A jury convicted Victor Kearney of filing a false tax return and conspiracy to defraud the United States by not reporting his trust income between 2007–2011. On appeal, Kearney challenged his conspiracy conviction, arguing that the district court erroneously instructed the jury on 18 U.S.C. § 371’s defraud clause and improperly limited his advice-of-counsel defense to the false-return count. The Tenth Circuit agreed and vacated the conspiracy conviction.
Kearney argued that the jury was given incorrect instructions. The indictment charged Kearney under the “defraud clause” of § 371 by alleging a conspiracy to impede the IRS, but the court instructed the jury using the “offense clause” elements.
The panel on appeal found plain error because the two clauses under § 371 are “fundamentally different.” Unlike the offense clause, the defraud clause has a “deceit, dishonest, or fraudulent means” element, and its omission would render the instructions insufficient to describe the specific § 371 crime charged. The panel reversed based on this plain error because Kearney pointed to evidence from which the jury could have concluded that he did not intend to defraud the government through dishonest means.
The panel also agreed that the district court plainly erred in giving the advice-of-counsel instruction when it mistakenly suggested that advice of counsel is a defense only to a substantive offense and not to a conspiracy offense. Finding overlapping prejudice from both errors, the Tenth Circuit vacated Kearney’s conspiracy conviction and remanded for further proceedings.
Appeal from the District of New Mexico.
Opinion by Moritz, joined by Matheson and Ebel.