Court Opinion

ID: 9892462
Source: CourtListenerOpinion
Date Created: 2023-10-23 22:00:34.761966+00
Date Added: 2024-06-11T08:07:08.259442
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 23-1528 & 23-1530
UNITED STATES OF AMERICA,
                                                   Plaintiff-Appellee,
                                 v.

JOHN PACILIO and EDWARD BASES,
                                             Defendants-Appellants.
                    ____________________

        Appeals from the United States District Court for the
          Northern District of Illinois, Eastern Division.
             No. 1:18-cr-00048 — John Z. Lee, Judge.
                    ____________________

  ARGUED SEPTEMBER 7, 2023 — DECIDED OCTOBER 23, 2023
                ____________________

   Before BRENNAN, ST. EVE, and JACKSON-AKIWUMI, Circuit
Judges.
    BRENNAN, Circuit Judge. John Pacilio and Edward Bases
appeal their convictions for fraud through the manipulation
of the precious metals market by “spoofing”—placing a de-
ceptive order with no intent to trade to push the market in a
certain direction. Defendants challenge their convictions on
due process grounds, and they dispute several evidentiary
2                                      Nos. 23-1528 & 23-1530

rulings at trial. For the reasons set forth below, we affirm the
district court’s judgments.
       I. Factual Background and Procedural History
    Pacilio and Bases were senior traders on the precious met-
als trading desk at Bank of America Merrill Lynch (“Bank of
America”), in New York. They conducted their trading on two
commodities exchanges, COMEX and NYMEX, operated by
the Chicago Mercantile Exchange (CME). While working to-
gether at Bank of America from 2010 until 2011, and at times
separately before and after that period, they engaged in a
fraudulent scheme, known as spooﬁng, to manipulate the
prices of precious metals.
    The mechanics of commodities futures trading make
spooﬁng possible. A commodities futures contract is a stand-
ardized agreement between a buyer and a seller to buy and
sell a set amount of a speciﬁc commodity, at a set price, on a
set, future date. Historically, the trading of commodities fu-
tures through the CME occurred in person on the CME trad-
ing ﬂoor. Since 2007, most CME trading takes place on the
CME’s electronic trading platform, Globex, which allows
traders to place buy or sell orders on certain numbers of fu-
tures contracts at a set price. Traders place these orders man-
ually or through programmed algorithms.
    Commodity prices are determined by supply and de-
mand. Orders placed in the CME order book communicate
buying and selling interest, aﬀecting the market price for fu-
tures contracts. The larger the order, the larger the eﬀect on
the commodity’s market price. Because larger orders can sig-
niﬁcantly impact the market, Globex permits traders to place
“iceberg” orders, showing only a partial amount of the full
Nos. 23-1528 & 23-1530                                          3

order. Traders on the COMEX and NYMEX exchanges may
cancel an order before it is executed. But, it is assumed that
every order placed is bona ﬁde and placed with “intent to
transact.” Spooﬁng schemes take advantage of this assump-
tion by manipulating the market through the placement of
large orders that are unintended to be executed. Spooﬁng con-
sists of (1) placing an order, typically a large iceberg order, on
one side of the market that is intended to be traded, and (2)
placing a spoof order, fully visible but not intended to be
traded, on the other side of the market. The spoof order
pushes the market price to beneﬁt the iceberg order, allowing
the trader to execute the iceberg order at a desired price. The
spoof order is then cancelled before it can be ﬁlled.
    On several occasions, each defendant placed an iceberg or-
der to sell commodities contracts above the prevailing market
price while simultaneously submitting visible spoof orders
pushing the market price higher. Once the market price
reached the level of the intended sale oﬀer, the entire iceberg
sell order was executed, and all the visible spoof orders were
cancelled. Defendants also engaged in coordinated episodes,
where one would place an iceberg buy order and the other
would ﬂood the market with spoof sell orders. The market
price would plummet and enable ﬁlling the iceberg order at
the desired price.
    Pacilio and Bases do not contest these facts. Rather, they
challenge the constitutionality of their convictions, dispute
the suﬃciency of the evidence, and criticize the district court’s
evidentiary rulings.
   A federal grand jury indicted Pacilio on one count of con-
spiracy to commit wire fraud aﬀecting a ﬁnancial institution;
seven counts of wire fraud aﬀecting a ﬁnancial institution;
4                                      Nos. 23-1528 & 23-1530

