United States v. Veronica Fairchild, 2016 U.S. App. LEXIS 4858

Veronica Fairchild, a professional adult entertainer, was convicted by a jury of four counts of making and subscribing false federal income tax returns (26 U.S.C. § 7206(1)) for tax years 2005–2008 and sentenced to 33 months' imprisonment.
IRS investigation and bank records showed $1,103,647.84 in checks from David Karlen, $50,000 from Paul Pietz, and $210,348.39 in cash deposits (2005–2008), while Fairchild’s filed returns reported substantially less income.
At interview and trial Fairchild claimed much of the payments were gifts and that she reported approximately $120,000 per year as income (she later amended returns in 2010). Karlen and Pietz testified payments were for private dances and, as to Karlen, for sex.
Accountant Anderson prepared drafts showing much higher gross receipts based on bank deposits; Fairchild used those drafts in loan applications but did not timely file the personal returns until 2010.
The district court found sufficient evidence for falsity and willfulness, instructed the jury (including a unanimity requirement as to whether falsity concerned income, tax liability, or both), and at sentencing found tax loss of $214,606 and applied a two-level enhancement for unreported income from criminal activity (prostitution).

Issue	Fairchild’s Argument	Government’s Argument	Held
Sufficiency of evidence of falsity	Amounts she reported matched her good-faith estimate of taxable services; excess were gifts	Bank records, witness testimony, accountant drafts, loan applications showed unreported income	Affirmed — reasonable jury could find returns false beyond a reasonable doubt
Knowledge/willfulness	She sincerely believed excess payments were gifts; good‑faith belief negates willfulness	Willfulness may be inferred from inconsistent reporting, conduct, and credibility; jury free to discredit her	Affirmed — jury could infer knowledge and willfulness
Jury unanimity / duplicity	Multiple income sources created risk jurors might convict without agreeing on a single source; requested specific unanimity instruction for Count 4	Each tax return is a single charged crime; multiple sources are alternative means; limiting instruction sufficed	Affirmed — court’s instruction was adequate; no abuse of discretion
Sentencing calculations & reasonableness	PSR erred on tax-loss and on enhancement for income from criminal activity; sentence failed to account for mitigation	District court’s factual findings (including crediting Karlen) not clearly erroneous; within-Guidelines sentence presumptively reasonable	Affirmed — tax-loss and enhancement sustained; 33-month sentence not substantively unreasonable

Kawashima v. Holder, 132 S. Ct. 1166 (2012) (elements of § 7206(1) and willfulness requirement)
Neder v. United States, 527 U.S. 1 (1999) (materiality standard for false statements)
Adler v. United States, 623 F.2d 1287 (8th Cir. 1980) (multiple evidentiary means supporting a single count do not make the count duplicitous)
Mathews v. United States, 761 F.3d 891 (8th Cir. 2014) (willfulness in tax cases may be inferred from inconsistent reporting)
Karam v. United States, 37 F.3d 1280 (8th Cir. 1994) (limiting jury instructions can cure potential nonunanimity from duplicitous counts)
Gall v. United States, 552 U.S. 38 (2007) (standard of review for sentencing reasonableness)