United States v. Gregg Smith

In the United States Court of Appeals For the Seventh Circuit ____________________

Nos. 23-2840, 23-2846 & 23-2849

UNITED STATES OF AMERICA,

Plaintiff-Appellee, v.

GREGG SMITH, MICHAEL NOWAK, and CHRISTOPHER JORDAN, Defendants-Appellants.

____________________

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 1:19-CR-00669-1, 2, 4 — Edmond E. Chang, Judge. ____________________

ARGUED SEPTEMBER 5, 2024 — DECIDED AUGUST 20, 2025 ____________________

Before EASTERBROOK, KIRSCH, and KOLAR, Circuit Judges. KIRSCH, Circuit Judge. Gregg Smith, Michael Nowak, and Christopher Jordan were precious metals futures traders who manipulated the market through an unlawful practice called , meaning they placed deceptive orders they in- tended to cancel to push the market price a certain direction. At trial, they were all convicted of various crimes in connec- tion with this practice. They appeal their convictions on

2 Nos. 23-2840, 23-2846 & 23-2849 multiple grounds. Finding none of their challenges persua-

Gregg Smith, Michael Nowak, and Christopher Jordan once traded precious metals futures contracts on commodities Group (CME). They each employed a fraudulent scheme, to game the system and manipulate the

prices of the precious metals futures they traded. of commodities

-upon price on

an agreed-upon future date. Commodities futures traders use -

operated exchanges. These traders ,

to sell,

while some traders employ computer algorithms to place or- ders, others enter their orders manually, as Smith, Nowak, and Jordan did.

executed.

The price of futures contracts is

demand: the price will increase if there is more demand than supply for a product, and vice versa. But a fundamental as- sumption on CME exchanges is that every order represents a legitimate, .

Each

conveying an intent to participate in it at a particular price.

Nos. 23-2840, 23-2846 & 23-2849 3 Today,

Smith, Nowak, and Jordan were traders, it displayed only the ny time.

smaller orders will, s traders

-called ice-

ceal the true size of their order. Although these features were designed to mitigate the impact that large orders would have on the market price, they paved the way for fraudulent schemes to manipulate the market— .

large orders that he does not in-

tend to execute, driving the price in a

tion

This typically

involves four steps. First, the trader places an order, often an he genuinely intends to trade. Second, the

ket. The trader never intends to trade this order; rather, it is designed to push the

mate order. For instance, if a trader wants

(or a series of smaller sell orders at descending prices) to push the market down. Third, the market reacts to the illusion of trader to execute the genuine order at his desired price. CME rules . In particular,

manipulating or at-

tempting to manipulate "prices of exchange futures or

4 Nos. 23-2840, 23-2846 & 23-2849 and pur-

futures or options contracts or any underlying commodities the market or creating a condition in which prices do not or will not r

ants' employers have ex-

pressly and implicitly as a form of market manipulation.

Nowak and Smith worked at JPMorgan from 2008 to 2016. Nowak was a managing director who ran the precious metals don. Smith was an executive director and sat next to Nowak He joined JPMorgan after it acquired

Bear Stearns in 2008. Jordan worked as a precious metals After

JPMorgan terminated him in 2009, he moved to Credit Suisse, where he worked from March to August 2010. On multiple occasions, Smith, Nowak, and Jordan each placed orders . That

conduct eventually led the government to indict them for var- -related crimes. Smith and Nowak were each

§ 13(a)(2); wire fraud, 18 U.S.C. § 1343; commodities fraud, 18 U.S.C. § 1348(1); and violating the anti-

the Dodd-Frank Act 6c(a)(5)(C) & 13(a)(2). Jordan was charged with wire fraud, 18 U.S.C. § 1343. All three were charged with conspiracy .

Nos. 23-2840, 23-2846 & 23-2849 5

Smith and Nowak were tried together. They did not mean- ingfully contest that their trading activity - government could not prove the requisite intent. During a three-week trial, t

dence to the contrary. Below, we summarize the evidence rel- evant to this appeal.

