*1 571 before the administrative agency. 28 (1984). C.F.R. 542.15 Martinez failed exhaust the ad ministrative made remedies available Bureau of Prisons the time of the filing petition of this for corpus. habeas court, therefore, correctly district dis missed this claim. Tatum v. See Christen sen, 964; 786 F.2d at Green v. Christian- sen, 1397, (9th Cir.1984); 732 F.2d 1400 Smith, Ruviwat v. F.2d at 701 845. Because the makes record clear that Martinez failed to exhaust his administra- Dublin, Cal., Phillip peti- for remedies, evidentiary tive hearing tioner-appellant. necessary. issue was or is See Chua States, Han Mow v. United 730 F.2d at Stergis, Atty., Barbara C. Asst. U.S. Los 1314. Cal., Angeles, respondent-appellee. Finally, there is no reversible error manner in which district assigned magistrate the matter hearing. to a Affirmed. BROWNING, Judge, Chief FARRIS, GOODWIN and

PER CURIAM: prisoner

A federal the dismissal petition his of corpus. for a writ habeas affirm.

We prisoners America,

Federal required are UNITED STATES Plaintiff-Appellant, exhaust their federal administrative reme prior petition to bringing dies for a writ v. corpus habeas in federal court. Tatum RUSSELL, Schooff, James Earhl C. R. Christensen, 959, (9th F.2d 786 964 Cir. Richey, M. and Lawrence 1986); Fendler v. United States Parole Defendants-Appellees. 975, Commission, 774 F.2d 979 Cir. 86-3013, 1985); Miller, Nos. 86-3014 and Anderson v. 86-3015. — (7th Cir.1985), denied, cert. U.S. Appeals, States Court -, (1986); S.Ct. Ninth Circuit. States, Han Chua Mow v. United (9th Cir.1984), Argued Sept. and Submitted 1986. Decided Nov. (1985); Smith, Ruviwat The Bureau of Prisons has established remedy an administrative

by which an prison inmate in a federal may any aspect imprisonment.

seek review of C.F.R. 542.10 Difficulties prisoner experience may in meet-

ing requirements the time for an adminis- appeal

trative properly brought are *2 FLETCHER, FERGUSON, and

REINHARDT, Circuit FLETCHER, Judge: United States dis- Plaintiff trict dismissal of of a court’s counts indictment. The district court 28-count held that the defendants lacked fair notice tax avoidance they developed promoted, schemes and and accordingly they could not will- have fully the statute. We and violated reverse trial. remand for

