United States v. Cline – The Tenth Circuit Endorses “Full-Scheme” Forfeiture and Clarifies the Reach of Honeycutt and Peterman

Introduction

In United States v. Cline, Nos. 24-1119 & 24-1137 (10th Cir. 2025) the Tenth Circuit addressed three discrete, but frequently litigated, questions that arise in federal fraud prosecutions:

When may the government introduce a co-participant’s guilty plea without violating the rule of United States v. Peterman?
How does a potentially over-inclusive “deliberate ignorance” instruction affect a conviction when ample evidence of actual knowledge exists?
Does Honeycutt v. United States limit forfeiture under 18 U.S.C. § 981(a)(1)(C) to funds that literally “came to rest” with the defendant, and may forfeiture include uncharged executions of a wire-fraud scheme?

Matthew Cline, owner of two sham vendors, appealed his wire-fraud convictions. The United States cross-appealed after the district court limited criminal forfeiture to the six wire transfers charged in the indictment, rather than the fifty-nine transfers that actually flowed to Cline’s companies. The Tenth Circuit affirmed the convictions but vacated and remanded the forfeiture order, establishing an important precedent on “full-scheme” forfeiture and the non-applicability of Honeycutt where the defendant at any time possessed the tainted proceeds.

Summary of the Judgment

The panel (Hartz, Kelly, and Carson, JJ., per Hartz, J.) ruled as follows:

Evidence of co-participants’ guilty pleas. The district court did not abuse its discretion by allowing the government to elicit John Atwood’s guilty plea. The plea was admitted for a proper credibility-related purpose, and the limiting instruction—though imperfectly drafted—adequately directed the jury not to use the plea as substantive proof of Cline’s guilt.
Deliberate-ignorance instruction. Even assuming arguendo that the evidence would not sustain a deliberate-ignorance theory, any error was harmless because unchallenged evidence independently proved Cline’s actual knowledge. Under circuit precedent (United States v. Hillman) a conviction stands so long as one valid theory of guilt is supported by sufficient evidence.
Forfeiture. The district court erred in capping forfeiture at the six charged wires and in excluding kick-backed funds. Section 981(a)(1)(C) reaches all proceeds traceable to the overall wire-fraud scheme, regardless of count-charging decisions, and Honeycutt does not shield a defendant who himself obtained the funds, even if he later passed them on to a co-schemer.

Analysis

1. Precedents Cited and Their Influence

United States v. Peterman, 841 F.2d 1474 (10th Cir. 1988) – The cornerstone precedent that bars use of a co-defendant’s conviction “for the primary purpose” of proving another defendant’s guilt. The panel clarified that Peterman is violated only when the sole or primary purpose of calling the witness is to smuggle in inadmissible substantive evidence. Here, multiple proper credibility purposes existed.
Griffin v. United States, 502 U.S. 46 (1991) – Provides that a general verdict should not be reversed merely because one of multiple theories lacks evidentiary support, so long as another theory is supported. Applied to uphold Cline’s conviction despite the contested deliberate-ignorance instruction.
Honeycutt v. United States, 581 U.S. 443 (2017) – Limits forfeiture to property the defendant “actually acquired” under 21 U.S.C. § 853. The panel joined most circuits in holding that Honeycutt does not protect a defendant who at any point had possession of the proceeds, even if he later transferred them.
Apprendi/Southern Union line – Raised by the district court sua sponte. The Tenth Circuit reiterated that criminal forfeiture under § 981(a)(1)(C) lacks a statutory maximum, so Apprendi’s jury-finding requirement is inapplicable (Libretti remains good law).
Out-of-Circuit Forfeiture Cases. The court aligned itself with the 1st, 2d, 6th, 7th, and 11th Circuits (Tanner, Bradley, Venturella, Saccoccia, etc.) endorsing full-scheme forfeiture, and rejected the narrow Ninth Circuit view in Thompson.