Kumar Venkataraman, explained how

Smith's and Nowak's

In a set of 100 trad-

ing episodes

(meaning

his genuine orders.

, as well. De the spoof

orders, Smith and Nowak used

this strategy "again and again." He concluded that Smith and Nowak's trading strategy was "inconsistent with a design" to the genuine orders and was instead "designed" to "push the price" of the market and execute the order on the other side. There was no "economically rational" reason for their , Venkata-

raman said.

genuine, they achieved the intended "shock to the market"

and successfully moved the price on the other side. The government also presented the testimony of CME in- vestigator Brian Wika and three of Nowak and Smith's former coworkers who

6 Nos. 23-2840, 23-2846 & 23-2849 authorities. John Edmonds sat next to Smith and Nowak at Smith and Nowak spoof regularly, at least several times per day, and that they in fact taught him how to spoof. According

"size moves the market" and would complain "[t]hey're fuck- he placed with the intent

to cancel were executed. After a meeting where JPMorgan regulators were looking into it, Edmonds heard Smith say to another coworker Edmonds also

they

on his own experience at JPMorgan, he was unaware of any legitimate non-

deceive other market participants.

that he witnessed Smith spoof "all the time" using the same strategy. Trunz sent a chat to another JPMorgan salesperson glasses against the screen" when his spoof order was exe- cuted. that Nowak spoofed while they

And while coaching

Trunz ahead of a compliance review, Nowak once warned, Corey Flaum sat along

Flaum also confessed to

that he saw Smith spoof at least several

Nos. 23-2840, 23-2846 & 23-2849 times per week.

At various points, Edmonds, Trunz, and Flaum each de- and

and impact on the market to explain why they spoofed. They and opined that Smith and Nowak lacked an intent to trade

. The district court

. Smith and Nowak declined the instruction. The government also coworkers discussing the legitimate orders they sought to ex- ecute, showing that they simultane-

ously placed and quickly canceled large orders on the other side of the market.

traders typically achieve it, how CME investigators identify dentials, Wika stated that he had worked in CME's investiga- tions group for 14 year

after it received a complaint from a market participant. When discussing the results of his investigation, Wika said that Smith's high cancellation rates were

activity—indicative of lack of intent to trade those orders." He prepared an investigative report concluding that Smith had Over the de-

8 Nos. 23-2840, 23-2846 & 23-2849

803(6).

was deadlocked. Although the defendants sought a mistrial, the court granted the government's request for the standard supplemental jury instruction under United States v. Silvern, a verdict" and discuss their "

of evidence." The next day, the jury

juror" that suggested that the juror had "made early decisions opening statements and "saw everything through that lense [sic]." The government asked the court to dismiss the juror. Instead, the court reminded the jury "that the lawyers' state- ments and arguments are not evidence. If what a lawyer said dence is what counts." The next day, the jury found Smith and them of

the conspiracy charges.

The government tried Jordan separately and, following Smith and Nowak's trial, dropped the conspiracy counts against him. ed that he

spoofed. Instead, his defense was that he spoofed without the criminal intent necessary to support a conviction for wire

Nos. 23-2840, 23-2846 & 23-2849 9

FBI A

Agent Luca had investigated Jordan and interviewed him in as a trader

and larger non-

in which he intended to cancel" and acknowledged that this He explained that he

spoofed "to mislead the market, to outperform the algo- rithms, and to make—and le s for his

The government characterized this interview as a con- fession. However, Jordan also told Agent Luca that he "did not think what he was doing was wrong." Jordan sought to admit this statement under a hearsay exception commonly court denied his motion.

To demonstrate Jordan's state of mind, the government in- troduced

the Commodity Futures Trading Commission. In stark con- trast to his interview with Agent Luca, Jordan swore during the deposition that he never placed an order that he didn't intend to execute, and "would only cancel something if [he] changed [his] mind or if it was put in error." He further stated ing the price" of the commodity exchange.

