United States v. Prange

United States Court of Appeals
For the First Circuit

Nos. 13-2262 & 13-2328

UNITED STATES OF AMERICA,

Appellee,

v.

JAMES PRANGE and JOHN C. JORDAN,

Defendants, Appellants.

APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel Gorton, U.S. District Judge]

Before
Kayatta, Baldock,* and Selya,
Circuit Judges.

Steven N. Fuller, with whom Allen-Fuller, P.A. was on brief,
for appellant James Prange.

Inga L. Parsons for appellant John C. Jordan.

David M. Lieberman, Attorney, United States Department of
Justice, with whom Carmen M. Ortiz, United States Attorney, Stephen
E. Frank, Assistant United States Attorney, Sarah E. Walters,
Assistant United States Attorney, Leslie R. Caldwell, Assistant
Attorney General, and David M. Bitkower, Deputy Assistant Attorney
General, were on brief, for appellee.

November 5, 2014

*
Of the Tenth Circuit, sitting by designation.
 Baldock, Circuit Judge. A jury convicted Co-Defendants

James Prange and John Jordan of multiple fraud-related counts based

on their participation in an FBI securities fraud “sting.” The

district court sentenced each defendant to 30 months in prison.

Defendants’ consolidated appeals raise multiple challenges to their

convictions and sentences. Exercising jurisdiction under 28 U.S.C.

§ 1291 and 18 U.S.C. § 3742, we affirm Defendants’ convictions but

remand for resentencing because the district court procedurally

erred when formulating their guideline sentencing ranges.

I. Introduction

Penny stocks are stocks issued by small companies that

trade at less than $5 per share. These stocks, generally speaking,

are thinly traded and not listed on organized securities exchanges.

As a result, their prices are often volatile and subject to

manipulation.

To investigate fraud in the penny stock market, the FBI

launched “Operation Penny Pincher.” This sting operation posed an

FBI agent as a corrupt hedge fund manager named “John Kelly” from

a fictitious fund called “Seafin Capital.” In this role, the agent

proposed a particular investment deal to the executives of

companies with low market capitalization. The agent offered to use

up to five million dollars of his clients’ money to overpay for

restricted shares of the executives’ companies in return for a

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fifty percent kickback disguised as a consulting fee to one of the

agent’s nominee companies.1

The FBI created a New York address, website, and business

cards, and rented a Massachusetts office for Seafin Capital. It

also used former stock broker E.H. as a cooperating witness willing

to speak to executives interested in the kickback arrangement.

E.H. had previously been convicted of wire fraud through this same

operation and was seeking a lenient sentence.

A. Defendant Prange

Defendant Prange is a self-described financial

consultant. A mutual acquaintance introduced E.H. and Prange over

the phone in early 2011. In June 2011, Prange called E.H. asking

for details about the kickback program. E.H. explained the program

as a “program of last resort” where fifty percent would go right

back to the agent-manager “and basically it’s a kickback to him.”

E.H. also emphasized that the executives had to “fully understand

the program” and that those who were uncomfortable could “just walk

away.” When Prange asked whether the manager had “a little one

page term sheet” documenting the kickback arrangement, E.H.

responded “no, no . . . he would never put anything in writing.”

Prange then replied “Exactly. Right.”

1
“Restricted” shares generally refer to unregistered and
non-transferable shares of ownership in a corporation. They
typically carry less value because the owner’s right to sell or
transfer the stock is limited.

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 Prange recommended a number of executives as participants

in this scheme and later participated in conference calls where

E.H. explained to these executives that the hedge fund did not know

about the kickback because the manager “slip[ped] this money in”

with his “legitimate business” deals. He also explained that the

manager used “seven or eight different nominee names” to receive

the consulting fee even though there was “no consulting work being

done for the company.” With Prange on the call, E.H. told one of

these executives that the arrangement was “inappropriate . . .

definitely inappropriate . . . in my mind illegal.”

Prange met the undercover agent in Massachusetts on July

22, 2011. The agent explained that his fund’s typical investments

involved a great deal of due diligence. But alongside these

“legitimate deals,” the agent said he invested in longshot

corporations in a way that made it look like he had done due

diligence when, instead, he would simply “paper the file in order

to get it through, and have the hedge fund, make the capital

investment.” The catch? He took “a fifty percent kickback, right

off the top.” The agent then offered Prange a choice: “if at the

end of today . . . there’s something about me you don’t like, then,

we decide to part ways.” But if Prange decided to participate he

would receive ten percent of each kickback, “so if . . . we do five

million, I get two and a half, I can give you ten percent.”

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 The agent then explained logistics. He would fund the

companies “in tranches . . . just to make sure all the mechanics

. . . work out.” Each tranche would “overpay” for restricted

shares of the company’s stock. As for the kickback, the agent

explained, “it’s me, personally, and through my nominee company,

that gets the money . . . so the fund doesn’t know, they don’t need

to know.” To “mask the payment,” the agent would “execute a

consulting agreement” with one of his nominee companies, but he

made clear that “[the] consulting agreement . . . is in paper only,

there’s no consulting.” The agent then told Prange “the ball is in

your court . . . if you wanna continue these meetings.” Prange

responded, “[a]bsolutely . . . it’s excellent.” Prange then sat

through two meetings where the agent repeated the kickback pitch to

two of the executives Prange had recommended for participation in

the scheme.

B. Defendant Jordan

Several weeks later, Defendant Prange suggested the

undercover agent invest in Vida Life International. On August 22,

2011, the agent met with Prange and Defendant Jordan--Vida Life’s

president, CEO, and CFO. The agent had a two-hour, face-to-face

conversation with Jordan, during which he explained the kickback

scheme. He then told Jordan “the decision now is yours whether you

want . . . to continue.” Jordan asked if Vida Life would need to

report the kickback on “a 1099” tax form; the agent said no,

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because they would “mask[ the] payment through a consulting

agreement” even though no one would ever perform any consulting.

The agent then told Jordan, “my biggest concern . . . is your

ability to . . . feel comfortable and . . . cover or hide the

payment that you’re making back to me.” Jordan responded, “I have

no issues.” The agent also told Jordan, “I’m screwing my investors

on the hedge fund side,” but qualified that, “They have done so

well in the past that anything I do like this is . . . not gonna

really hurt them.” He then asked if Jordan “had any pangs . . . of

consc[ience] with that.” Jordan responded simply: “No.” Jordan

then gave the agent materials the agent could use to “mislead” his

partners on the nature of the investment. Jordan also pledged to

make Vida Life’s press releases say the cash was coming from the

sale of fishmeal, and not from Seafin.