one count of commodities fraud; and one count of violating
the anti-spooﬁng provision of the Dodd-Frank Act. The grand
jury similarly indicted Bases on one count of conspiracy to
commit wire fraud aﬀecting a ﬁnancial institution; nine
counts of wire fraud aﬀecting a ﬁnancial institution; and one
count of commodities fraud.
    Before trial, the government disclosed its plans to call
CME representatives to testify that CME Rule 432 has always
prohibited spooﬁng. Rule 432, in place since 1989, prohibits
traders from attempting to engage or engaging in “the manip-
ulation of prices of exchange futures or options contracts;”
“any manipulative device, scheme, or artiﬁce to defraud;” or
oﬀering to purchase or sell “exchange futures or options con-
tracts, or any underlying commodities or securities, for the
purpose of upsetting the equilibrium of the market or creating
a condition in which prices do not or will not reﬂect fair mar-
ket values.” This testimony, the government asserted, would
support their implied misrepresentation theory.
    The defendants moved to preclude this testimony as irrel-
evant and improper, arguing that CME representatives’ sub-
jective interpretations of Rule 432, never disclosed to market
participants, could neither form the foundation of an implied
misrepresentation nor support a ﬁnding of intent to defraud.
The district court denied the motion, concluding that Rule 432
was ambiguous as a matter of law as to whether it prohibited
spooﬁng. Therefore, the government could oﬀer extrinsic ev-
idence from CME representatives interpreting the rule.
    At trial, the parties presented substantial evidence. Pursu-
ant to the district court’s pre-trial ruling, the government
called as witnesses two CME representatives, John Scheerer
and Robert Sniegowski. Scheerer, a CME Senior Director,
Nos. 23-1528 & 23-1530                                      5

testiﬁed that each order placed on the CME exchanges was
expected to be a “bona ﬁde order … placed with intent to
transact.” Sniegowski, the longtime director of the CME’s
Rules and Regulatory Outreach group, similarly testiﬁed the
CME requires orders “be placed with the intent to buy” and
sell—and Rule 432 prohibits spooﬁng. Sniegowski also out-
lined the mechanics of spooﬁng and explained that a spoof
order is a deceptive order placed with “no intent to trade” to
“push the market in a particular direction.”
    The government also called an employee who worked
with Pacilio and Bases, Harnaik Lakhan, as a cooperating wit-
ness. Lakhan testiﬁed he engaged in spooﬁng and knew at the
time it was “wrong.” He described how he, Pacilio, and Bases
carried out the spooﬁng scheme by placing orders they in-
tended to cancel for the sole purpose of “manipulat[ing] the
price to the level you wanted it.” He admitted spooﬁng placed
“false information” into the market both “as to demand, sup-
ply,” and “intent” to trade, and stated defendants placed
spoof orders “frequently” in the precious metals futures mar-
kets. When cross-examined, Lakhan did not recall a CME rule
prohibiting spooﬁng, was not familiar with Rule 432, and did
not remember any pre-Dodd-Frank compliance training men-
tioning spooﬁng. Additionally, the government presented
testimony from bank oﬃcials concerning bank policies at the
time of Pacilio’s and Bases’s conduct. These witnesses, John
Juul and Ed McLaren, compliance oﬃcials with Deutsche
Bank and Bank of America respectively, testiﬁed spooﬁng
was always prohibited at their banks.
   The jury found Pacilio guilty of conspiracy to commit wire
fraud aﬀecting a ﬁnancial institution, wire fraud aﬀecting a
ﬁnancial institution, and commodities fraud, but not guilty of
6                                         Nos. 23-1528 & 23-1530

spooﬁng in violation of Dodd-Frank. The jury found Bases
guilty of conspiracy to commit wire fraud aﬀecting a ﬁnancial
institution and wire fraud aﬀecting a ﬁnancial institution, but
not guilty of commodities fraud. The district court sentenced
each defendant to 12 months and one day in prison.
                         II. Discussion
    Defendants raise three challenges to their convictions.
They assert the commodities and wire fraud statutes are un-
constitutionally vague as applied to them in violation of the
Fifth Amendment’s due process guarantee. They also
challenge the suﬃciency of the evidence supporting their con-
victions for conspiracy to commit wire fraud and Pacilio’s
conviction for commodities fraud. Finally, they argue the dis-
trict court abused its discretion in admitting the testimony of
the CME representatives and bank oﬃcials and excluding cer-
tain evidence of Bases’s good faith.
    A. Due Process Challenge
    We review de novo both constitutional challenges to a con-
viction and vagueness challenges. United States v. Coscia, 866
F.3d 782, 791 (7th Cir. 2017); United States v. Sandidge, 863 F.3d
755, 758 (7th Cir. 2017). The Fifth Amendment guarantees
“[n]o person shall … be deprived of life, liberty, or property,
without due process of law.” U.S. CONST. amend. V. This
guarantee forbids vague criminal laws. Johnson v. United
States, 576 U.S. 591, 595 (2015). To satisfy this guarantee, a
criminal statute must “deﬁne the criminal oﬀense (1) with suf-
ﬁcient deﬁniteness that ordinary people can understand what
conduct is prohibited and (2) in a manner that does not en-
courage arbitrary and discriminatory enforcement.” Skilling v.
Nos. 23-1528 & 23-1530                                         7