. Middle- ton said — meaning they must particular price or quantity"—to maintain the integrity of their markets. She acknowledged, however, that the word and that

10 Nos. 23-2840, 23-2846 & 23-2849 such language would have that the rule

. Representatives from JPMorgan and Credit Suisse either. Jordan sought

to challenge these statements with post-2010 compliance pol- icies and CME documents that, unlike the policies in place ed

The district court excluded these

that they posed a risk of confusing the jury and erroneously injecting a mistake of law defense into the case. The court also rejected Jordan's request for a jury instruc- if he acted in good faith, "then he lacked the intent to defraud gue that he lacked an intent to defraud and the instruction posed a similar risk of misleading the jurors into thinking that The court did, however, instruct the jury on the mental state necessary to show an intent to defraud. The jury was in- structed that Jordan must have acted knowingly, which the

"aware of the nature of his con- tion of 'knowingly' … does not mean that the defendant must law." The jury returned a guilty verdict, and the court denied Jordan's .

Nos. 23-2840, 23-2846 & 23-2849 11

Smith, Nowak, and Jordan all appeal the denial of their motions a new trial. They also challenge sev- eral of the district judge's rulings at trial. We take their argu- ments in turn.

All three defendants argue that their fraud convictions cannot involve a misrepre-

an essential element

contracts. We review this threshold legal challenge de novo. United States v. Rivers de

novo review applies to "legal questions wrapped up in chal- Their argument

fails for several reasons.

Both wire and commodities fraud require as an element "a scheme to defraud." 18 U.S.C. §§ 1343 & 1348(1). only deceptive schemes where "money or property was an

" of the fraud. Ciminelli v. United States, 598 U.S. 306, 312 Building on this, some circuits pre-

viously drew

than cause their victims to enter into transactions they would otherwise avoid" and "schemes that depend for their comple- gain." United States v. Shellef In

d a scheme to defraud

that violated the fraud statutes. Id.; United States v. Takhalov, 13-14 (11th Cir. 2016); United States v. Guer- tin -52 (D.C. Cir. 2023); United States v. Bruch- hausen -69 (9th Cir. 1992). A scheme to

12 Nos. 23-2840, 23-2846 & 23-2849 defraud, they reasoned, requires the "nature of the one concerning "price" or "character- istics of the good," Takhalov -14, or some "ex- Unit ,

924 F.2d 410, 420 (2d Cir. 1991). The defendants ask us to apply the essential element of the here.

market supply and demand, rather than the price or another characteristic of the futures contract itself, they contend that the other parties to the transaction "received exactly what they paid for." Takhalov .

They liken

positions" in arm's length transactions, which are not fraud. United States v. Weimert

not amount to a scheme

to defraud within the scope of the fraud statutes, even if the parties would not have otherwise executed the transaction. Kousisis v. United States, 145 S. Ct. 1382 (2025), which came down after oral argument in this case. There, the defendant had secured contracts with the Pennsylvania Department of Transportation to paint two projects in Philadelphia. Id. at 1388-89. He represented that he would acquire painting sup- ," in

pass-through entity to funnel payments. Id. at 1389. The Court the defendant's wire fraud convictions and directly the defendants in this case in-

voke. Id. at 1390-92, 1398; see also United States v. Runner, 143 F.4th 146, 154-

wire fraud statute, the Court explained

Nos. 23-2840, 23-2846 & 23-2849 13 economic loss." Kousisis, 145 S. Ct. at 1392. Rather, a fraud conviction can stand if the defendant did no more than "use[] a material misstatement to trick a victim into a contract that requires handing over her money or property." Id. at 1388,

1391.

Because Kousisis forecloses the defendants' essential ele- well-

to defraud within the meaning of the wire and commodities fraud statutes. United States v. Pacilio

Cir. 2023); United States v. Chanu, 40 F.4th 528, 541 2022); United States v. Coscia, 866 F.3d . the defendants' argument would fail

even without Kousisis. Unlike the transactions in Kousisis or Weimert, where the defendants directly lied to the purported victims

parties and the market as a whole.

—

private intent to cancel." Pacilio, 85 F.4th at 460. In this way, d and

fraud-on-the-market,

sentations that undermine the integrity of the marketplace. See United States v. Gilbertson 39 (8th Cir. 2020) (in the context of securities fraud, the "gravamen of manipu- nipulators") (qu .

