United States Court of Appeals

For the Eighth Circuit

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No. 12-2818

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United States of America

lllllllllllllllllllll Plaintiff - Appellee

v.

Tracy Clemons

lllllllllllllllllllll Defendant - Appellant

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 Appeal from United States District Court 

for the Eastern District of Arkansas - Little Rock

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 Submitted: March 11, 2013

 Filed: July 22, 2013

[Published]

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Before MURPHY, SMITH, and GRUENDER, Circuit Judges.

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PER CURIAM.

Tracy Clemons was convicted of 65 counts of mail fraud, in violation of 18

U.S.C. § 1341, for collecting proceeds from the milling of pine saw logs that he

diverted from their intended mill. On appeal, Clemons challenges the sufficiency of
the evidence to support his conviction, argues that the district court1

 abused its

discretion in allowing the government to introduce statements he made during a

proffer interview, and argues that the district court erred in denying him a setoff

against the restitution amount. We affirm.

I. Background

Deltic Timber Corporation ("Deltic") contracted the harvesting of several tracts

of land to a logging company, Clemons Timber, Inc. (CTI). CTI agreed to deliver pine

saw logs harvested from those tracts to a mill that Deltic owned. However, Clemons,

the owner and operator of CTI, instructed CTI's log-truck drivers to deliver many

truckloads of the logs to a mill owned by one of Deltic's competitors, Green Bay

Packaging ("Green Bay"). Clemons instructed the drivers to identify their loads as

timber brokered through North Arkansas Wood (NAW). Clemons's mother owned

NAW. NAW routinely sent weekly statements of its deliveries via U.S. mail to Green

Bay, and Green Bay routinely responded by sending payments by U.S. mail back to

NAW. NAW received payment for the truck loads of Deltic's pine saw logs, and

Clemons diverted those proceeds from NAW to CTI's business account. Clemons then

caused checks to be issued out of CTI's business account into his personal account.

A superseding indictment charged Clemons with 65 counts of mail fraud, in

violation of 18 U.S.C. § 1341, and 116 counts of money laundering, in violation of 18

U.S.C. § 1956(a)(1)(B)(i). Clemons maintained his innocence, and he agreed to meet

with Assistant United States Attorney Tricia Harris to proffer testimony regarding

where he had obtained the pine saw logs that he directed to Green Bay's mill. The

interview was attended by Clemons, Clemons's attorney, Harris, Billy Black of the

Arkansas Forrestry Commission, and Federal Bureau of Investigation Special Agent

1

The Honorable J. Leon Holmes, United States District Judge for the Eastern

District of Arkansas.

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Chad Coulter. Agent Coulter wrote a memorandum ("the FBI 302 memo") of

Clemons's statements during the interview.

Clemons subsequently obtained new counsel, Dale Adams, who discovered

from reading Agent Coulter's grand jury testimony that a proffer agreement existed.

Adams requested a written copy of the proffer agreement from Harris. However,

Harris found no proffer agreement in the government's file and thus did not provide

one to Adams. Clemons moved to dismiss the indictment, arguing that insufficient

evidence existed to convict him. The district court denied his motion. The case

proceeded to trial, and Clemons testified. The government sought to cross-examine

Clemons with his proffered statements as summarized in the FBI 302 memo. Adams

objected, arguing that the government's use of the FBI 302 memo was inappropriate,

given that the government had not provided a copy of the proffer agreement to him.

Harris responded that the terms of the proffer agreement would have been the same

as any other she had dealt with. Harris stated that, in her practice, a proffer interview

would be covered by a standard proffer agreement that is entered

into. . . . My understanding of the terms of it is just like any other proffer

agreement; that is, if Mr. Clemons, whatever he says to us during a

proffer can't be used against him, unless he testifies differently than what

he told us in the proffer.

The district court found that Clemons's proffered statements would be admissible

whether there was a proffer agreement or not:

Well, if we don't have a proffer agreement, then, of course, you can use

[the FBI 302 memo]. If we do have an agreement, then under the local

rule, [that agreement] would have to be in writing before I could enforce

it. In other words, we have a local rule that governs agreements between

counsel, and it says that the agreement has to be in writing or it's not

enforceable. And the reason for that is for when you have lawyers who

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have different accounts of what happened or what they agreed to and one

wants to enforce the agreement and the other one doesn't.