United States, 561 U.S. 358, 402–03 (2010) (quoting Kolender v.
Lawson, 461 U.S. 352, 357 (1983)).
    “The void-for-vagueness doctrine prohibits the govern-
ment from imposing sanctions under a criminal law so vague
that it fails to give ordinary people fair notice of the conduct
it punishes.” Welch v. United States, 578 U.S. 120, 124 (2016)
(internal quotation marks omitted). “A vagueness challenge
not premised on the First Amendment is evaluated as-ap-
plied, rather than facially.” United States v. Calimlim, 538 F.3d
706, 710 (7th Cir. 2008). The “touchstone” of constitutional fair
notice “is whether the statute, either standing alone or as con-
strued, made it reasonably clear at the relevant time that the
defendant’s conduct was criminal.” United States v. Lanier, 520
U.S. 259, 267 (1997). “[A] scienter requirement in a statute al-
leviates vagueness concerns.” McFadden v. United States, 576
U.S. 186, 197 (2015) (internal marks omitted). Two statutory
prohibitions are relevant. Title 18 U.S. Code § 1343 provides:
       Whoever, having devised or intending to devise
       any scheme or artiﬁce to defraud, or for obtain-
       ing money or property by means of false or
       fraudulent pretenses, representations, or prom-
       ises, transmits or causes to be transmitted by
       means of wire, radio, or television communica-
       tion in interstate or foreign commerce, any writ-
       ings, signs, signals, pictures, or sounds for the
       purpose of executing such scheme or artiﬁce … .
   The commodities fraud statute states:
       Whoever knowingly executes, or attempts to ex-
       ecute, a scheme or artiﬁce—(1) to defraud any
       person in connection with any commodity for
8                                       Nos. 23-1528 & 23-1530

       future delivery, or any option on a commodity
       for future delivery … ; or (2) to obtain, by means
       of false or fraudulent pretenses, representa-
       tions, or promises, any money or property in
       connection with the purchase or sale of any
       commodity for future delivery, or any option on
       a commodity for future delivery … .
18 U.S.C. § 1348.
    We have held twice—in Coscia and in United States v.
Chanu, 40 F.4th 528 (7th Cir. 2022)—that spooﬁng violates the
wire fraud and commodities fraud statutes. In Coscia, we con-
sidered “whether spooﬁng amounts to a ‘scheme to defraud’”
within the meaning of the commodities fraud statute. Chanu,
40 F.4th at 540 (citing Coscia, 866 F.3d 782). Coscia placed large
spoof orders opposite small orders on CME exchanges in 2011
and used a preprogrammed algorithm to quickly cancel the
spoof orders before they were ﬁlled. Coscia, 866 F.3d at 788-90.
The government alleged Coscia placed the spoof orders “to
create illusory supply and demand and, consequently, to in-
duce artiﬁcial market movement.” Id. at 785. Coscia was con-
victed of commodities fraud in violation of 18 U.S.C.
§ 1348(1), and spooﬁng, in violation of 7 U.S.C. § 6c(a)(5)(C).
Id. Our court aﬃrmed. Id. As to his commodities fraud con-
viction, Coscia argued “because ‘his orders were fully execut-
able and subject to legitimate market risk,’ they were not, as a
matter of law, fraudulent.” Id. at 797. This court rejected that
argument. Id.
   In Chanu, we again aﬃrmed that spooﬁng was fraud, this
time in a situation very similar to and involving the same
scheme as the one Pacilio and Bases employed. Cedric Chanu
and James Vorley were precious metals traders at Deutsche
Nos. 23-1528 & 23-1530                                         9

Bank who traded futures contracts on the COMEX exchange
using CME’s Globex platform. Chanu, 40 F.4th at 532. They
“placed orders for precious metals futures contracts on one
side of the market that, at the time the orders were placed,
they intended to cancel prior to execution”—though unlike
Coscia, Chanu and Vorley placed their trades manually. Id. at
533, 540. Chanu and Vorley were convicted on several counts
of wire fraud. Id. at 538. On appeal we addressed whether the
manual spooﬁng conduct violated the wire fraud statute and
held it was determined by two questions: “Was there a
scheme to defraud by means of false representations or omis-
sions, and were such false representations or omissions mate-
rial?” Id. at 539. “Coscia establishes that placing orders on
opposite sides of the commodities market with the intent to
cancel amounts to a ‘deceitful’ scheme, aiming to ‘manipulate
the market for [the trader’s] own ﬁnancial gain.’” Chanu, 40 F.
4th at 540 (quoting Coscia, 866 F.3d at 797).
    The Chanu defendants attempted to distinguish Coscia, ar-
guing “[b]ecause they were engaged in manual trading, …
their trades—unlike Coscia’s—were actually tradeable due to
the length of time they remained active prior to cancellation.”
Id. That reasoning was unpersuasive, and we aﬃrmed the
convictions in Chanu. In Coscia, we had “rejected Coscia’s de-
fense that he ‘placed real orders that were exactly that, orders
that were tradeable’—the same defense Chanu and Vorley
now employ.” Id. (quoting Coscia, 866 F.3d at 790, 797 (cita-
tions omitted)). Importantly, we noted “order placement
signals a trader’s intent to buy or sell.” Id at 541. Thus, “[b]y
obscuring their intent to cancel, through an orchestrated ap-
proach, Chanu and Vorley advanced a quintessential ‘half-
truth’ or implied misrepresentation—the public perception of
an intent to trade and a private intent to cancel in the hopes of
10                                     Nos. 23-1528 & 23-1530