The defendants also claim the fraud statutes are unconsti- tutionally vague as applied to their conduct. We have already

14 Nos. 23-2840, 23-2846 & 23-2849 rejected this argument, Pacilio, 85 F.4th at 460-61, and decline ing violates the federal wire and commodities fraud statutes,

18 U.S.C. §§ 1343 & 1348(1).

wire and commodities fraud (it does), the evidence cannot sustain their convictions

practice. They

intent to cancel a

a conditional intent to

cancel the orders .

Smith and Nowak concede, as they must, that each of their convictions is predicated on the

meaning the convictions all stand or fall with the govern-

Dodd-Frank Act provides that any person who knowingly vi- olates its anti- 6c(a)(5)(C), is

§ 13(a)(2). According to Smith and Nowak, since the govern- ment cannot prove that they placed trade orders with the req- are entitled to a

Though formally we

the evidence." United States v. Peterson, 823 F.3d 1113, 1120 ; see also Rivers

for threshold legal questions).

the standard for intent and, frankly, we struggle to

Nos. 23-2840, 23-2846 & 23-2849 15 understand why.

an unconditional purpose to cancel the . The jury thus considered—and rejected—Smith and Nowak's ar- gument that the evidence does not show such unconditional intent. We measure intent at the moment the order was placed. Coscia

quires proving that ds or

execution"). If a party possesses a conditional intent to trade, he necessarily lacks an intent to cancel at the time the order is placed. The word unconditional is redundant and unneces- sary.

The key question is whether an order is

placed on the opposite side of the commodities market with the market. Chanu, 40 F.4th at 540. Even if Smith and Nowak waited to cancel the spoof orders until the legitimate trade was executed, what counts is that the trades "were designed Coscia It

to cancel until

his —that's the whole point of

Cf. id. (defendant's software program canceled the passage of time

or (3) ") (emphasis added). The

"unconditional" semantics aside, the question is whether Smith's and Nowak's "purpose was not to trade on those or- Id.

16 Nos. 23-2840, 23-2846 & 23-2849 More importantly, all that is whether a rational trier of fact could have come to that conclusion. Peterson, 823 F.3d at 1120 ("We consider the evidence in the light most fa- ."

United States v. Sorensen

. In particular, Smith and Nowak's focus Pacilio, 85 F.4th at 463

(cleaned up).

could have found Smith and Nowak placed spoof orders with the requisite intent to cancel.

stantial data evidence depicting the scheme, and the jury heard extensive testimony from cooperating witnesses, cial experts, and investigators supporting an inference of guilt. This evidence

messages showing that Smith and Nowak placed (and then canceled) orders on the opposite side of the market from the legitimate orders that they intended to execute. Smith and Nowak argue that this evidence is all circumstantial, as the mind. Even so, "direct evidence of intent

the scheme itself." Id.

Smith and Nowak counter that the circumstantial evidence cannot support

sistent with their innocence. But Smith and Nowak were free

Nos. 23-2840, 23-2846 & 23-2849 to argue to the jury that there were legitimate explanations for their trading and to cross-examine the witnesses on —indeed, that was the heart

… that were

lieve them." United States v. Maxwell, 143 F.4th 844, 858 evidence to justify the jury's conclusions.

also challenge the anti-

statute 6c(a)(5)(C), as void for vagueness. As with fraud, our precedent squarely forecloses this argument. Coscia, 866 F.3d at -95. The statute is not uncon- stitutionally vague, and ample evidence supported Smith's and Nowak's convictions under it.

challenge fails as to all convictions. There was more than suf- 6c(a)(5)(C). And

constitutes a scheme to defraud under the wire and commod- ities fraud statutes, 18 U.S.C. §§ 1343 & 1348(1), and amounts to 13(a)(2), there was

Because the jury's verdict is dence on all charges, they are not entitled to a new trial on these grounds either. Peterson, 823 F.3d at 1122; United States

v. Conley .3d 391, 399-400 when motions that the government failed to prove the elements of the of-