In this instance, we don't have a written agreement. . . . [W]e don't

have any agreement that I can enforce with respect to how the proffer

could be used, and so, consequently, I think [Harris] is entitled to ask

about it.

The district court allowed the government to introduce Clemons's proffered statements

both on Clemons's cross-examination and through Black's rebuttal testimony.

The case was submitted to the jury, which found Clemons guilty on all counts.

Clemons moved for judgment of acquittal on all charges. The court denied his motion

with respect to the 65 mail-fraud counts, but it directed the parties to brief the issue

with respect to the 116 money-laundering counts. Clemons argued that the

government failed to prove that the purpose of the checks that CTI issued to Clemons

was to conceal the nature, source, ownership, and control of the unlawful proceeds.

The district court granted Clemons's motion for judgment of acquittal with respect to

the money-laundering counts. Deltic and Clemons stipulated to a total loss amount of

$228,463.80, based on the fair market value of the diverted timber. Clemons argued

that he was entitled to offset $41,890.00 for uncompensated services to Deltic. At

sentencing, the district court determined that the Guidelines range was 37 to 46

months' imprisonment, but the court granted a downward departure to 18 months'

imprisonment, to be followed by three years' supervised release. The court denied

Clemons's request for a setoff and ordered him to pay restitution in the amount of

$228,463.80 and a special assessment in the amount of $6,500.00.

II. Discussion

On appeal, Clemons argues that insufficient evidence existed to support his

conviction on the mail-fraud charges. Furthermore, he argues that the district court

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abused its discretion in allowing the government to impeach him with his proffered

statements and that it erred in denying him a setoff against the restitution amount.

A. Sufficiency of the Evidence to Support Clemons's Mail-Fraud Conviction

Clemons challenges the sufficiency of the evidence supporting his conviction

on the 65 counts of mail fraud, arguing that neither he nor any entity he controlled

ever used the U.S. mail to commit fraud.

"We review de novo challenges to the sufficiency of the evidence."

United States v. Wells, 706 F.3d 908, 914 (8th Cir. 2013) (citing United

States v. Espinoza, 684 F.3d 766, 776 (8th Cir. 2012)). "We 'view the

evidence in the light most favorable to the guilty verdict, granting all

reasonable inferences that are supported by that evidence.'" United States

v. Van Nguyen, 602 F.3d 886, 897 (8th Cir. 2010) (quoting United States

v. Milk, 447 F.3d 593, 598 (8th Cir. 2006)). "We will reverse a

conviction only if no reasonable jury could have found the defendant

guilty beyond a reasonable doubt." Wells, 706 F.3d at 914 (quoting

United States v. Yang, 603 F.3d 1024, 1026 (8th Cir. 2010)).

United States v. Sullivan, 714 F.3d 1104, 1107 (8th Cir. 2013).

To prove mail fraud, the government b[ears] the burden of

proving: (1) a scheme to defraud by means of material false

representations or promises, (2) intent to defraud[,] (3) reasonable

foreseeability that the mail would be used, and (4) the mail was used in

furtherance of some essential step in the scheme.

United States v. Parker, 364 F.3d 934, 943 (8th Cir. 2004) (citing 18 U.S.C. § 1341;

United States v. Frank, 354 F.3d 910, 916 (8th Cir. 2004)).

Clemons contends that "[t]he only 'mailing' involved was by [NAW] and Green

Bay Packaging, and it was clearly undertaken in the normal course of [their] legal,

day-to-day business operations." Moreover, Clemons argues that the funds that Green

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Bay mailed are not within the ambit of the mail fraud statute because they were mailed

after Green Bay's receipt of the fraudulently obtained pine saw logs.

In Pereira v. United States, 347 U.S. 1, 74 S. Ct. 358, 98 L. Ed.

435 (1954), the mail fraud statute is discussed in some depth. The

Supreme Court pointed out that it is not necessary to show that the

petitioners actually mailed or transported anything themselves; it is

sufficient if they caused it to be done. Id. at 8, 74 S. Ct. at 362–63.