2. Legal Reasoning

a) Co-participant Pleas. The panel examined trial context: (1) Atwood’s guilty plea corroborated his first-hand knowledge; (2) it pre-empted impeachment by showing the government had “nothing to hide”; (3) a strong limiting instruction was given. Applying Peterman, the majority emphasized that courts should find an impermissible purpose only if the record “clearly and unequivocally” demonstrates it, a threshold not met here.

b) Deliberate Ignorance. Because Cline conceded that actual-knowledge evidence was sufficient, the panel invoked Hillman: an arguably overbroad conscious avoidance instruction does not undermine a verdict sustained on an unchallenged knowledge theory. The Supreme Court’s holding in Griffin furnished the doctrinal foundation for this harmless-error approach.

c) Forfeiture. The court’s analysis proceeded in three steps:

Statutory Text. Section 981(a)(1)(C) forfeits “any property … derived from proceeds traceable to” the specified unlawful activity. Because each wire-fraud count required proof of a “scheme to defraud,” the “proceeds” of each count are the proceeds of the entire scheme.
Apprendi/Libretti. No Sixth-Amendment bar exists to judicial determination of the forfeiture amount, as § 981 prescribes no maximum.
Honeycutt’s Limitation. The panel drew a distinction between (i) conspirators who never possessed the proceeds (protected by Honeycutt) and (ii) those, like Cline, who actually received the money. Once a defendant “comes into possession” of the proceeds, forfeiture can reach them in full, even if later dissipated or kicked back.

3. Likely Impact

Forfeiture Practice. Prosecutors in the Tenth Circuit may now confidently seek forfeiture of all proceeds generated by a wire-fraud (or mail-fraud) scheme, including uncharged executions, so long as they establish a factual link by a preponderance of the evidence. Defendants cannot shield funds by promptly routing them to co-conspirators.
Litigation of Co-Participant Pleas. The decision gives district courts a workable framework: admit guilty-plea evidence if (1) the witness testifies, (2) a credibility-related purpose is articulated on the record, and (3) a clear limiting instruction is given. Defense counsel must now develop a stronger record of improper purpose if they wish to preserve Peterman objections.
Jury Instructions. Hands-on guidance: appellate courts will not reverse when a deliberate-ignorance instruction is arguably unsupported, provided the unchallenged evidence of actual knowledge is ample. Practitioners should consider the tactical cost of challenging only part of the mens-rea theory.
Apprendi Contours. The opinion underscores a circuit consensus that Apprendi does not apply where Congress sets no statutory cap—important for white-collar sentencing where forfeiture often exceeds statutory fine limits.
Circuit Split Deepened. By rejecting the Ninth Circuit’s restrictive reading of Honeycutt, the Tenth Circuit entrenches a 6-to-1 split, heightening the possibility of eventual Supreme Court review.

Complex Concepts Simplified

Criminal Forfeiture (§ 981). A punishment taking away property—not liberty. It targets the ill-gotten gains of federal crimes and is payable to the United States, not to victims.
Restitution vs. Forfeiture. Restitution repays victims; forfeiture disgorges profits. Courts may impose both without “double recovery” concerns. (See McGinty, 610 F.3d 1242).
Deliberate Ignorance (a/k/a “willful blindness”). A mental-state shortcut: jurors may infer knowledge when a defendant consciously avoids learning a truth he strongly suspects. It does not substitute for negligence or recklessness; it demands proof of a “high probability” the fact exists and deliberate efforts to avoid confirmation.
Honeycutt Principle. In conspiracy cases, forfeiture is not automatically joint and several; a member who never possessed the money cannot be forced to pay it. Cline clarifies that once the money does pass through a defendant’s hands, Honeycutt no longer protects him.
Peterman Rule. A co-defendant’s guilty plea is generally inadmissible as substantive proof of another’s guilt. It may, however, come in for credibility purposes if the jury is properly instructed.

Conclusion

United States v. Cline provides a tripartite clarification of federal criminal practice. First, it reaffirms a pragmatic, context-sensitive approach to admitting co-participant pleas, anchoring Peterman in real-world trial dynamics. Second, it underscores that harmless-error principles and Griffin foreclose reversal where an alternate, well-supported theory of guilt exists. Third—and most significantly—the opinion squarely adopts a “full-scheme” view of forfeiture under 18 U.S.C. § 981(a)(1)(C) and explains why Honeycutt does not limit forfeiture when the defendant actually handled the proceeds.

For prosecutors, the decision supplies a robust roadmap to maximize forfeiture awards. For defense counsel, it highlights the need to contest both actual knowledge and deliberate ignorance, and to develop a concrete record when challenging guilty-plea evidence. Strategically, the ruling will likely embolden the government in complex fraud cases and cement the Tenth Circuit’s position as a forfeiture-friendly jurisdiction—while further sharpening the circuit split that may one day draw Supreme Court scrutiny.