18 Nos. 23-2840, 23-2846 & 23-2849

Smith and Nowak next court's decision to admit much of the evidence discussed

. They claim the court's rulings were erroneous and ask We

discretion. Pacilio, 85 F.4th at 464. We will only reverse if we Id. Smith and

Nowak assert that the

ing witnesses, (2) Wika's lay opinion testimony, and (3) Wika's investigative report.

rulings. Although the report and some of Wika's in light of the joint conspiracy charge, even though this evi- dence focused on Smith, the jury could consider it against Nowak as relevant and in accordance with any limiting in- structions. See United States v. Lopez

1993) (in joint trials, juries will "sort through the evidence"

and "follow instructions from the court" separate con- Wika's testimony and report and, importantly, did not receive or request a limiting instruction that the jury could only con- sider them against Smith.

Turning to the merits, none of these decisions was an witnesses to testify as to "their opinions and inferences, even United States v. Locke, 643

Nos. 23-2840, 23-2846 & 23-2849 19

other person's mental state, so long as the testimony is helpful to the jury and appropriate under Rule 403's

Id. at 239-40. Though lay witnesses may not

elements, United States v. Noel

2009), they can use words "in a colloquial sense" that "em- those words mirror legal standards, Locke, 643 F.3d at 241-42 (approving of lay witnesses' use of the words fraud and mis- representation).

The lay testimony was proper under this standard. Smith and Nowak take issue with the witnesses' use of the word argue that they im-

lation, and claim that the witnesses inappropriately opined on Smith's and Nowak's intent .

But the witnesses'

with the colloquial vernacular of the trading industry, id. at 242 's and Nowak's mental

states was properly framed as an opinion drawn from the trading data in light of the witnesses' own experience, see United States v. Winbush, 580 F.

for the claim that the testimony improperly equated with fraud and price manipulation, the witnesses were simply explaining why they spoofed, what they had pled guilty to, That

Smith and Nowak declined a jury instruction that the wit-

20 Nos. 23-2840, 23-2846 & 23-2849 Smith and Nowak also argue that Wika should have testi- Investigators such

as Wika can

provide their impressions of the case without crossing into ex- pert territory. United States v. Rollins, 544 F.3d 820, 832-

"spe- cialized knowledge informed his mental state." United States

v. Oriedo experience, Wika's testimony was limited to his investigation and what it revealed to him. Even if it argu-

"approaches the line dividing lay opinion testimony from expert opinion testimony," this testimony remained ad- allowing it. Rollins, 544 F.3d at 833. At the very worst, the gov- ernment's other evidence of Smith's and Nowak's guilt was so extensive that even if Wika's testimony "had crossed the Id. Nor was it erro-

neous to admit Wika's investigative report: investigative re- ports may come in as

Evidence 803(6) if

at trial, as Wika did. United States v. King - United States v. Blackburn

for cross-examination,

does not contravene Rule 803(8).").

the district court's supplemental instructions to the jury were er- court's decision to provide supplemental jury instructions, in- cluding its decision to read (or reread) a Silvern instruction,

Nos. 23-2840, 23-2846 & 23-2849 21 United States v. Cardena, 842 F.3d 959, (Silvern instruction); United States v. Sims, generally).

It was appropriate for the district court to reread the Sil- vern instruction. Silvern instructions are "perfectly content- jury." United States v. Beverly

. Rather, the district court followed our instruc-

tion to a deadlocked jury. United States v. Collins, 223 F.3d 502, 508-

It was similarly within the court's discretion to remind the jury that lawyers' statements are arguments, not evidence. despite Smith and Nowak's arguments to the contrary, crafted it carefully to avoid singling out the juror. The court also refused to ask the jury whether it remained deadlocked

ations. Under the circumstances, the court proceeded thoughtfully and exercised its discretion wisely. Nowak and Smith may not like the verdict the jury reached after receiving not mean they were issued in

error.