ﬁnancial gain.” Id. Moreover, we emphasized so long as the
trading conduct “is deceitful and aligns with the plain mean-
ing of ‘scheme to defraud,’” it can be criminalized under the
commodities fraud or wire fraud statute. Id.
    The defendants had fair notice that their conduct was pro-
hibited by the wire and commodities fraud statutes. The fraud
statutes have long been held to encompass “implied represen-
tation[s]” and “misleading omission[s].” Chanu, 40 F.4th at
541. In particular, “[a] half truth, or what is usually the same
thing as a misleading omission, is actionable as fraud … if it
is intended to induce a false belief and resulting action to the
advantage of the misleader and the disadvantage of the mis-
led.” Emery v. Am. Gen. Fin., Inc., 71 F.3d 1343, 1348 (7th Cir.
1995). And, as we held in Chanu, the defendants’ spooﬁng
conduct “advanced a quintessential ‘half-truth’ or implied
misrepresentation” prohibited by the fraud statutes—namely
the public perception of the intent to trade and the private in-
tent to cancel. 40 F.4th at 541.
    Pacilio and Bases advance several arguments that the stat-
utes are vague, but none are persuasive. First, defendants sub-
mit it was not until “Coscia was indicted in October 2014, that
the government ﬁrst claimed that spooﬁng could be fraudu-
lent.” Though “due process bars courts from applying a novel
construction of a criminal statute to conduct that neither the
statute nor any prior judicial decision has fairly disclosed to
be within its scope,” courts may apply a statute to novel con-
duct so long as the plain text permits. Lanier, 520 U.S. at 266.
    Years before Coscia, this court held that placing orders in
the commodities market in a way that gives a “misleading sig-
nal” can be an “active misrepresentation.” United States v.
Dial, 757 F.2d 163, 169 (7th Cir. 1985). The Dial defendants
Nos. 23-1528 & 23-1530                                      11

were found guilty of mail and wire fraud—in violation of 18
U.S.C. §§ 1341 and 1343—stemming from the trading of silver
futures on the Chicago Board of Trade. Id. at 164. They had
“defrauded the people from whom they bought silver futures
contracts … by trading, without margin,” that is without cash
backing, their clients’ accounts. Id. at 169. This court ulti-
mately decided that though defendants “owed” no duty to
disclose their unmargined trading “to people on the other
side of their silver futures transactions, their trading an un-
margined account was an active misrepresentation,” as trad-
ing without margin indicates the trades are backed by cash
when they are not, imbuing the trader with “powerful inﬂu-
ence on futures prices.” Id.
    Pacilio’s and Bases’s conduct is indistinguishable from
that deemed illegal in other cases. By placing spoof orders
they intended to cancel before execution, they sent misleading
signals to the market that the demand for a given commodity
was much higher, eﬀecting an increase in the market price.
Through this active misrepresentation of demand, defend-
ants’ iceberg orders would accrue signiﬁcant proﬁts when
executed. Any novelty in this prosecution is based on the par-
ticulars of defendants’ spooﬁng scheme, not any originality in
construing the relevant fraud statutes. As we explained in
Coscia, spooﬁng is a relatively new phenomenon aided by the
development of high frequency programmed trading. 866
F.3d at 786–87. And as we have held before in Coscia and
Chanu, spooﬁng is synonymous with other behavior actiona-
ble as fraud.
   Second, defendants assert the passage of the Dodd-Frank
Act’s spooﬁng provisions signals that spooﬁng was not previ-
ously considered fraud. Dodd-Frank included an amendment
12                                        Nos. 23-1528 & 23-1530

to “prohibited transactions” under the Commodity Exchange
Act, 7 U.S.C. § 6c(a)(5)(C), recognizing spooﬁng as unlawful.
But Congress did not create the concept of spooﬁng. As the
Exchange Act notes, the term spooﬁng was “commonly
known to the trade.” 7 U.S.C. § 6c(a)(5)(C). Moreover, “[t]he
Federal Criminal Code is replete with provisions that crimi-
nalize overlapping conduct.” Pasquantino v. United States, 544
U.S. 349, 359 n.4 (2005). As we have just noted, the wire and
commodities fraud statutes criminalized defendants’ conduct
before the passage of Dodd-Frank.
    Third, Pacilio and Bases contend the government’s de-
scription of the spooﬁng scheme is impermissibly broad to
capture their conduct. Yet in Coscia, we characterized a similar
scheme—although it used an algorithm rather than manual
trades—as market manipulation akin to “pump and dump”
schemes that the government prosecutes under the mail and
wire fraud statutes. 866 F.3d at 797. The government’s de-
scription is therefore consonant with this court’s precedent.
    Fourth, defendants urge the court to rely on the Fifth Cir-
cuit’s en banc decision in United States v. Radley, 632 F.3d 177
(5th Cir. 2011), to hold that it is not fraud to place trades with-
out the intent to enter into a transaction if the trades are at risk
of being executed. The Radley defendants were charged with
a conspiracy to manipulate the price of propane “by placing
multiple bids … in order to trick other market participants
into believing that demand for the commodity was strong and
came from more than one source” and “placed bids at prices
higher than other bidders had posted, allegedly perpetrating
their deception by enticing other market participants to trans-
act at higher prices.” Id. at 180. The district court had previ-
ously ruled that “even if [the bids] were higher than any
Nos. 23-1528 & 23-1530                                          13