Further, it is not necessary that the schemes contemplate the use of the

mails as an essential element. Where one does an act with the knowledge

that the use of the mails will follow in the ordinary course of business,

or where such use can reasonably be foreseen, even though not actually

intended, then he "causes" the mail to be used. Id. at 8–9, 74 S. Ct. at

362–63.

United States v. French, 88 F.3d 686, 688 (8th Cir. 1996) (construing a prior version

of the mail-fraud statute, 18 U.S.C. § 1341). The reasoning in French applies to the

version of the mail-fraud statute under which Clemons was convicted. 18 U.S.C.

§ 1341 (2002) (stating the elements of mail fraud as including, inter alia, "knowingly

caus[ing] to be delivered by mail . . . any . . . thing.") Viewing the evidence in the light

most favorable to the guilty verdict, we find that it was "reasonably . . . foresee[able]"

"that the use of the mails w[ould] follow in the ordinary course of business" from

Clemons's diverting the pine saw logs to Green Bay's mill. See id. Furthermore, we

find that Green Bay's mailing of checks to NAW is within the ambit of the mail fraud

statute because "the mailing of the check[s] by [Green Bay] [was] incident to an

essential part of the scheme"— Clemons's obtaining proceeds from the diverted pine

saw logs. See Pereira, 347 U.S. 1, 8 (1954). Consequently, we hold that "the mail was

used in furtherance of some essential step in [Clemons's] scheme." See Parker, 364

F.3d at 943. Sufficient evidence existed to support Clemons's conviction on the 65

counts of mail fraud.

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B. Admissibility of Clemons's Proffered Statements

Clemons argues that the district court erred in allowing Assistant United States

Attorney Harris to introduce his proffered statements. '"We review a district court's

evidentiary rulings for clear abuse of discretion, reversing only when an improper

evidentiary ruling affected the defendant's substantial rights or had more than a slight

influence on the verdict.'" United States v. Summage, 575 F.3d 864, 877 (8th Cir.

2009) (quoting United States v. Two Shields, 497 F.3d 789, 792 (8th Cir. 2007)). The

district court found, in pertinent part: "[W]e have a local rule that governs agreements

between counsel, and it says that the agreement has to be in writing or it's not

enforceable. . . . In this instance, we don't have a written agreement." Indeed, Eastern

District of Arkansas Local Rule 7.4, titled "Stipulations By Counsel," provides that

"[t]he court will not recognize any agreement between counsel, if counsel differ as to

its terms, unless the agreement has been reduced to writing."

Here, Harris argued that the proffer agreement provided that "whatever

[Clemons] says to us during a proffer can't be used against him, unless he testifies

differently than what he told us in the proffer." Adams, on the other hand, argued that

the terms of the agreement had not been established. Thus, prosecution and defense

"counsel differ[ed] as to[the] terms" of the proffer agreement. See Rule 7.4. The Rule

provides that, in that case, "the court will not recognize [the] agreement between

counsel . . . unless the agreement has been reduced to writing." Id. While it was

undisputed at trial that a proffer agreement had been reached, neither Adams nor

Harris asserted that the proffer agreement "ha[d] been reduced to writing." In fact,

both attorneys denied having possession of any such writing. Adams stated that "in

the government's file there is no proffer agreement, so I don't have the proffer

agreement. As far as I can tell, Ms. Harris can't find one either." Harris stated, "I went

back and looked in my computer files and didn't see one that I had prepared. I also did

not locate one in any of my hard copies of documents in my files." The only written

reference to a proffer agreement is in the first paragraph of the FBI 302 memo, which

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states, "AUSA Harris discussed the proffer agreement between the USAO and

Cortinez/Clemons." While the FBI 302 memo clearly refers to "the proffer

agreement," it likewise provides no grounds for inferring that the agreement was

"reduced to writing." See id.

