United States v. Cline: Expanding Criminal Forfeiture to the Entire Fraud Scheme notwithstanding Honeycutt
1. Introduction
United States v. Cline, Nos. 24-1119 & 24-1137 (10th Cir. Aug. 21, 2025), is a consolidated appeal arising from a multimillion-dollar procurement fraud at the Western Area Power Administration (WAPA). Matthew Cline (“Defendant”) challenged his wire-fraud convictions, and the Government cross-appealed the district court’s limited forfeiture order. The Tenth Circuit, in a published opinion by Judge Hartz, affirmed the convictions but vacated the forfeiture order, creating an important new precedent on the scope of criminal forfeiture under 18 U.S.C. § 981(a)(1)(C) in light of the Supreme Court’s 2017 decision in Honeycutt v. United States.
2. Summary of the Judgment
- Convictions Affirmed. The court upheld Cline’s six wire-fraud convictions, rejecting arguments that (1) references to a co-participant’s guilty plea were impermissible substantive evidence and (2) the deliberate-ignorance instruction lacked evidentiary support.
- Forfeiture Vacated and Remanded. The district court erred in limiting forfeiture to the six charged transfers ($20,268.35). The panel held that § 981(a)(1)(C) authorises forfeiture of all proceeds derived from the entire fraud scheme ($179,314.56), even if many transfers were uncharged, and that Honeycutt does not shield a defendant from forfeiture of funds he once possessed but later kicked back to a confederate.
3. Detailed Analysis
3.1 Precedents Cited and Their Influence
- United States v. Peterman, 841 F.2d 1474 (10th Cir. 1988). Long-standing rule that a co-defendant’s conviction or plea cannot be used as substantive evidence of a defendant’s guilt. The panel analysed Peterman to decide whether the Government’s use of Atwood’s plea crossed the line; it concluded the evidence was properly introduced for credibility and the district court’s limiting instruction sufficed.
- United States v. Woods, 764 F.3d 1242 (10th Cir. 2014) & United States v. Davis, 766 F.2d 1452 (10th Cir. 1985). These cases explain permissible uses of plea evidence to bolster or impeach credibility. Cited to show that mentioning Atwood’s plea on direct and in closing fell within acceptable bounds.
- Griffin v. United States, 502 U.S. 46 (1991); United States v. Hillman, 642 F.3d 929 (10th Cir. 2011). Support the rule that where evidence of actual knowledge is sufficient, an arguably unsupported deliberate-ignorance instruction is harmless.
- Libretti v. United States, 516 U.S. 29 (1995); Apprendi / Southern Union. Confirm that forfeiture is not subject to Sixth-Amendment jury-fact-finding where the statute has no numerical maximum.
- Honeycutt v. United States, 581 U.S. 443 (2017). Limits forfeiture to property a defendant “obtained.” The Tenth Circuit joins the majority side of an emerging circuit split, holding Honeycutt inapplicable where the defendant actually possessed the full proceeds, even if later transferred.
- Sister-Circuit Forfeiture Cases: United States v. Lo (9th Cir. 2016); Cox (1st Cir. 2017); Venturella (7th Cir. 2009); Tanner (2d Cir. 2019); Bradley (6th Cir. 2020); Young (11th Cir. 2024). The panel relied heavily on these to conclude that forfeiture encompasses uncharged executions of the same scheme.
3.2 Court’s Legal Reasoning
a) Admission of Co-Participant’s Guilty Plea
The Court applied a two-step inquiry: (1) Was the evidence offered for a legitimate, non-substantive purpose (credibility, completeness, impeachment pre-emption)? (2) Did the prosecutor’s primary purpose nevertheless veer into proving Cline’s guilt by association (Peterman)? Finding that Atwood’s plea was introduced ex ante to blunt impeachment and show acceptance of responsibility—bolstering his firsthand narrative—the panel affirmed. A clear limiting instruction insulated misuse, and no contemporaneous objection was lodged at closing.
b) Deliberate-Ignorance Instruction
While the evidence of “willful blindness” may have been debatable, the panel invoked the rule of alternative-theory harmlessness. Ample evidence of Cline’s actual knowledge existed (59 falsified invoices, kickback cheques marked “rent,” use of false identities). Therefore, even assuming factual deficiency, any error was harmless.
c) Forfeiture Scope and Honeycutt
Three sequential holdings anchor the new precedent:
- No Sixth-Amendment Barrier. Because § 981(a)(1)(C) lacks a statutory maximum, Apprendi/Southern Union do not require jury findings; forfeiture remains a sentencing matter for the judge on a preponderance standard (Libretti).
- Schematic Approach to “Proceeds.” Wire fraud inherently involves “a scheme to defraud.” Hence, the “proceeds” for each conviction encompass all funds traceable to that scheme, including uncharged or even acquitted transactions (Lo, Cox).
- Honeycutt Distinguished. The bar on joint-and-several liability applies only to co-conspirators who never possessed the proceeds. Cline did obtain every dollar before kicking it back to Newman; consequently, he remains liable for the whole $179,314.56. The opinion sides with the 1st, 2d, 6th, and 11th Circuits and expressly rejects the narrower 9th-Circuit “came-to-rest” test.
3.3 Impact of the Judgment
- Forfeiture Litigation. Prosecutors in the Tenth Circuit may now seek forfeiture of all fraud-scheme proceeds a defendant briefly controlled, even if many underlying acts are uncharged. Defense counsel must prepare for aggressive monetary exposure at sentencing.
- Honeycutt Split Deepens. The decision adds weight to the majority view that Honeycutt is limited to defendants who never touched the money. A Supreme Court resolution is increasingly likely.
- Evidentiary Strategy. The ruling clarifies that prosecutors may safely disclose co-participants’ guilty pleas when those witnesses testify, provided there is a contemporaneous limiting instruction and a bona-fide credibility purpose.
- Deliberate Ignorance Instructions. Although not new law, the panel reiterates that such instructions are harmless where evidence of actual knowledge is strong—useful guidance for trial courts crafting jury charges.
4. Complex Concepts Simplified
- Forfeiture vs. Restitution
- Restitution makes victims whole; money goes to the victims. Forfeiture punishes the defendant; money goes to the Government. Both can be ordered simultaneously.
- “Proceeds traceable to”
- Any money or property that can be followed back—directly or indirectly—to the criminal scheme, even if it changed hands or forms (e.g., cash → car → cash).
- Deliberate Ignorance / Willful Blindness
- A doctrine allowing juries to find “knowledge” when a person consciously avoids learning the truth (e.g., shutting one’s eyes to obvious fraud signals).
- Honeycutt Rule
- Under certain forfeiture statutes that say “property the defendant obtained,” a defendant cannot be forced to forfeit proceeds only acquired by someone else, unless he ever possessed them.
5. Conclusion
United States v. Cline cements two practical rules in the Tenth Circuit: (1) evidence of a testifying accomplice’s guilty plea is admissible for credibility with a proper limiting instruction, and (2) defendants who once held fraudulent proceeds cannot escape forfeiture by quickly passing the money on. By tethering forfeiture to the whole fraud scheme and reading Honeycutt narrowly, the opinion materially expands the Government’s financial-recovery arsenal and provides clear guidance for future white-collar prosecutions.
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