At the close of the meeting, Jordan proposed they sign

the consulting and stock subscription agreements right then and

there. The agent signed the consulting agreement, but directed

Jordan (who lived in California) to take the subscription agreement

home with him, fill in certain information, and then send it back.

By August 31, 2011, Jordan had finalized these agreements.

Once the executives finalized the stock purchase

agreements and the consulting agreements, which listed “Waters

Edge” as the nominee corporation to receive the kickback, the FBI

(posing as Seafin) wired the first tranche of approximately $30,000

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to each company. Of the $32,000 Vida Life received, it sent

$16,000 to Waters Edge. Vida Life then disbursed the remainder to

Jordan, his credit card, his niece, his attorney, and his business

partner. In anticipation of the next tranche, Jordan fabricated an

invoice, dated September 8, 2011, justifying a $50,000 payment by

Vida Life to Waters Edge for purported consulting services,

technology assessments, travel expenses, and conference fees.

Neither Waters Edge nor the agent ever provided these services.

The FBI stopped the investments in September 2011,

adopting a cover story that Seafin had transferred John Kelly to

its London office where he could no longer execute these fraudulent

investments. The FBI arrested Prange, Jordan, and the other

participants several months later. The three other executives

indicted with Prange and Jordan--Stephen Berman, Richard Kranitz,

and Karen Person--pled guilty. Prange and Jordan went to trial.

C. Trial

At trial, the government during its case in chief played

in short segments video recordings of the agent’s meetings and

phone conversations with Prange, his meeting with Jordan, and his

meetings with the other executives. After playing each segment,

the government asked the agent to clarify particular statements

made during these conversations. For example, after playing a clip

where Prange asked the agent whether he would have “an open line of

communication” to “[b]ring other things to you,” the agent

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testified that he understood Prange’s question to be referencing

Prange’s “ability and willingness to bring other companies to do

these stock fraud deals.” As to Jordan, after playing the clip

where the agent asked Jordan if he was comfortable hiding the

kickback and Jordan responded “I have no issues,” the government

asked the agent what he thought Jordan’s response meant. The agent

answered: “It’s my understanding that Mr. Jordan was clear that

this was an illegal stock deal and he was willing to participate in

it.” Similarly, when asked why he told Jordan “I’m screwing my

investors on the hedge fund side,” the agent testified that this

was so he could “make clear to Mr. Jordan that this is not a

legitimate transaction.” After playing the segment where the agent

asked Jordan if he had any “pangs of consc[ience]” about what they

were doing and Jordan responded “no,” the agent testified his

understanding from this response was that “Mr. Jordan had no

problem with what I was doing by screwing my investors.” Prange

did not object to this line of questioning at trial. Jordan’s

repeated objections were, for the most part, overruled.

In their defense, Prange and Jordan claimed entrapment

throughout trial and sought judgments of acquittal on this basis.

The district court denied these motions, but instructed the jury on

the defense of entrapment. The court told the jury that, to

convict, “[it] must be convinced that the government has proven

beyond a reasonable doubt that [the] defendant was not entrapped.”

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The government could satisfy its burden in one of two ways, the

court explained: It might demonstrate “that the cooperating

witness or undercover agent did not persuade or talk the defendant

into committing the crime.” Alternatively, the government could

establish “that the defendant . . . was ready and willing to commit

the crime without any persuasion from the cooperating witness,

undercover agent or any other government agent.”

At the close of trial, the district court notified the

parties that it planned to provide a copy of the superseding

indictment to the jury but would redact the names of the three

other executives who had pled guilty. The court refused, however,

“to take out all of the references to the co-conspirators.”

Defendants objected. They urged the court to redact the

superseding indictment’s “Introduction” and “Background” sections

because these sections contained “numerous representations

including acts by individuals who are not on trial which are

prejudicial.” Defendants also complained that the indictment

referenced the term “nominee companies” in quotations when

referring to the agent’s nominee companies. The court overruled

these objections and submitted the indictment to the jury. But it

also instructed the jury “[n]ot . . . to be concerned with the

guilt of any other person or persons not on trial as a defendant in

this case,” and explained that “an Indictment is not evidence of

any kind against the defendant.”

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 Ultimately, the jury convicted both Defendants on all

counts: Prange with three counts of conspiracy to commit

securities fraud, in violation of 18 U.S.C. § 1349; and eight

counts of wire fraud, in violation of 18 U.S.C. §§ 1343, 1349, and

2; and Jordan with one count of conspiracy to commit securities

fraud, in violation of 18 U.S.C. § 1349; four counts of wire fraud,

in violation of 18 U.S.C. §§ 1343, 1349, and 2; and one count of

mail fraud, in violation of 18 U.S.C. §§ 1341, 1349, and 2. Prange

and Jordan then moved for judgment notwithstanding the verdict or,

in the alternative, a new trial arguing that “no reasonable jury

could find beyond a reasonable doubt that the government had

disproven the defense[] of . . . entrapment . . . .” The district

court denied these motions.

D. Sentencing

In preparation for sentencing, Jordan’s Presentence

Report (“PSR”) recommended holding him accountable for $32,000 in

intended loss, representing the full amount of the money

transmitted to Vida Life. Prange’s PSR recommended holding him

responsible for $95,000, reflecting the sum total of the funds

transmitted to Vida Life and the two other companies whose

executives Prange had introduced to the agent. Defendants urged

the district court to reduce these loss calculations by the market

value of the stock purchased by Seafin and to classify the

kickbacks as credits against the loss. The district court rejected

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these arguments and accepted the PSRs’ recommended figures. Based

on these numbers, Jordan received a six-level increase to his base

offense level and Prange received an eight-level increase.

The PSR also concluded Jordan had altered an e-mail

before producing it to the government and accordingly recommended

a two-level obstruction-of-justice enhancement to Jordan’s offense

level. More specifically, in response to a government subpoena,

Jordan initially produced an e-mail to his lawyer, Richard Kranitz-

-who, recall, pled guilty to other charges related to this sting--

referencing the fraudulent consulting fees as follows:

I have to request that restricted stock be issued to SEA
FIN CAPITAL LLC as agreed. Both the issuance of stock
and paying for the “consulting” fees were approved by the
Board of Directors on August 26, 2011.