BACKGROUND developed Frank Forrester tax shelter designed programs to reduce in- taxpayers’ pri- come tax liabilities. Under Forrester’s mary program, “personal con- services tract,” taxpayers would “sell” life their services to Professional and Ser- Technical him, (PTS), entity an by vices created year. per one dollar When taxpayers paychecks from their employers, received endorse the send would checks and PTS, them transferred the checks Dynamics, (IDI), an- International Inc. organization. other turn Forrester IDI in the funds to IDI transferred Credit Union (IDICU), taxpayers which would send the equal percent checks to 90 to 92 original taxpayers’ paychecks. Some purported foreign of these entities to be corporations. trusts or Forrester’s other tax scheme at issue here the “9:1 tax shelter” under which taxpayers purchased “consulting services” Taxpayers IDI. an allegedly Searles, Roger Donald Atty., W. M. Ol- consulting IDI, IDI deductible fee to sen, Paup, Michael L. Lindsay, Robert E. sent immediately taxpayers Dawson, Justice, Dept, Deborah W. tax-free reimbursement check less ten a Washington, D.C., plaintiff-appellant. percent consulting fee. No were Bothwell, Lorello, Thomas & Bothwell performed. ever Christopher Tait, Yakima, Wash., Joseph S. Russell, Defendants James Earhl Jr., Butler, Nappi, Spokane, Brian T. Schooff, Richey and Lawrence were Wash., for defendants-appellees. promotion volved in the and sale of these three, along schemes. These with Forres- ter, deceased, charged now who is variety indictment 28-count with fraud, fraud, judgment” mail and tax evasion viola- under 28 U.S.C. 1291. Unit- ed States v. tions. general Despite the appli- defendants, motion the district On finality requirement, cation of 1291’s dismissed counts of the indict- twelve “[sjection can, does, make it law- ment, finding reasoning that under ful for the ap- take certain Dahlstrom, 713 though peals judg- there no final *3 (9th Cir.1983), According ment.” Id. at 1308n. 10. to the (1984), 80 L.Ed.2d the Eleventh “right Circuit in this to illegali- of the defendants lacked fair notice appeal take an interlocutory ex- [must be] July ty of the tax schemes until 1982 pressly provided in section 3731.” Id. held, Eighth the in a when civil provides Title 18 U.S.C. 3731 in rele- § proceeding, “personal that a services con- part: vant “In appeal by a criminal case an tract”, involved in similar to those this the United States shall lie to a court of case, illegal was an tax avoidance scheme. decision, appeals judgment, from a or order Landsberger, 692 States v. F.2d United of dismissing a district court an indictment (8th Cir.1982).1 any ... as to more one or counts.” Be- government appealed the dismissal cause the district court dismissed 12 of the of the twelve counts. The district court counts, government the is authorized to counts, remaining continued trial on the appeal under satisfying thus the § ruling accruing during that the time the prong. first prong, As to second the the would pendency appeal the be deemed district court order not a judgment is final except as to delay Speedy the Schooff because it excludable under Trial does not dispose remaining of the 16 counts.2 How- Act. ever, quoted we have interpreted por- the tion of expressly providing 3731 as the § DISCUSSION right interlocutory to take appeal in this Appealability 1. situation. See United Marubeni The district court dismissed 12 of (9th Corp., America indictment, 28 counts in the the contin Cir.1980) (court that supplied held § remaining trial pending ued on the counts appellate jurisdiction where district court appeal. prosecute appeal, its To the portion had dismissed one count and had government that “must show it has the suspended pre-trial proceedings on remain- right appeal appealed to order and that the ing pending appeal; counts no discussion of statutory comes within the terms of a 1291’s finality requirement). Following § Marubeni, grant jurisdiction.” juris- we conclude that we have Dior, interlocutory appeal diction to hear the in Cir. case at 1982). bar.3 satisfy prong, To government bring to must be authorized 2. Standard Review appeal under 18 U.S.C. 3731. To satisfy the prong, being second decision The district court “assumed the truth of appealed generally must constitute a “final material each fact set forth the indict- Landsberger "personal only interlocutory appeal 1. involved ser- Schooff. The issue arises contract,” only Richey. vices and did involve the "9:1 as to defendants Russell and in the case shelter.” district court at bar apparently pr^-Landsberger, Order, concluded that At the end of its the district court lacked of the fair notice any stated: "To the that this Court extent has well, the “9:1 tax shelter” as because the district authority government’s entertain motion involving dismissed at count least one interlocutory appeal, for leave to take an only the "9:1 tax shelter.” same is This GRANTED." statement has no provision effect. There is no for district court charged interlocutory 2. We note that defendant Schooff certification of criminal I, 1292(b) analogous regarding in count which was dismissed. The to 28 U.S.C. terlocutory appeals. district court’s order is final as to civil therefore and, applying

ment ruled that 1428. The court accordingly reversed the evidence, Id. at 1429. regardless judgments.