Clemons argues for the first time on appeal that his proffer statements were

made pursuant to plea negotiations and are protected by Federal Rule of Evidence

410(a)(4), which prohibits the use of statements made during plea negotiations against

a criminal defendant. "We consider a newly raised argument only if it is purely legal

and requires no additional factual development, or if a manifest injustice would

otherwise result." Orr v. Wal-Mart Stores, Inc., 297 F.3d 720, 725 (8th Cir. 2002)

(citing Orion Fin. Corp. of S.D. v. Amer. Foods Group, Inc., 281 F.3d 733, 740 (8th

Cir. 2002)). Clemons's argument is not purely legal because answering the question

of whether the proffer interview was conducted pursuant to plea negotiations would

require an analysis of the factual circumstances surrounding the interview.

Furthermore, Clemons has not asserted that false or misleading evidence entered the

record affecting the outcome of the trial, and we are not convinced that "a manifest

injustice would otherwise result." See id. Thus, "[Clemons] does not persuade us that

either exception applies. We therefore decline to consider the argument on appeal."

See id. Consequently, we hold that Clemons has failed to show that the district court

erred in allowing Harris to introduce Clemons's proffered statements.

C. Setoff Against the Restitution Amount

Finally, Clemons argues that the district court erred in denying him a setoff of

$41,890.00 for uncompensated services to Deltic against the $228,463.80 restitution

award, which reflects the fair market value of the pine saw logs that Clemons diverted

to Green Bay's mill. Clemons argues that from February 26, 2007, until his arrest on

March 7, 2007, CTI harvested timber on Deltic's land and transported it to Deltic's

mill as per the standard procedure. Clemons contends that Deltic has been enriched

by refusing to pay $41,890.00 for the pine saw logs that were harvested and

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transported during that time. At the sentencing hearing, the district court denied

Clemons's request to adjudicate his claim against Deltic:

I don't think that there's a provision under the Mandatory Victims

Restitution Act for me to do that. I think the case law says that I can't do

that, and I think logic, for a couple of reasons, says I can't do that. The

closest case on point that we found is United States v. Masek, M-a-s-e-k,

588 F.3d 1283. It's a Tenth Circuit case in 2009.

* * *

[T]he transactions on which Mr. Clemons or Clemons Timber,

Incorporated delivered wood to Deltic Timber per the contract would be

separate transactions from those here. I don't think that we get to do [a

setoff for uncompensated services]. And as a logical matter, I don't think

we can because it would really require making Deltic a party and

bringing them in and let them litigate the issue. I don't think the United

States Attorney's in a position to represent Deltic on the issue of whether

Clemons Timber has a legitimate claim against them, and that's what

we'd have to do in order to determine that here. So those are my reasons

for overruling the request to adjudicate that issue.

"We review the district court's factual finding of loss relating to restitution

under a clearly erroneous standard and a challenge to the district court's application

or construction of the Guidelines de novo." United States v. Cupit, 169 F.3d 536, 539

(8th Cir. 1999) (citations omitted). Cupit involved a criminal defendant who pleaded

guilty to making a false statement in connection with a loan application. Id. at 536.

The criminal defendant argued that the court should set off the restitution amount by

an amount owed to him by the victim lender. Id. at 539. The district court refused to

order the setoff, and we affirmed the court's decision not to reduce the loss amount by

the amount owed to the criminal defendant on the unrelated claim. Id. We stated that

the criminal defendant "still retains his claims against the corporation and may pursue

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those claims in a separate proceeding." Id. at 540 n.3.2 Cupit controls here.

Consequently, we hold that the district court did not err in denying Clemons a setoff

against the restitution amount.

III. Conclusion

Accordingly, we affirm the judgment of the district court.

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2

The government's brief states:

In 2007, after Deltic discovered Clemons'[s] fraud, CTI, which is

not a party in this criminal case, filed a civil suit against Deltic, Cleburne

Circuit Case No. CV-2007-178-4, seeking to recover $41,890.00 for

alleged deliveries of timber to Deltic for which payment was not made.

In response, Deltic filed a counterclaim against CTI, and also filed third

party claims against Clemons, Clemons'[s] wife, Clemons'[s] mother, and

NAW. As set forth in the United States'[s] sentencing memorandum

(Dkt. 83), Deltic asserted numerous defenses to the claims of CTI,

including setoff and unclean hands, and also asserted claims of

conversion, breach of contract, civil fraud, unjust enrichment, and

trespass. . . . The civil case remains pending.

(Footnote omitted).

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