Although the e-mail referenced two attachments, Jordan did not

include them. After being notified of the missing attachments,

Jordan produced them along with another version of the e-mail

above, with the same date and time stamp (August 31, 2011, 8:53

a.m.). But in this second e-mail, the word “consulting” was no

longer in quotation marks. Over Jordan’s objection, the court

adopted the PSR’s conclusion that deleting these quotation marks

warranted an obstruction-of-justice enhancement.

The government also argued Prange deserved a four-level

enhancement under U.S.S.G. § 3B1.1(a) because he organized or led

five or more participants. The PSR did not recommend any

leadership or management enhancement. The court declined the

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government’s request, but ultimately found “that [Prange] was at

least a manager and supervisor or exercised management

responsibilities over the property, assets or activities of a

criminal organization.” As such, the court applied a two-level

enhancement to Prange’s offense level under § 3B1.1(c).

The district court eventually calculated Prange’s

guideline sentencing range at 24 to 30 months, reflecting an

offense level of 17 and a criminal history category of I. The

district court calculated Jordan’s guideline sentencing range at 30

to 37 months, reflecting an offense level of 19 and a criminal

history category of I. The court sentenced both Defendants to

concurrent terms of 30 months’ imprisonment for each count of

conviction.

II. Agent Testimony

A. Testimony Against Jordan

Jordan first argues the district court erred when it

permitted the undercover agent to interpret what he and Jordan

meant by certain questions and statements in their recorded, face-

to-face conversation. Jordan preserved his objections to the

agent’s testimony at trial so we review these evidentiary rulings

for an abuse of discretion. See United States v. Albertelli, 687

F.3d 439, 445 (1st Cir. 2012). “But abuse of discretion is not a

monolithic standard. Within its margins, embedded issues may

receive attention under more narrowly focused standards. Thus,

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embedded questions of law engender de novo review and embedded

findings of fact engender clear-error review.” United States v.

Carrasco-De-Jesús, 589 F.3d 22, 26-27 (1st Cir. 2009).

Jordan argues the agent impermissibly testified as to

(1) the agent’s own state of mind and intent, (2) Jordan’s state of

mind and intent, and (3) the ultimate legal issue in the case. He

gives a number of examples of this purportedly improper testimony:

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 Recorded Conversation Agent’s Testimony
Jordan: “Do we as a
corporation have to issue a
1099?” “It’s my understanding that
[Jordan]’s engaging me now on
Agent: “No” how best to cover up the
kickback payment.”
Jordan: “How do we go around
that?”
“I understand Jordan to be
telling me that the consulting
Jordan: “If [other agreement--phony consulting
participating companies] have agreement and the fake
done well and their audits go invoices, if they passed
through then I’m sure ours audits from companies
. . . will do the same.” that have already done these
stock deal--frauds with, then
he thinks that it will
pass his as well.”
Agent: “my biggest concern
. . . is your ability to . . . “It’s my understanding that
feel comfortable and . . . Mr. Jordan was clear that this
cover or hide the payment that was an illegal stock deal and
you’re making back to me.” he was willing to
participate.”
Jordan: “I have no issues.”
Agent: “I’m screwing my “This is another . . . way I
investors on the hedge fund can make clear to Mr. Jordan
side.” that this is not a legitimate
. . . transaction.”
“So if you have any pangs of
con[science] with that.” “I understand Mr. Jordan had
no problem with what I was
Jordan: “No.” doing by screwing my
investors.”

Our first task is to establish whether the government

offered this testimony as expert testimony or lay testimony. When

critical evidence in a case consists of recorded conversations,

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“officers commonly help interpret [these] conversations by

translating jargon common among criminals.” Albertelli, 687 F.3d

at 446. “This [testimony] can be admitted as lay testimony from

experienced officers, expert testimony or both depending on

circumstances.” United States v. Santiago, 566 F.3d 65, 69 (1st

Cir. 2009). Where the basis of an interpretation comes from the

officer’s personal involvement in the case, rather than from

specialized outside knowledge, we typically construe it as lay

testimony under Federal Rule of Evidence 701. See Albertelli, 687

F.3d at 446–47.

Jordan’s opening brief sometimes assumes the agent’s

testimony was lay testimony. See Jordan Br. at 25 (“Even if the

agent was being used as some type of expert . . . .” (emphasis

added)). Other times it assumes the testimony was expert

testimony. See id. at 31 (asserting the agent’s testimony violated

Fed. R. Evid. 704, which applies only to expert witnesses). Not

until his reply brief does Jordan assert that the agent’s

interpretations should be classified as expert testimony because

the agent had also testified about “industry terms.” Jordan Reply

Br. at 1. “While a reply brief is not the proper place to raise

new arguments, it is proper for a court to look there for

clarification.” United States v. Bradstreet, 207 F.3d 76, 80 n.1

(1st Cir. 2000) (citation omitted). Regardless, the fact that this

case involved some industry jargon does not automatically turn the

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agent’s interpretations of his own conversations with Defendants

into expert testimony.

Indeed, the agent prefaced almost every interpretation he

gave with “I understand this to mean,” or “it is my understanding

that . . . .” The agent never once said, for example, “Jordan said

X and, in the finance industry, that means Y.” Furthermore, as to

the jargon used, the agent used terms like “lender of last resort”

to try to convey the illegality of these transactions to both

Defendants. But when pressed on the meaning of these particular

terms, the agent readily admitted he did not know and did not look

up their meaning “in the business community.” Rather, the agent

based his understanding of Defendants’ responses to terms like

“lender of last resort” on his personal understanding of that term

“[i]n the context of this undercover operation.” (emphasis added).

As such, we fail to see why we should treat the agent’s

interpretation of his own conversations as expert testimony.

“Although linguistically possible, calling such testimony ‘expert

opinion’ would lend undue credibility to it and increase the risk

of reliance on information not properly before the jury as data on

which ‘experts in the particular field would reasonably rely,’

[when] the ‘field’ is merely the facts of the case.” Albertelli,

687 F.3d at 446 (quoting Fed. R. Evid. 703); see also United States

v. Rollins, 544 F.3d 820, 833 (7th Cir. 2008) (Where “the agent’s

‘impressions’ testimony was based on his own personal observations

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and perceptions derived from this particular case[, s]uch testimony

is admissible as lay opinion testimony.”).

Of course, we have previously detailed many potential

dangers of allowing this form of interpretation as lay testimony.