would be unable to sustain its burden with 4. Frank Forrester’s Tax Shelter respect to those counts which were dis- Schemes missed.” The district court thus ruled as a law, holding matter of and we review this The heart of the primary Forrester de novo. personal scheme was the taxpayers contract under which sold their 3. Dahlstrom PTS, life services one of the entities Forrester, created for one per dollar The tax avoidance scheme at issue in year. taxpayers were allegedly there- at 713 F.2d described 1425- by obligated paychecks to transfer all Commissioner, Zmuda v. and also According indictment, PTS. to the the de- Zmuda fendants participants assured the appeal was an judgment from a Tax Court *4 longer income was no taxable to them as disallowing assessing deductions and civil individuals because PTS owned their pay- penalties for use of a tax virtually scheme checks. to the one at issue in the Dahlst- identical rom criminal prosecution. As this recognized, At court has guid- the heart of “[t]he ing principle assignment the foreign scheme were three trusts to be income cases is that income is individually by person established taxed to the taxpayer each or entity, which in participant. fact controls Property earning or income the was trans- States, Johnson v. United income.” among trusts, ferred to and these 698 and 372, 374 eventually Supreme taxpay- transferred back to the Court first announced “gift.” er this rule in transactions, as a 1930 in Some of the Earl, Lucas v. Ill, 114-15, 281 U.S. including the 50 taxpayer, to the 241, Ct. (1930), 74 L.Ed. 731 allegedly and part tax-free in has because of the See, e.g., repeated United often it. foreign status of the trusts. v. Basye, 441, 410 93 S.Ct. The defendants by were tried (1973) (“The 35 412 L.Ed.2d principle jury and convicted of conspiracy to de- Earl, of Lucas v. that he who earns income fraud the United aiding States and of and may not avoid through taxation anticipato- abetting preparation the presentation and ry arrangements no matter how clever or of fraudulent income tax ap- returns. On subtle, ... today stands as a cornerstone peal, the court noted that per- to convict a graduated of our system.”); income tax aiding son for and abetting preparation the Culbertson, Commissioner v. 337 U.S. presentation of fraudulent income tax 733, 739-40, 1210, 1212, 93 L.Ed. 7206(2), returns under 26 U.S.C. (1949) (court 1659 cites principle “the first must the defendant act- of income taxation: income must be willfully. ed 713 F.2d at 1426-27. Under it”). taxed to him who earns statute, a “willful” act consists of “a alleged The acts in the indictment consti- ‘voluntary intentional violation of a known ” tute violations of the statute because Id. legal duty.’ (quoting 1427 contradict this “first principle” of tax law. Pomponio, 10, 12, 429 U.S. Such anticipatory assignments of income 22, 23, S.Ct. (1976)). recognized have been as ineffective to shift court held that because legality “the income purposes fifty for over program shelter by ap- advocated years. The defendants in this case had fair pellants in this completely case was unset- notice of illegality of their scheme from by any tled clearly precedent relevant inception. its alleged the dates indictment,” in the According court, lacked fair illegali- notice of the the district ty of their acts and thus requi- lacked the twist the instant scheme is that site intent to violate the law. 713 F.2d at accused not cognizance took controlling prog- nature of Lucas and if no court has eny, pro- explicitly but cited that decision in their so ruled. See United States v. proposition for the Ingredient Technology motional literature Corp., 698 F.2d (2d Cir.) (“it preassignment that while of the fruit is immaterial that ‘there is unlawful, may prohibition litigated there pattern be is no fact precisely in ”), against assigning Ergo, point’ the tree. if the assignee-trust tree, owns the it also owns This fruit, assignor-taxpayer distinguishable and the case is thus from Dahlst- any rom, liability thus relieved of for taxes on where the court was “convinced that such fruit. the legality of the tax program advocated ... was [defendants] not, This fruit/tree distinction does how- completely by any clearly unsettled rele- ever, save the defendants’ scheme. In Lu- precedent vant on the alleged dates in the cas, Supreme Court held that “the tax indictment.” 713 F.2d at 1428. See Unit- escaped by anticipatory could not ar- Little, ed States v. rangements contracts, however skilful- (9th Cir.1984) (court distinguished Dahlst- ly prevent salary devised to when rom, noting regarding that the law retroac- vesting even for a second in the man partnership tive allocations was clear on 114-15, earned who it.” U.S. at indictment); the dates in the Unit- S.Ct. at 241. The indictment in the case at Condo, ed States v. alleges taxpayer signed bar that a who Cir.1984) (court distinguished Dahlstrom, personal services contract “continued to observing that the constitutionality of the previous employer work for his and receive *5 taxing system clear), denied, was cert. paychecks in his own name.” The indict- U.S. 105 S.Ct. ment further states that “the defendants (1985). orally assured they these individuals that every paycheck did not have to turn over to The other Forrester tax scheme was the Professional and Technical Services. In- tax illegality “9:1 shelter.” The of this stead, signed ‘personal individuals who scheme was likewise beyond any clear complete services contract’ had discretion “The depends doubt. incidence of taxation they over whether or not turned their pay- upon the substance of a transaction.” checks over to Professional and Technical Co., Holding Commissioner v. Court Services.” 331, 334, 707, 708, 89 L.Ed. (1945); Rickey see also