others, [they] were actually bids, and when they were ac-
cepted, defendants actually went through with the transac-
tions.” United States v. Radley, 659 F. Supp. 2d 803, 815 (S.D.
Tex. Sep. 17, 2009). “Since defendants were willing and able
to follow through on all of the bids, they were not mislead-
ing.” Id. The Fifth Circuit aﬃrmed the district court’s dismis-
sal of the indictment’s price manipulation, cornering, and
wire fraud counts. 632 F.3d at 179.
    This court previously addressed Radley in Coscia. 866 F.3d
at 797 n.64. We ruled that Radley was not analogous because
that case did not involve an attempt “to create the illusion of
artiﬁcial market movement that included the use of large
orders to inﬂate the price while also taking steps to avoid
transactions in the large orders.” Id. That is the conduct
(which Pacilio and Bases do not dispute) that occurred here,
though through manual trades rather than a programmed al-
gorithm. In Coscia and Chanu, this court speciﬁcally rejected
this defense. Chanu, 40 F.4th at 540; Coscia, 866 F.3d at 790, 797.
The defendants had suﬃcient notice that their spooﬁng
scheme was prohibited by law.
   B. Suﬃciency of the Evidence
    The defendants also challenge whether the evidence at
trial supported their convictions. Because they moved for a
judgment of acquittal, we review the sufficiency of the evi-
dence in support of the conviction de novo. United States v.
Durham, 766 F.3d 672, 678 (7th Cir. 2014). This court “con-
strue[s] the evidence in the light most favorable to the gov-
ernment, asking whether a rational trier of fact could have
found the elements of the crime beyond a reasonable doubt.”
United States v. Weimert, 819 F.3d 351, 354 (7th Cir. 2016). A
conviction will be overturned “only if, after reviewing the
14                                          Nos. 23-1528 & 23-1530

record in this light, we determine that no rational trier of fact
could have found the essential elements of the offense beyond
a reasonable doubt.” United States v. Fitzpatrick, 32 F.4th 644,
649 (7th Cir. 2022) (internal quotation marks omitted). The
burden to overturn a conviction on sufficiency of the evidence
“is a high one,” one this court has “described as ‘nearly insur-
mountable.’” Id. (quoting United States v. Anderson, 988 F.3d
420, 424 (7th Cir. 2021)).
    The government establishes a conspiracy by proving that
“(1) two or more people agreed to commit an unlawful act,
and (2) the defendant on trial knowingly and intentionally
joined in the agreement.” See United States v. Griﬃn, 76 F.4th
724, 742 (7th Cir. 2023) (holding that suﬃcient evidence sup-
ported two defendants’ convictions under 18 U.S.C. § 1349)
(citation omitted). 1 Title 18 U.S.C. § 1343 criminalizes the use
of wire, radio, or television communications to eﬀect “any
scheme or artiﬁce to defraud, or for obtaining money or prop-
erty by means of false or fraudulent pretenses … . To convict
a defendant of wire fraud, the government must prove three
elements: (1) the defendant participated in a scheme to de-
fraud; (2) the defendant intended to defraud; and (3) a use of
an interstate wire in furtherance of the fraudulent scheme.”
United States v. Powell, 576 F.3d 482, 490 (7th Cir. 2009). The
statute reaches “not only false statements of fact but also mis-
leading half-truths and knowingly false promises.” Weimert,
819 F.3d at 355. Actionable misstatements can also “include

     1 Though the fraud scheme in this case concerned commodities trad-

ing—whereas the fraud in Griffin involved a scheme to fraudulently ob-
tain Small Business Administration loans, 76 F.4th at 733–34—both cases
dealt with allegations of wire fraud and conspiracy to commit such under
18 U.S.C. §§ 1343 and 1349.
Nos. 23-1528 & 23-1530                                       15

the omission or concealment of material information, even ab-
sent an aﬃrmative duty to disclose, if the omission was in-
tended to induce a false belief and action to the advantage of
the schemer and the disadvantage of the victim.” Id. Clarify-
ing the statutory term “scheme or artiﬁce to defraud,” the
Supreme Court has held that materiality of falsehood is an el-
ement of the federal wire fraud statute. Neder v. United States,
527 U.S. 1, 25 (1999).
       1. Suﬃcient evidence supports the defendants’ convictions
          for conspiracy to commit wire fraud.
    Lakhan testiﬁed how he, Pacilio, and Bases carried out the
spooﬁng scheme by placing orders they intended to cancel for
the sole purpose of “manipulat[ing] the price to the level you
wanted it,” admitted that spooﬁng placed “false information”
into the market “as to demand, supply,” and “intent” to trade,
and stated defendants both placed spoof orders “frequently”
in the precious metals futures market. The government also
submitted evidence of numerous trades where defendants
placed an iceberg order followed by a visible spoof order
which was cancelled immediately after executing the iceberg
order. The evidence further included contemporaneous chat
messages between the defendants, Lakhan, and others dis-
cussing their actions in placing “spoof” orders “not intended
to be executed” in order to “push,” “move,” and “goose …
up” the market price of commodities.
    The defendants do not contest any of this evidence. Ra-
ther, they argue their wire fraud convictions should be re-
versed because CME orders do not implicitly represent that a
trader wants to trade. This argument is predicated on lan-
guage in the operative third superseding indictment. That
states the fraudulent orders placed by defendants were
16                                     Nos. 23-1528 & 23-1530