See Albertelli, 687 F.3d at 447. And Jordan, in a conclusory list

in his reply brief, asserts every one of these dangers were

harmfully manifested at trial. Again, the reply brief is not the

proper place to raise these new arguments. See Bradstreet, 207

F.3d at 80 n.1. Moreover, Jordan only hints at developed argument

as to two of these dangers. See United States v. Zannino, 895 F.2d

1, 17 (1st Cir. 1990) (“[I]ssues adverted to in a perfunctory

manner, unaccompanied by some effort at developed argumentation,

are deemed waived.”).

First, Jordan essentially argues that we cannot treat the

agent’s testimony as admissible lay testimony because the

government failed to lay the necessary foundation for lay

testimony. See Albertelli, 687 F.3d at 447. The Federal Rules of

Evidence require that lay testimony be “(a) rationally based on the

witness’s perception; (b) helpful to clearly understanding the

witness’s testimony or to determining a fact in issue; and (c) not

based on scientific, technical, or other specialized knowledge

within the scope of Rule 702.” Fed. R. Evid. 701.

Alluding to Rule 701(a), Jordan argues the agent was

“unable to point to any rational basis for the interpretation

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offered [and did] nothing more than speculating.” Albertelli, 687

F.3d at 447. Jordan relies heavily on two Second Circuit cases to

argue this foundational element was not met, at least as to the

agent’s testimony interpreting what Jordan meant by his statements

and responses during their recorded conversation. Most

significantly, he cites United States v. Garcia, 291 F.3d 127 (2d

Cir. 2002), for the proposition that “[w]hen a conversation has a

legitimate purpose understandable to a lay person, testimony about

a code without some evidence of prearrangement or some other

foundation is inappropriate.” Id. at 141; see also United States

v. Rea, 958 F.2d 1206, 1215 (2d Cir. 1992)(“When a witness has not

identified the objective bases for his opinion, the proffered

opinion obviously fails completely to meet the requirements of Rule

701 . . . .”).

We fail to see how statements such as “screwing my

investors on the hedgefund side” could lend themselves to a

legitimate purpose understandable to a lay person. Moreover, the

government laid out an objective basis for the agent’s

understanding that Jordan knew they were speaking in coded terms

and his impression of what Jordan actually meant.2 Specifically,

the agent testified that stock fraud deals are “discussed

2
Clearly, the agent had personal knowledge of what he meant
when he spoke to Jordan, and “his status as a participant in the
conversation is sufficient to demonstrate the basis of this
opinion.” Garcia, 291 F.3d at 140-41.

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privately,” “happen quickly,” and employ “coded terminology.”3

Furthermore, before meeting with Jordan personally, the agent asked

Prange, who had recruited Jordan into this scheme, about Jordan’s

understanding of the scheme. Prange told the agent that Jordan’s

“money guy” had explained to Jordan that they had tried “different

ways” to get financing and that “this deal makes sense.” Prange

also told the agent, Jordan “gets it.” The agent then pressed

Prange: “All right. And he’s good with the kickback with the 50

percent?” To which Prange responded “yes.” The government thus

provided an objective basis for the agent’s opinion that Jordan met

with him personally to discuss participating in an illegal stock

fraud scheme.

Jordan then asserts the government did not establish a

foundation for how this lay testimony was helpful to the jury. See

3
To be sure, the Second Circuit has condemned, and we have
strongly cautioned against, a witness using “broad appeals to ‘the
totality of the investigation’” or “purporting to represent
collective knowledge” “for the bases of his interpretations.”
Albertelli, 687 F.3d at 448 (quoting United States v. Grinage, 390
F.3d 746, 749 (2d Cir. 2004)). And here, the agent relied on his
specialized expertise and “experience investigating frauds like
this” in explaining how stock fraud deals typically work and why
interpretation was needed. But Jordan does not point to, and we
have not found, any place in the record that indicates the agent
purported to base his interpretations of Jordan’s specific
statements on collective knowledge. Rather, as explained above,
the agent readily admitted on cross-examination that his
understanding of certain terms might not line up with their
traditional meaning in the business community. Furthermore, unlike
in Grinage, where the agent never made any personal observations of
the defendant, see 390 F.3d at 749, here, the agent interpreted his
own face-to-face conversation with Jordan.

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Fed. R. Evid. 701(b). Rather, Jordan claims, his conversation with

the agent used everyday terms that made sense contextually. We

disagree. Jordan often used abrupt stand alone words or phrases

that do not strike us as everyday terms, for example: “what will be

your overpay,” and “[f]or five, half back.” Likewise, without

proper context, a lay jury might easily fail to grasp the

significance of many of Jordan’s comments. For example, at one

point in their conversation, the agent explained to Jordan that his

hedge fund had “CalPERS” and “other pension money from California,”

and also that he was “screwing” his investors on the hedge fund

side. Jordan then responded simply, “my wife . . . doesn’t work

with the state[,] so.” Those familiar with public company auditing

and state retirement systems might grasp the significance of

Jordan’s response without any further explanation, but a lay juror

might not. The agent’s own statements at the meetings were often

equally obscure.4 True, Jordan--the President, CEO, and CFO of a

public company--never expressed any confusion with the vernacular

the agent used or its significance, but we understand how a lay

juror might. The agent’s testimony therefore helped the jury

clearly understand the recorded conversation and its significance.

4
For example, the agent told Jordan, “I view you differently
and take that as a compliment . . . I see you as having, uh, access
. . . either to venture capital money or to government money.”
Furthermore, in trying to convey the illegality of the scheme to
Jordan, the agent used terms like “last resort,” “kickback,” and
“papering the file.”

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 Finally, the agent’s testimony was “not based on

scientific, technical, or other specialized knowledge within the

scope of Rule 702.” Fed. R. Evid. 701(c). Jordan does not argue

otherwise. As we noted above, although the agent referenced his

specialized expertise in explaining that stock fraud deals are

often planned in a coded language, Jordan does not point to any

place in the record where the agent relied on prior specialized

knowledge to interpret the particular terms used in his

conversation with Jordan. Rather, the agent’s interpretations

appear to be based on his own personal understanding of what Jordan

meant, developed in the context of face-to-face conversation. See

Rollins, 544 F.3d at 832 (admitting agent’s lay testimony about

code words when “not based on any specialized knowledge gained from

his law enforcement training and experience,” but instead on “the

particular things he perceived from monitoring intercepted calls”

and other case-specific investigative activities). We are

therefore satisfied that the government laid a sufficient

foundation for the agent’s lay testimony interpreting his face-to-

face conversation with Jordan.

