, said, "There was a lot incriminating in many of the letters from Margolis to clients, but when we wanted the letters that dealt with specific transactions we were interested in, they weren't there."
"I think the government thought initially that they could just put all this information in front of us," said juror Rosalee Blase. "I could understand the issues but I was confused about the application of the law."
Defense council Richard Gladstein, given high marks by both sides for his detailed nine-hour closing argument, brought up that issue in a different light during his closing.
He said it would have been better if the judge had been able to give his jury instructions - some 92 pages - before the trial instead of after. "I think it would have been great if at the beginning of this case you had been told what the rules of law were so that as the people testified here you would be able to judge as you were going along," he told the jury.
They apparently agreed, and in the course of their deliberation called for 202 exhibits to be brought into the jury room for another look after Judge William A. Ingram read the instructions.
To be sure, assistant U.S. Attorneys Schainbaum and Gary Shelton were persistent and methodical in their approach to this case, introducing one witness after another in an attempt to recreate many transactions.
But for the jury, it wasn't enough.