150 F.4th 1328
10th Cir.2025Background
- Victor Kearney was indicted for filing a false tax return (2011) and for conspiring to defraud the United States under 18 U.S.C. § 371 for failing to report trust income from 2007–2011; his tax attorney Robert Fiser was named as a co-conspirator, pled guilty, and cooperated.
- Trial evidence showed Fiser prepared Kearney’s returns reporting negative income; Fiser testified they jointly decided not to report trust income because Kearney couldn’t afford the taxes.
- Kearney claimed he relied in good faith on Fiser’s advice and presented evidence he had reading difficulties, did not receive some relevant documents, and did not handle his own mail; defense also attacked Fiser’s credibility and disclosed conflicts.
- The district court read the indictment but gave a § 371 jury instruction that tracked the statute’s "offense clause" (conspiracy to violate the law) rather than the charged "defraud clause," omitting any requirement that the conspiracy employ deceitful or dishonest means.
- The court gave an advice-of-counsel instruction tied explicitly to the substantive false-return count (2011) but not to the conspiracy count. The jury convicted on both counts; Kearney appealed.
- The Tenth Circuit found two plain errors—(1) the conspiracy instruction omitted the deceit/dishonesty element required by a § 371 conspiracy-to-defraud and (2) the advice-of-counsel instruction failed to tell the jury it applied to the conspiracy count—causing overlapping prejudice, vacated the conspiracy conviction, and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the jury instruction erroneously described § 371 by using the offense clause instead of the charged defraud clause (omitting deceit/dishonest-means element) | Kearney: instruction omitted essential element (agreement to obstruct IRS by deceit/dishonest means), misdirected jury on charged offense | Government: overall trial context (indictment read, prosecutor argument) cured any omission; Bedford supports that context can suffice | Court: Plain error—instruction did not track the charged defraud clause and omitted the required deceit/dishonesty element; error was plain and prejudicial |
| Whether limiting the advice-of-counsel instruction to the false-return count (and not mentioning conspiracy) was erroneous | Kearney: advice-of-counsel was a defense to both counts; jury was not told it could rely on that defense for conspiracy | Government: jury understood overarching defense and closing argument made the point; placement of instruction after elements indicated applicability | Court: Plain error—instruction tied only to substantive count despite theory of defense applying to both; omission prejudiced Kearney |
| Whether the combined instructional errors affected substantial rights and trial fairness under plain-error review | Kearney: overlapping prejudice—omitting deceit element and excluding advice-of-counsel from conspiracy deprived jury of defenses to mens rea | Government: evidence (signing returns, Schwalm’s prior accurate filings, Fiser’s testimony) allowed inference Kearney lacked good-faith reliance; no reasonable jury would acquit | Court: Prejudice shown—reasonable probability a properly instructed jury could have accepted good-faith reliance and acquitted on conspiracy; errors affected fairness and integrity |
Key Cases Cited
- Dennis v. United States, 384 U.S. 855 (1966) (recognizes § 371 has alternative clauses: offense clause and defraud clause)
- Hammerschmidt v. United States, 265 U.S. 182 (1924) (conspiracy to defraud includes interference with government functions by deceit, craft, trickery, or dishonest means)
- Haas v. Henkel, 216 U.S. 462 (1910) (statute broad enough to include conspiracies to impair government functions)
- United States v. Feola, 420 U.S. 671 (1975) (mens rea for conspiracy under offense clause matches underlying substantive offense)
- United States v. Scott, 37 F.3d 1564 (10th Cir. 1994) (conspiracy-to-defraud instruction must communicate that means be dishonest or deceitful)
- United States v. Caldwell, 989 F.2d 1056 (9th Cir. 1993) (reversed § 371 conviction where jury was not instructed that obstruction must be by deceitful or dishonest means)
- United States v. Bedford, 536 F.3d 1148 (10th Cir. 2008) (upheld instruction where court explicitly defined "defraud" in charge; distinguished here)
- United States v. Olano, 507 U.S. 725 (1993) (sets plain-error review framework)
- United States v. Maryboy, 138 F.4th 1274 (10th Cir. 2025) (district court must instruct on a defense when defendant produces sufficient evidence and requests instruction)
- United States v. Piette, 45 F.4th 1142 (10th Cir. 2022) (prejudice found where erroneous instruction undermined an affirmative defense)