Court orders new hearing in Reno tax case

Las Vegas Sun/June 11, 2004

Carson City -- A federal appeals court has ordered a hearing for a Reno couple to determine whether Internal Revenue Service agents at their trial intimidated the jury into finding them guilty.

The 9th U.S. Circuit Court of Appeals Thursday directed U.S. District Judge Edward C. Reed to consider additional evidence that IRS agents sitting in at the trial improperly influenced the guilty verdict against Martin and Nanja Rutherford, accused of tax evasion.

At the trial seven to 10 IRS agents sat directly behind the prosecution in the courtroom, often conferring with the government lawyers. Jurors said the IRS agents "glared" at the jury.

The Rutherfords maintain that the presence of the IRS agents led some of the jurors to fear that if they acquitted the couple, the IRS might go after them.

Jurors after the trial told an investigator for the Rutherfords that there was discussion that the IRS might retaliate against members if they found the couple innocent.

Reed, in a hearing on a motion for a new trial, ruled that the Rutherfords bore the burden of proving that the government agents intended to intimidate or influence the jurors.

The appeals court, in a decision written by Judge Stephen Reinhardt, said Reed should have ruled that the conduct of the agents "raised a risk of influencing the verdict," not whether the Rutherfords had to prove the actions of the IRS agents intended to influence the jurors.

The court directed Reed to conduct another hearing to determine if there was a risk that the jury was influenced. Reed can then either uphold the guilty verdict or erase it and allow the U.S. Department of Justice to seek another trial.

The Rutherfords were fighting the IRS over a $125,000 from 1988 to 1990 spent on "Church of Scientology-related business courses and traveling." They deducted that from their taxes.

The couple sought to settle the case for $111,000 and sent in a payment of $50,000. But the IRS placed a levy on about $72,900 in their bank accounts.

The jury found the couple guilty of two counts of tax evasion and the Rutherfords were sentenced to five months in prison, followed by one year of supervised released. The judge ordered them to pay $141,812 in restitution and $2,637 as the cost of prosecution. They were each fined $3,999.