These Commis- allegations in the indictment indi- sioner, participants cate that in the scheme contin- alleged taxpayer The indictment par- that

ued to “earn” their own salaries. The ticipants pur- contracted with IDI for the illegal scheme is therefore under Lucas. services,” “consulting paid chase of a fee Calling the assignment scheme an of life services, for the immediately received a services rather than assignment of in- equal percent from IDI to 90 of the change come does not the nature of the paid, fee and never any consulting received underlying acts in the indictment. They services. told that the “fee” The fact that this scheme in “consulting for the services” was tax purported foreign volved the use of trust substance, deductible. This scheme lacks organizations, particular and that and the defendants had fair notice of its scheme illegal had not been ruled until the illegality. Landsberger litigation, change does not assuming We conclude that the truth of Regardless basic conclusion. of the enti allegations indictment, in the defend- through taxpayers’ ties monies were engaged promoting ants were in tax funneled, personal the basic con schemes, of which had assignment tract remains an of income that fair notice. The district court in erred is purposes. ineffective for tax If it is granting pre-trial the defendants motions beyond any clear doubt that a scheme is for dismissal of 12 counts. illegal principles under established of tax law, participants then have fair notice of its REVERSED and REMANDED. 7206(2), Judge, concurring: FERGUSON, Circuit I.R.C. and the return prepared Dahlstrom, filed. See never Durst was Judge opinion. I I in Fletcher’s concur clarify in our separately an effort write holds, Dahlstrom Dahlstrom, as noted in its Conclu- in decision sion, for advocacy of a “[p]rosecution that Cir.1983), 713 F.2d 1423 program in the of any absence 980,104 S.Ct. L.Ed.2d specific intent evidence of a violate is offensive to the law and fifth first Initially, disagree I with district amendments of United States Constitu- to dismiss a court’s decision number added). tion.” Id. (emphasis The Dahlst- of trial. court counts without benefit The rom case was primarily a First Amend- that, regardless of what ruled evidence involving pure case advocacy. ment might produced, government could prosecuted there were not unless an willfulness though nothing gave warning them fair previously specific had held advocacy that the tax shelter would illegal. shelter scheme I know of no law in prosecution. result a criminal It is permits that the dismissal anof indictment prohibiting doubtful statute advoca- upon facts, such based the nonexistence of cy would, in tax matters absent imminent mind, prior as a defendant’s state of action, unlawful withstand the First trial. The district on court’s reliance protection speech. Amendment’s Dahlstrom misplaced, for present case at hand does not a case decided in after a trial which the pure advocacy. The counts of the indict- ample opportunity had to dem- allege ment that were dismissed various onstrate defendants’ willfulness. acts, speech, part unlawful not mere Further, panel as a member of are defendants. The defendants Dahlstrom, holding I view its facts and prosecuted advocacy of false or differently did than the district court. In statements, fraudulent but various acts there were cate- two different support of false or fraudulent state- gories of defendants. group, advocacy ments. Their case is outside the

cluding except Durst, all of the defendants protection granted by Dahlstrom. *6 advocated no did shelters — They more than prepared talk. or false I.R.S.;

fraudulent documents for the

most, they may have counseled such a

preparation. then, opinion, The bulk of the group

dealt with a people acts whose possibly “advocacy could ... direct- POOLE, In the Matter of &. McGONIGLE inciting ed to producing or law- imminent DICK, INC., dba Northwest Steel Fabri- likely less action ... or produce to incite cators, Oregon corporation, an Debtor. such action.” 713 F.2d at 1428 CO., LA GRAND STEEL PRODUCTS Ohio, (quoting Brandenburg Creditor-Appellant, 447,89 1827,1829,23 (1980) (per curiam). prosecution under I.R.C. 7206(2) thus failed it because failed Herman GOLDBERG David W. incitement imminent unlawful ac- Harper, Appellees. tion. No. 85-3790. presented Defendant Durst a different of Appeals, States Court case, for he prepared had a tax return Ninth Circuit. upon plan. based fraudulent His Nov. conviction was reversed be- nonetheless cause we filing found the ALARCON, of document FLETCHER, WIGGINS, essential element a conviction under