“material misrepresentations that falsely and fraudulently
represented to market participants that [defendants] and oth-
ers actually wanted to trade the Fraudulent Orders when, in
fact, they did not want to do so.” To the defendants, because
CME orders only impliedly represent that traders are willing
to trade—not that they actually want to trade—the govern-
ment did not prove the fraudulent misrepresentation in the
indictment necessary for a wire fraud conviction.
    The terms “intend,” “intending,” and “intent” are used
throughout the indictment, including in the crucial paragraph
setting forth the elements for conspiracy to commit wire
fraud. But in one instance in paragraph 12, the term “want” is
used in the “Manner and Means” section of the conspiracy.
The other sixteen paragraphs of that section do not use
“want.”
    The jury was instructed that convictions for wire fraud re-
quired that the defendants intended to not trade the spoof or-
ders. In the instructions “scheme to defraud” meant “a
scheme that is intended to deceive or cheat another and to ob-
tain money or property or to cause the potential loss of money
or property of another by means of materially false or fraud-
ulent pretenses, representation, or promises.” (emphasis sup-
plied) “[I]ntent to defraud” was deﬁned as acting “knowingly
with the intent to deceive or cheat in order to cause a gain of
money or property to the defendant or another or the poten-
tial loss of money or property to another.” The question for
the jury was whether the defendants had fraudulent intent.
The evidence was suﬃcient for a rational jury to ﬁnd that in-
tent beyond a reasonable doubt.
    Whether the trade orders showed a willingness or desire
to trade does not matter. In Chanu, we held that placing an
Nos. 23-1528 & 23-1530                                        17

order on the CME represented an intent to buy and sell. 40
F.4th at 540–42. In addition, the ubiquitous use of “intent” lan-
guage throughout the indictment and the jury instructions
cured any error created by the word “want” in one paragraph.
One word in one paragraph of the 16-page indictment does
not warrant reversal.
       2. Suﬃcient evidence supports Pacilio’s conviction for
          commodities fraud.
    Pacilio also contends the government presented no evi-
dence of his fraudulent intent in 2014 to substantiate his con-
viction for commodities fraud. This challenge fares no better.
Title 18 U.S.C. § 1348(1) criminalizes conduct “to defraud any
person in connection with a commodity for future delivery.”
To convict a defendant on commodities fraud, the govern-
ment must prove (1) fraudulent intent, (2) a scheme or artiﬁce
to defraud, and (3) a nexus with a security. Coscia, 866 F.3d at
796 (citation omitted). “False representations or material
omissions are not required” for a conviction under this stat-
ute. Id. “Because [Pacilio] focuses on intent, this makes [the
court’s] job relatively easy.” United States v. Johnson, 874 F.3d
990, 1000 (7th Cir. 2017) (internal quotation marks omitted).
“[O]nce a jury has weighed the evidence and has found guilt
beyond a reasonable doubt,” a challenge to the suﬃciency of
the evidence proving intent “is exceedingly diﬃcult to win.”
United States v. Dingle, 862 F.3d 607, 614 (7th Cir. 2017).
    The jury could find Pacilio intended to defraud based on
the government’s data evidence depicting the spoofing
scheme, Lakhan’s testimony, and prior evidence of Pacilio’s
intent to commit wire fraud. Lakhan testified he witnessed
Pacilio make the exact same types of spoofing trades at Mor-
gan Stanley that he made at Bank of America during the time
18                                      Nos. 23-1528 & 23-1530

frame covered by the wired fraud convictions, where chats
and emails provided clear evidence of Pacilio’s intent. Pacilio
notes, and we agree, that Lakhan did not testify to Pacilio’s
intent in the later time frame covering the commodities fraud.
But direct evidence of intent is often unattainable, and “spe-
cific intent to defraud may be established by circumstantial
evidence and by inferences drawn from examining the
scheme itself which demonstrate that the scheme was reason-
ably calculated to deceive persons of ordinary prudence and
comprehension.” United States v. Pust, 798 F.3d 597, 600–01
(7th Cir. 2015) (internal quotation marks omitted).
     Pacilio argues “[a] jury may not infer that because a de-
fendant committed an illegal act once, he must have also com-
mitted another alleged similar act.” For this he relies on United
States v. Manganellis, 864 F.2d 528, 531 (7th Cir. 1988)). But un-
like the prior intent evidence here, Manganellis concerned the
admission of prior bad acts, id., so it is inapplicable. The gov-
ernment’s prior intent evidence is not prior bad acts evidence.
It is circumstantial evidence the jury could have relied upon
to ﬁnd that Pacilio maintained his fraudulent intent when
continuing to trade in the exact same way at a later time pe-
riod.
    We aﬀord the district court great deference on this type of
challenge. A reasonable jury could ﬁnd beyond a reasonable
doubt, based on all the prior evidence of Pacilio’s intent, cou-
pled with the government’s data and Lakhan’s testimony,
that Pacilio continued to trade at Morgan Stanley with the
same fraudulent intent he possessed at Bank of America. Suf-
ﬁcient evidence supported Pacilio’s conviction for commodi-
ties fraud.
Nos. 23-1528 & 23-1530                                          19