III

Recall that Jordan was convicted of only wire fraud under

18 U.S.C. § 1343. Jordan challenges various aspects of his sep- claim. Jordan joined Smith

22 Nos. 23-2840, 23-2846 & 23-2849 he spoofed, his argument hinges entirely on that theory. Since we rejected that argument in Section II.A

of the evidence challenge is a nonstarter.

Jordan's primary remaining argument concerns the dis- trict court's decision to exclude his statement to Agent Luca that he "did not think what he was doing was wrong." Jordan sought to admit that statement under Federal Rule of Evi- dence 106, often referred to as the rule of completeness. Rule 106 provides that "[i]f a party introduces all or part of a state- ment, an adverse party may require the introduction, at that time, of any other part—or any other statement—that in fair- s

Rule 106 requires a complete statement "

the trier of fact, or (4) insure a fair and impartial understand- ing." United States v. Lewis

In United States v. Haddad, 10 F.3d 1252

the remainder that said,

Id. at 1259. The gun was located right next to the marijuana, Id. We concluded that Rule 106 required

the admission of the exculpatory statement, in part to avoid any misleading inference. Id. "The completeness doctrine does not, however, require introduction of portions of a

Nos. 23-2840, 23-2846 & 23-2849 23 statement that are neither explanatory of nor relevant to the Lewis quoting United

States v. Marin ).

The district court was correct that Rule 106 did not compel it to admit Jordan's statement. Jordan's claim that he did not think he was doing anything wrong does not change the fac- to cancel for the purpose of misleading the market. Nor does was illegal or, as he put it, wrong. United States v. Blagojevich, Rather, the court rightly

noted that Jordan was free to take the stand and testify that he did not think he was doing anything wrong. United States v. Faruki

trict court that "the appropriate vehicle for the introduction of have taken the stand," rather than Rule 106). Defendants often try to justify their actions when speaking with FBI agents and

Such an exculpatory statement has nothing to do with Rule

106.

Next, Jordan claims excluding he sought to use for im- peachment. The trial concerned Jordan's trading when he worked at JPMorgan and then Credit Suisse until August 2010. Although the policies in place at the time did not explic- the

practice To

24 Nos. 23-2840, 23-2846 & 23-2849 controvert this testimony, Jordan moved to admit post-2010 However, the district court

excluded this evidence under Rule 403. The policies were re- -Frank Wall Street and Consumer

. L. No. 111- the general wire fraud statutes, the Dodd-Frank Act amended as an unlawful disruptive practice amounting to price manip- 6c(a)(5)(C

g the jury and erro-

neously injecting a mistake of law defense into the case and excluded it.

and directly responsive to the witnesses' testimony, making the district court's decision to exclude them under Rule 403 We disagree. Jordan conducted exten-

sive cross-examination of the witnesses, which elicited clear testimony that the pre-2010 documents did not mention The actual documents themselves were thus of limited addi- And as the district court noted, evi-

dence of the after-the-fact, post-Dodd-Frank policies could have led the jury to think that the wire fraud statutes were not this concern—defendants in other cases have made this same argument. See Chanu, 40 F.4th at 534.

Nos. 23-2840, 23-2846 & 23-2849 25 is a highly discretionary assessment," we give "great defer- ence" to a district court's decision to exclude evidence under Rule 403 and "

agree with the ruling." Pacilio, 85 F.4th at 465 (quotation omit- ted).

valid concerns of jury confusion, Jordan does not overcome this extremely deferential standard.

Last, Jordan says the district court erred in declining to ad- minister a so-called good faith instruction sought an instruction that if he acted in good faith "then he wire fraud." Though we review challenges to jury instruc- tions de novo,

cretion with respect to the precise wording of instructions so long

rectly states the law." Chanu, 40 F.4th at 542 (cleaned up). We already addressed and rejected this same argument in Chanu. As the district court noted, a good faith instruction is is a part of the charge. Id.

free to provide one if they wish. But "the rule is clear" that defendants such as Jordan cannot demonstrate that "the fail- ure to include the good faith instruction denied [them] a fair trial." Id. (cleaned up).

convicted him of wire fraud after a fair, properly conducted trial.

AFFIRMED

United States v. Gregg Smith

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