The second danger Jordan alludes to is that the agent

“usurp[ed] the jury’s function by effectively testifying as to

guilt rather than merely providing building blocks for the jury to

draw its own conclusion.” Albertelli, 687 F.3d at 447. In this

vein, Jordan points out that the agent repeatedly testified as to

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Jordan’s knowledge of the illegality of this scheme. But Jordan

does not explain how this usurped the jury’s function. Instead, he

relies on an unpublished district court memorandum and order for

the proposition that “[a]n expert witness may not testify as to

another person’s intent. No level of experience or expertise will

make an expert witness a mind-reader.” Holmes Grp., Inc. v. RPS

Products, Inc., CIV.A. 03-40146-FDS, 2010 WL 7867756, at *5 (D.

Mass. June 25, 2010) (emphasis added). Yet Jordan fails to

acknowledge that a lay witness may “offer an opinion that is

‘rationally based on the witness’s perception,’ and though one

can’t actually read another person’s mind, one is often able to

infer, from what the person says or from the expression on his face

or other body language, what he is thinking.” United States v.

Curescu, 674 F.3d 735, 740 (7th Cir. 2012). Given that the agent

was a lay witness, he was free to state his rationally-based

perception of what Jordan was thinking during their face-to-face

conversation.

Lest any doubt remain as to the propriety of the agent’s

testimony, Jordan’s trial contained numerous safeguards against the

danger that the agent might usurp the jury’s function. See

Albertelli, 687 F.3d at 447. The district court sustained several

of Jordan’s objections where the prosecution’s question called for

generalized or speculative responses. Moreover, the court afforded

Jordan “very liberal cross-examination” on whether the agent

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properly understood the recorded statements. This cross-

examination drew out possible alternative interpretations of

certain terms and phrases--for example “confidentiality” and

“lender of last resort.” “Where such alternatives can be offered,

the plausibility of the witness’ own position--unlike, say, that of

a medical expert--is readily measured by the jury.” Id. at 448.

Finally, and in a similar vein, Jordan argues the court

erred when it allowed the agent to testify to the ultimate issue in

this case. The challenged conduct is exemplified by the following

excerpt from trial:

Q [to Agent]: “How are you familiar with Mr. Prange and
Mr. Jordan?”
A: “Mr. Prange and Mr. Jordan both participated in stock
fraud deals that we had done.”

But, again, as we explained above, Jordan fails to recognize that

this testimony was properly offered as lay opinion testimony, and

lay opinion “is not objectionable just because it embraces an

ultimate issue.” Fed. R. Evid. 704(a) (emphasis added).

In sum, because the district court properly admitted the

agent’s interpretation as lay testimony and Jordan’s trial

contained sufficient safeguards against the abuse of such

testimony, Jordan’s objections to the agent’s testimony fail.

B. Testimony Against Prange

Prange, on the other hand, conceded at oral argument

that, because he did not object to the agent’s testimony below, we

review his challenge to the agent’s testimony for plain error only.

-23-
See Albertelli, 687 F.3d at 445. Furthermore, Prange’s challenge

to the agent’s testimony consists of one sentence in his brief

joining in Jordan’s argument on this point. As such, Prange’s

argument clearly fails. We see no reason to provide any further

analysis when Prange gives us nothing further to analyze. See

Zannino, 895 F.2d at 17.

III. Entrapment

Both Prange and Jordan claimed entrapment throughout

trial and moved for acquittal on this basis. The court denied

their motions for acquittal as a matter of law, but submitted the

issue to the jury. Alas, the jury likewise rejected the entrapment

claim. Nevertheless, Defendants maintain the evidence did not

support the jury’s verdict and we should hold they were entrapped

as a matter of law.

We review the denial of Defendants’ motion for acquittal

de novo, “asking whether the evidence, construed favorably to the

government, permitted rational jurors to conclude, beyond a

reasonable doubt, that the defendant[s were] guilty as charged.”

United States v. Sánchez-Berríos, 424 F.3d 65, 77 (1st Cir. 2005)

(internal quotation marks omitted). “To defeat a sufficiency

challenge premised on a defense of entrapment, the evidence, taken

in the light most favorable to the government, need only support a

finding of either predisposition or lack of improper inducement.”

Id. (emphasis added).

-24-
 Defendants first argue the Government improperly induced

them to engage in stock fraud. “An improper ‘inducement,’ however,

goes beyond providing an ordinary ‘opportunity to commit a crime.’”

United States v. Gendron, 18 F.3d 955, 961 (1st Cir. 1994) (quoting

Jacobson v. United States, 503 U.S. 540, 550 (1992)). “An

‘inducement’ consists of an ‘opportunity’ plus something else--

typically, excessive pressure by the government upon the defendant

or the government’s taking advantage of an alternative,

non-criminal type of motive.” Gendron, 18 F.3d at 961; see also

id. at 961–62 (listing examples of improper inducement).

Defendants do not argue excessive pressure, nor could they. The

record is replete with instances where the agent made clear to

Defendants that they were free to walk away if they felt in any way

uncomfortable with the kickback scheme. Instead, Defendants assert

two alternative forms of improper inducement: First, they argue

the government improperly played on the desperation of executives

trying to save floundering companies. Second, they argue the very

nature of the sting amounted to an improper inducement because it

was designed to appear as a legitimate investor engaging in

legitimate investment activities.

The record belies Defendants’ first argument. Prange,

for his part, did not serve as an executive or director for any of

the companies seeking capital in this operation. We thus fail to

see how the asserted desperation of trying to save a failing

-25-
enterprise could affect his decisional calculus. Jordan, on the

other hand, initially told the agent he would use the capital to

grow his business. Yet as soon as he received his first tranche,

Jordan transferred that money which he did not kick back to Waters

Edge to his personal bank and credit card accounts, and to the

accounts of his niece, attorney, and business partner. Faced with

these facts, a reasonable jury could conclude beyond a reasonable

doubt that Jordan was not desperate to save his company. Rather,

the jury could reasonably conclude Jordan simply “succumb[ed] to

his own greed [and] the lure of easy money.” United States v.

Coady, 809 F.2d 119, 122 (1st Cir. 1987).

Defendants’ second inducement argument, that the

government made the kickback scheme appear legitimate, fares no

better. Whether Defendants knew the scheme was illegal “relates to

[their] intent to commit the illegal act. It does not bear on

whether [they were] induced to” engage in the kickback scheme.