   C. The District Court’s Evidentiary Rulings
   Bases asks for a new trial, arguing the district court erred
in (1) admitting testimony from CME representatives and
bank oﬃcials, and (2) excluding evidence of his good faith.
    We review evidentiary rulings for an abuse of discretion.
United States v. Pulliam, 973 F.3d 775, 782 (7th Cir. 2020). “Re-
versal is warranted only where the reviewing court is left with
the deﬁnite and ﬁrm conviction that a mistake has been com-
mitted.” United States v. Daniel, 749 F.3d 608, 613 (7th Cir.
2014) (internal quotation marks omitted). An evidentiary er-
ror requires reversal if the error was not “harmless.” United
States v. Chaparro, 956 F.3d 462, 481–82 (7th Cir. 2020). “The
general test for harmless error at trial is whether it is clear be-
yond a reasonable doubt that a rational jury would have
found the defendant guilty absent the error.” Id. at 482 (quot-
ing United States v. Bonin, 932 F.3d 523, 538 (7th Cir. 2019)).
       1. The district court properly admitted testimony of CME
          representatives and bank oﬃcials.
    Bases asserts the district court abused its discretion by ad-
mitting testimony from CME representatives and bank oﬃ-
cials because their testimony was irrelevant and more preju-
dicial than probative.
    This testimony was relevant. The district court admitted
the testimony of CME representatives Robert Sniegowski and
John Scheerer, who testiﬁed as lay persons to their under-
standing of CME Rule 432 and its prohibition of defendants’
conduct. Sniegowski testiﬁed that Rule 432’s prohibition of
“manipulation of prices,” “bad faith,” and “conduct … incon-
sistent with just and equitable principles of trade” prohibited
entering an order that the trader intends to cancel, i.e.,
20                                     Nos. 23-1528 & 23-1530

spooﬁng. He also testiﬁed the CME requires traders to place
only those orders that they “desire to actually buy or sell” and
expects market participants to know the rules to ensure mar-
ket integrity. Scheerer likewise testiﬁed CME rules prohibited
traders from “placing orders with the intent to cancel before
execution.”
    This testimony was relevant because defendants knew of
the CME rules. Several commodities futures traders testiﬁed
that they were on notice of and understood CME rules requir-
ing that orders be bona ﬁde and prohibiting the placement of
orders with the intent to cancel them. The testimony was also
relevant to demonstrate the defendants’ intent to manipulate
the market by placing orders with the intent to cancel, con-
trary to the expectation of market participants.
    The district court also admitted the testimony of John Juul
and Ed McLaren, compliance oﬃcers at Deutsche Bank and
Bank of America, respectively. They testiﬁed their ﬁnancial
institutions prohibit the placing of orders with intent to can-
cel. The defendants contend this testimony is irrelevant be-
cause “there was no evidence that anyone at the banks ever
shared with [the defendants] that general prohibitions against
‘manipulation’ were interpreted or understood to encompass
spooﬁng.” Both testiﬁed, though they worked in separate de-
partments from defendants, that they functioned together as
“one compliance department” and that traders at their banks
were expected to understand and follow bank policies. Those
included policies prohibiting market manipulation, such as
spooﬁng. Further, the evidence showed that defendants knew
of, and received training on, the banks’ compliance policies,
much like they knew of and received training on the CME
Rules.
Nos. 23-1528 & 23-1530                                       21

    The defendants submit this testimony’s probative value
was outweighed by the danger of unfair prejudice, see FED. R.
EVID. 403, because the testimony discussed market “manipu-
lation,” which is a distinct oﬀense not charged. “The balanc-
ing of probative value and prejudice is a highly discretionary
assessment, and [the court] accord[s] the district court’s deci-
sion great deference, only disturbing it if no reasonable per-
son could agree with the ruling.” United States v. Thomas, 321
F.3d 627, 630 (7th Cir. 2003). The defendants provide no
rationale to reverse the district court’s decision. The govern-
ment expressly deﬁned for the jury what it meant by “manip-
ulate.”
       Ladies and gentlemen, good morning. You have
       before you two bankers. These two bankers ma-
       nipulated the market prices of gold and silver.
       They pushed those prices up and they pushed
       those prices down with orders to buy and sell,
       orders that they knew sent fake signals to the
       market about supply and demand.
The jury would not have confused “manipulate” with “mar-
ket manipulation” because the terms are distinct. “Manipu-
late” is a generally understood term distinct from a statutory
term like “market manipulation.” The defendants were not
convicted for manipulation, but for fraud. See United States v.
Bloom, 846 F.3d 243, 252 (7th Cir. 2017) (holding suﬃcient
evidence existed of defendants manipulating investment
portfolio yield rates to support convictions for wire and in-
vestment adviser fraud). And, as discussed previously, the
district court suﬃciently instructed the jury on the meaning
of “scheme to defraud.”
22                                     Nos. 23-1528 & 23-1530