United States v. Marino, 868 F.2d 549, 554 (3d Cir. 1989) (footnote

omitted). Defendants do not argue on appeal that they lacked the

requisite mens rea to commit securities fraud--indeed, an

entrapment defense assumes the necessary mens rea existed.5 See

5
Jordan asserts that kickbacks are commonplace in his native
country of Peru--whether they are legal in Peru he does not say.
Jordan Br. at 9. Regardless, “ignorance of the law is not an
excuse for violating it,” United States v. Denis, 297 F.3d 25, 31
(1st Cir. 2002), and Jordan nowhere explains why his kickback-
friendly background should excuse his illegal activities here.

-26-
United States v. Dyke, 718 F.3d 1282, 1286 (10th Cir. 2013). Nor

do they argue the evidence was insufficient to show they intended

to commit securities fraud. They cannot now bootstrap that

argument in under the guise of entrapment.

In sum, a reasonable jury concluded the government did

not improperly induce Defendants to commit securities fraud, and we

cannot say the government improperly induced Defendants as a matter

of law. Given the lack of an improper inducement, Defendants’

entrapment claim fails and we need not address predisposition.

IV. Submitting the Superseding Indictment to the Jury

Defendants also argue the district court committed two

reversible errors in submitting their superseding indictment to the

jury. Defendants first argue that the “Introduction” and

“Background” sections of their indictment asserted facts that had

not been proven at trial and related to co-defendants who were not

on trial because they had pled guilty. Second, they argue that

allowing the term “nominee companies” to remain in quotations in

the indictment was tantamount to providing the jury with

testimonial evidence not subject to cross-examination.

We have long followed “[t]he well nigh universal rule”

that, “subject to a proper covering instruction, whether the

indictment should be given to the jury for use during its

deliberations is within the discretion of the trial court.” United

States v. Medina, 761 F.2d 12, 21 (1st Cir. 1985). “We will find

-27-
no fault with the exercise of the court’s discretion in this manner

unless the defendant can show unfair prejudice as a result of the

court’s approach.” United States v. Glantz, 847 F.2d 1, 10 (1st

Cir. 1988). “Whether all or a part of the indictment is provided

to the jury, one way to avoid unfair prejudice is to give a proper

covering instruction.” Id.

Defendants’ claims of error are dubious at best.

Defendants rely on allegations in the indictment relating to Steve

Berman and Richard Kranitz, whose names were apparently redacted,6

as the prime example of “asserted facts not proven at trial.” But

the government presented a wealth of evidence on Berman and

Kranitz’s involvement in the conspiracy, including recordings of

numerous conversations in which they took part. Moreover,

Defendants do not explain how the quotation marks around “nominee

companies” transform this term into a form of testimony.

Even assuming the superseding indictment provided cause

for concern, however, Defendants cannot show prejudice here both

because no prejudice is obvious and because the district court gave

proper covering instructions. The court instructed the jury “that

an Indictment is not evidence of any kind against the defendant.

It is simply the formal method that our Constitution provides for

6
The district court indicated it would redact the names of
these individuals because they had entered guilty pleas.
Defendants do not provide us with a copy of the indictment that was
submitted to the jury, so we can only assume the district court did
as promised.

-28-
charging someone with the commission of a crime.” (emphasis added).

The court also told the jury: “Neither are you to be concerned with

the guilt of any other person or persons not on trial as a

defendant in this case.” In light of these instructions, we fail

to see how Defendants were prejudiced by submitting to the jury the

superseding indictment as redacted. See, e.g, Smith v. Jenkins,

732 F.3d 51, 69 (1st Cir. 2013) (“As it is a basic premise of our

jury system that the jury follows the court’s instructions, we

presume that the jury acted according to its charge.” (internal

quotation marks and alterations omitted)).

Indeed, Defendants fail to cite a single case where a

court has overturned a conviction based on a district court’s

discretionary decision to provide a copy of the charging instrument

to the jury subject to a proper covering instruction. In his reply

brief, Jordan relies on United States v. Roy, 473 F.3d 1232 (D.C.

Cir. 2007), and United States v. Shafer, 455 F.2d 1167 (5th Cir.

1972). But these cases are inapposite.

In Roy, the trial court inadvertently submitted to the

jury an indictment which identified specific predicate crimes to

support the defendant’s felon-in-possession count even though the

defendant had already stipulated to his felon status. Roy, 473

F.3d at 1232. This violated prior D.C. Circuit precedent which

established that, “at least when the defendant stipulates to the

fact of a felony conviction, the district court should avoid

-29-
mentioning the nature of the prior felony to the jury.” United

States v. Jones, 67 F.3d 320, 325 n.10 (D.C. Cir. 1995).

Nevertheless, the D.C. Circuit affirmed the defendant’s conviction

on plain error review, holding that the defendant was not

prejudiced because, among other things, the trial court took back

the incorrect indictment and gave a sufficient curative

instruction. Roy, 473 F.3d at 1239. In so holding, the D.C.

Circuit noted that giving a copy of the indictment “often carries

significant risks and has few corresponding benefits.” Id. at 1237

n.2. But it also recognized that submitting the indictment to the

jury is “common practice,” and even “assume[d] that it would have

been within the district court’s discretion to submit a properly

redacted indictment to the jury in this case.” Id.

In Shafer, the Fifth Circuit held “[n]umerous . . . items

were erroneously submitted to the jury, including a copy of the

indictment showing substantive charges which had been dismissed,

and a blackboard on which the prosecutor had summarized the

testimony of various prosecution witnesses.” Shafer, 455 F.2d at

1170. The most prejudicial of these items were (1) “the sworn

complaint by a customs agent on the basis of which arrest warrants

of defendants had been obtained,” which “was, in effect, a

statement that defendants were guilty,” and (2) a copy of a hotel

bill, which had not been admitted into evidence at trial, tying the

defendants to the alleged offenses. Id. at 1169. Indeed, the

-30-
Fifth Circuit did not reverse the defendants’ convictions there

based on the submission of their indictment listing dismissed

charges. Rather, “[w]ithout considering [the indictment] in

detail,” the Fifth Circuit concluded, “we are forced to [reverse],

based on the complaint and the hotel bill.” Id. at 1170.

Furthermore, there is no indication that the district court there

gave any covering instruction as to the indictment.

Defendants have not shown any particular statements in

the indictment that were not supported by evidence presented at

trial. Nor do they show how any improprieties in the indictment

caused prejudice so egregious as to be beyond the reach of the

court’s covering instructions. As such, we cannot say the court

abused its discretion in submitting the superseding indictment to

the jury.

V. Sentencing Issues

Defendants also challenge their sentences on various

grounds. “We review sentences for reasonableness, a task composed

of both procedural and substantive inquiries.” United States v.

Innarelli, 524 F.3d 286, 291 (1st Cir. 2008). “We first review

the procedural component of the sentence for abuse of discretion.”

Id. at 292. “[P]rocedural errors amounting to an abuse of

discretion might include failing to calculate (or improperly

calculating) the Guidelines range . . . or failing to adequately

explain the chosen sentence--including an explanation for any

-31-
deviation from the Guidelines range.” Id. (internal quotations

marks omitted). Only if this review reveals no abuse of discretion

do we examine the substantive reasonableness of the sentence

imposed. See id.

A. Jordan’s Obstruction-of-Justice Enhancement

Jordan argues the district court erroneously added a two-

level enhancement for obstruction of justice to his offense level

calculation. “We review for clear error the sentencing court’s

factbound determination that an obstruction of justice occurred.”

United States v. Quirion, 714 F.3d 77, 79 (1st Cir. 2013). “[W]here

the record supports at least two permissible inferences, the

factfinder’s choice between them cannot be clearly erroneous.”

United States v. Balsam, 203 F.3d 72, 89 (1st Cir. 2000).

The Guidelines recommend increasing a defendant’s offense

level by two levels if “(1) the defendant willfully . . . attempted

to obstruct or impede[] the administration of justice with respect

to the investigation, prosecution, or sentencing of the instant

offense of conviction, and (2) the obstructive conduct related to

(A) the defendant’s offense of conviction and any relevant conduct

. . . .” U.S.S.G. § 3C1.1. The commentary to § 3C1.1 specifically

lists “producing or attempting to produce a false, altered, or

counterfeit document or record during an official investigation or

judicial proceeding,” as an example of obstruction of justice

-32-
warranting a two-level enhancement. Id. at § 3C1.1 cmt. 4(C)

(emphasis added).

Recall that, in response to a subpoena, Jordan initially

produced, along with various other correspondence, an e-mail

referencing the fraudulent consulting fees with the word

“consulting” in quotation marks. He later produced this e-mail’s

attachments with a copy of the same e-mail, with an identical time

stamp (August 31, 2011, at 8:53 a.m.), except that “consulting” was

no longer in quotation marks. The PSR asserted this warranted a

two-level enhancement because it showed Jordan had deleted the

quotation marks before reproducing the e-mail and therefore

“altered an e-mail chain . . . that was produced pursuant to a

subpoena.” At sentencing, Jordan offered an alternate explanation:

He “typically sends two or three e-mails on different servers

because he has a lot of e-mail problems.” And, in this instance,

he sent two e-mails to his lawyer, but in the second e-mail he

“thought better of putting in those quotations.” The government

argued this explanation was “nonsensical.” Ultimately, the court

agreed with the government’s position, and found Jordan obstructed

justice by altering the e-mail.

Although Jordan’s alternate explanation may be possible,

the PSR’s theory is much more plausible given the identical

timestamp. The district court accordingly could not commit clear

-33-
error by adopting the PSR’s factual predicate, warranting a two-

level enhancement under § 3C1.1.

B. Prange’s Management Enhancement

Prange attacks the district court’s imposition of a two-

level management enhancement. In preparing for Prange’s

sentencing, the government sought a four-level enhancement under

U.S.S.G. § 3B1.1(a), asserting Prange organized or lead five or

more participants. Prange’s PSR, however, maintained no such

enhancement should apply because “Prange did not direct his co-

conspirators, each of whom willingly became a part of, and played

an active role in, the scheme.” At sentencing, the court stated

that Prange “may not be deserving of a full four-level enhancement

for his role in the offense as a leader or organizer, but he is

surely deserving of at least a two-level enhancement for his

management and supervisory role.” The court accordingly enhanced

Prange’s offense level by two levels.

The Guidelines authorize a two-level enhancement in cases

where “the defendant was an organizer, leader, manager, or

supervisor in any criminal activity . . . .” U.S.S.G. § 3B1.1(c).

To justify the two-level enhancement, “[e]vidence of the

defendant’s role . . . need only show that he ‘exercised authority

or control over another participant on one occasion.’” United

States v. Flores-De-Jesús, 569 F.3d 8, 34 (1st Cir. 2009)

(citation omitted). Indeed, simply “recruiting” a co-defendant,

-34-
“by itself, constitutes a ‘managerial’ function under § 3B1.1.”

United States v. Savarese, 686 F.3d 1, 20 (1st Cir. 2012). “It is

not enough, however, that the defendant merely controlled,

organized, or managed criminal activities; rather, he must instead

control, organize, or manage criminal actors.” Flores-De-Jesús,

569 F.3d at 34 (emphasis in original) (quoting United States v.

Ofray–Campos, 534 F.3d 1, 40 (1st Cir. 2008)).

The district court based this enhancement on two

alternate findings: (1) “that [Prange] was at least a manager and

supervisor,” or (2) that he “exercised management responsibilities

over the property, assets or activities of a criminal

organization.” Although the court’s second finding, may warrant an

upward departure, it is not a valid basis for an offense level

enhancement under § 3B1.1. See id. at cmt. 2. Nevertheless, the

record amply supports the court’s first finding: that Prange was at

least a manager or supervisor. At a minimum, Prange recruited

Jordan and multiple other executives into this scheme by

introducing them to E.H., gauging their willingness to issue

kickbacks, and recommending them to the agent. Thus, the court did

not clearly err in finding Prange was “at least a manager or

supervisor,” warranting a § 3B1.1 two-level enhancement.

C. Calculation of Loss

Both Defendants argue the district court made two errors

in calculating the amount of loss attributed to them. First, they

-35-
argue they should have been given credit for the kickbacks paid

because they unwittingly paid these kickbacks to the government.

Second, they argue they should be given credit for the value of the

stock purchased by the government in these fraudulent transactions.

“We review the district court’s interpretation and

application of the Guidelines de novo; we review related findings

of fact, including the court’s calculation of amount of loss, for

clear error.” Innarelli, 524 F.3d at 290. The Guidelines define

“loss” as “the greater of actual or intended loss.” U.S.S.G. §

2B1.1, cmt. 3(A). “We have endorsed a pragmatic, fact-specific

approach,” to calculating such loss, “stating that ‘loss should be

calculated using the entire price paid for the product, unreduced

by any offsetting value,’ if ‘the product misrepresented by the

defendant is worthless.’” United States v. Ihenacho, 716 F.3d 266,

278 (1st Cir. 2013) (citation omitted).

Defendant’s argument that they should be given credit for

the kickback plainly fails. To give Defendants credit for the

kickback would ignore the fact that loss under § 2B1.1 includes

intended loss, which “includes intended pecuniary harm that would

have been impossible or unlikely to occur (e.g., as in a government

sting operation . . . ).” U.S.S.G. § 2B1.1, cmt. 3(A)(ii). Here,

by taking money Defendants believed belonged to investors in a

hedge fund and paying fifty percent as a kickback to the corrupt

manager’s personal nominee company, Defendants intended to cause a

-36-
loss to the hedge fund investors of at least the amount of the

kickback paid. The fact that no investors actually suffered this

intended loss is irrelevant under § 2B1.1.

On the other hand, the government admits it received

shares of restricted stock in the companies to which it sent

tranches. The government also admits that if the shares received

carry any fair market value, the district court should have reduced

its loss calculation by that amount. See id. at cmt. 3(E)(i)

(“Loss shall be reduced by . . . the fair market value of the

property returned and the services rendered . . . .”). But the

district court never made any findings as to the value of these

shares. Nevertheless, the government asserts the district court

must have found these particular shares were worthless because

Defendants did not present sufficient evidence of their value. We

are not so sure.

Defendants argued below that the PSRs should have

credited them with the value of the shares the government received.

The PSRs responded to these objections by reasoning that Defendants

should be held accountable for the total value of the transaction

or transactions simply because they knew these transactions were

not legitimate. The government, for its part, argued at Jordan’s

sentencing that the Vida Life stock was worthless simply because

there was no market for it. But neither reason holds water.

-37-
 Indeed, the PSRs’ reasoning flies in the face of our

precedent. In calculating loss based on fraud, we have long

recognized

that there are two types of fraud: “The first type of
fraud implicates the ‘true con artist,’ . . . who intends
only to pocket the money without rendering [anything] in
return. The second type of fraud involves a person who
would not have attained the contract or loan but for the
fraud, but who fully intends to perform.”

United States v. Blastos, 258 F.3d 25, 30 (1st Cir. 2001) (quoting

United States v. Haggert, 980 F.2d 8, 12–13 (1st Cir. 1992)); see

also United States v. Smith, 951 F.2d 1164, 1167 (10th Cir. 1991)

(“A thief who steals $100,000 is more culpable than a salesman who

obtains $100,000 by selling a victim an $80,000 house he

fraudulently represents as being worth $100,000. In the latter

case, it makes no sense to suggest that $100,000 is the accurate

measure of the victim’s loss.”). Yet, by holding Defendants

responsible for the full amount of the fraudulent transactions

simply because they knew the transactions were fraudulent, the

PSRs’ response to Defendants’ objections would render the

distinction between these two types of fraud illusory.

Furthermore, on appeal, the parties do not dispute that

the common stock of the companies at issue had some value. At

sentencing, the government asserted no market existed for Vida Life

stock because “in contrast to [the] other companies . . . that were

at issue,” there was “virtually no trading” of Vida Life shares.

(emphasis added). But the government’s own witness at trial

-38-
testified to multiple trades of Vida Life common shares in 2011 at

between $0.03 and $0.05 per share. In its response brief, the

government argues these particular shares were worthless because

they were restricted shares, which were not fully transferable or

salable. Of course, restricted shares may be less valuable than

common shares because they are not freely transferable. But the

government cites no authority, from the record or elsewhere, for

the proposition that the shares the government acquired were

worthless simply because they were restricted. Au contraire,

courts often assign a value to restricted shares. See, e.g.,

United States v. Roush, 466 F.3d 380, 385-86 (5th Cir. 2006)

(“[T]he fact that the stock was restricted at all times during 1998

did not render its fair market value either zero or de minimus for

the purposes of income calculations.”); Scully v. US WATS, Inc.,

238 F.3d 497, 514 (3d Cir. 2001) (affirming the district court’s

refusal to discount the value of stock shares simply because they

were restricted).

At oral argument, the government asserted the district

court must have found the shares were worthless because Defendants

did not provide sufficient evidence to show the shares had any

particular value, and thus, the court was entitled to disregard

them in its amount of loss calculation. But, again, the district

court nowhere made such a finding. Rather, the court’s terse

explanation as to the amount of loss indicates it probably followed

-39-
one of the original erroneous arguments put forth by the PSR and

the government. As to Jordan, the court stated “the loss was, in

fact, $32,000, the full amount of the transaction, and not some

netted out amount . . . reflective of [the] alleged value of the

transferred stock.” (emphasis added). Similarly, the court stated

only that Prange “is responsible for the loss as calculated by the

probation officer, namely, including all of the amounts paid to the

co-conspirators.” (emphasis added). Perhaps the court could have

found these shares were worthless, but the record does not show the

court must have held this view. Indeed, the government suggested

at oral argument that, to the extent we are concerned about the

district court’s failure to make any factual findings on this

point, we should remand to allow the court to make those findings.

There is a strong likelihood that the court based

Defendants’ amount of loss enhancements on an erroneous legal

ground rather than a possible unspoken factual determination.

Furthermore, a finding that the shares at issue had even a very

small value could make a significant difference under the

Guidelines.7 As such, we accept the government’s invitation and

7
For example, given that the district court held Jordan
responsible for $32,000 in loss, if the Government’s 400,000 Vida
Life shares had a combined value of even $2,000--or just half a
cent per share--Jordan could be held responsible for no more than
$30,000 in loss and his amount of loss enhancement would be reduced
by two levels. See U.S.S.G. § 2B1.1(b)(1)(D). Similarly, because
Prange was held responsible for $95,000 in loss, if all of the
shares procured from all of Prange’s co-conspirators had a combined
value of $25,000 or more, he could be held responsible for no more

-40-
remand these cases for resentencing so the district court can make

factual findings as to the value of the pertinent shares acquired

by the government during the sting.8

VI. Conclusion

For the reasons state above, we AFFIRM Defendants’

convictions but REMAND their cases to the district court with

instruction to vacate Defendants’ sentences and resentence them

according to this opinion.

than $70,000 in loss, and his amount of loss enhancement would
likewise be reduced. See id. at (b)(1)(E).
8
Because the district court committed procedural error in
formulating Defendants’ sentences, we need not address the
substantive reasonableness of those sentences here.

-41-