    Bases relies heavily on United States v. Farinella, 558 F.3d
695 (7th Cir. 2009), in support of his claim of error in admit-
ting this testimony. That case concerned whether sufficient
evidence supported Farinella’s conviction for misbranding
food with intent to defraud or mislead in violation of 21
U.S.C. §§ 331, 333. Id. at 697. The government presented the
testimony of an FDA employee. Id. at 699. He testified he
searched through an FDA database detailing inquiries re-
garding the labeling of food products and found no record of
inquiry from Farinella requesting a change to the “best when
purchased by” date on their product. Id. “The implication was
that changing the ‘best when purchased by’ date on a label
requires the FDA’s permission, and he added that the FDA
requires supporting data before approving a request to
change the date.” Id.
    This court ruled the district court should not have admit-
ted that testimony. Id. at 699–700. Most salient was the fact
that, if such a requirement could predicate a criminal convic-
tion, the requirement should be included “in some written
interpretive guideline or opinion, and not just in the oral tes-
timony of an agency employee.” Id. at 699. The court noted,
“[i]t is a denial of due process of law to convict a person of a
crime because he violated some bureaucrat’s secret under-
standing of the law.” Id. That testimony discarded, the evi-
dence was insufficient to support Farinella’s conviction. Id. at
700.
    Here, Bases asserts that, like in Farinella, the testimony
from CME representatives and bank officials constitutes
“some bureaucrat’s secret understanding of the law” and
should have been prohibited. Id. at 699. But Farinella is easily
distinguishable. There, to prove misbranding and fraud, the
Nos. 23-1528 & 23-1530                                          23

government needed to establish that FDA approval was re-
quired before changing a label. In contrast, Rule 432 was not
a predicate for criminal liability here. Indeed, the district court
instructed the jury, “[e]vidence that a defendant … violated
an exchange rule or any bank policy is not sufficient, in and
of itself, to find a defendant guilty of conspiracy to commit
wire fraud, wire fraud, or commodities fraud.” The instruc-
tion made clear the CME rule could not be the basis of crimi-
nal liability and cured any potential confusion by the jury.
    Even if the testimony from the CME representatives and
bank oﬃcials was erroneously admitted, such an error was
harmless. This testimony went to the defendants’ state of
mind: they intended to manipulate the market by placing
spoof orders with the intent to cancel that traders would per-
ceive as bona ﬁde. Abundant evidence at trial supported a
ﬁnding of fraudulent intent, including: defendants’ chat mes-
sages; the testimony of Lakhan and others that CME rules
prohibit traders from placing orders with the intent to cancel;
and other witnesses’ testimony that spoof orders sent mis-
leading signals to the market, irrespective of Rule 432 or bank
policies. Admitting the testimony of the CME representatives
and bank oﬃcials was not an abuse of discretion.
       2. The district court correctly excluded evidence of Bases’s
          good faith.
    A key question at trial was whether Bases knew his con-
duct was prohibited. He argues the exclusion of certain
evidence of his good faith was an abuse of discretion. Speciﬁ-
cally, he faults the exclusion of certain chat messages between
him and Bank of America colleague Simon Butler. Because the
sequence of these messages is important to our analysis, a his-
tory of their exchange is below.
24                                     Nos. 23-1528 & 23-1530

    Bases and his colleagues received an email from their Bank
of America supervisor, Rupen Tanna, on July 22, 2013, inform-
ing them that the British regulatory authorities had ﬁned
Coscia and noting that his behavior is “deemed unaccepta-
ble.” The following day, Bases and Butler engaged in the fol-
lowing exchange:
      [Bases]: Did u read that thing that Rupen sent
      out?
      …
      [Bases]: Everyone has done it
      …
      [Bases]: Oﬀered it or bid it to do the opposite
      [Bases]: The problem is
      [Bases]: Both orders were good
      [Butler]: it is however t[he] same as any algo
      based strategy
      [Bases]: U could have traded either side
      [Bases]: And that’s illegal?
      …
      [Bases]: They were real orders
   The government sought to exclude the evidence as hear-
say that fell outside the scope of the state-of-mind exception
under Federal Rule of Evidence 803(3). The district court
agreed and excluded all the messages except for those bolded
above.
    Exempt from the prohibition of hearsay are “statement[s]
of the declarant’s then-existing state of mind … or emotional,
Nos. 23-1528 & 23-1530                                          25

sensory, or physical condition …, but not including a state-
ment of memory or belief to prove the fact remembered or
believed unless it relates to the validity or terms of the declar-
ant’s will.” FED. R. EVID. 803(3). Statements are admissible un-
der the state-of-mind exception only when the following three
requirements are met: “(1) the statement[s] must be contem-
poraneous with the mental state sought to be proven; (2) it
must be shown that declarant had no time to reﬂect, that is,
no time to fabricate or misrepresent his thoughts; and (3) the
declarant’s state of mind must be relevant to an issue in the
case.” United States v. Neely, 980 F.2d 1074, 1083 (7th Cir. 1992).
   The district court properly excluded Bases’s statements.
None of these messages were made contemporaneously with
the execution of the orders they reference. Rather, Bases sent
these messages to Butler the day after receiving the Rupen
Tanna email, showing that Bases had ample time to reﬂect on
the email and misrepresent his thoughts to Butler.
    Bases argues these statements were contemporaneous to
his learning of the event to which he was reacting, namely the
enforcement action against Coscia, and not prior trades. Even
assuming the messages were not made in reference to prior
trades, Bases still has a contemporaneity problem. He was not
reaching out to Butler as the Tanna email came through. Cer-
tainly, some of the statements are contemporaneous reactions
to Butler’s questions. But other statements are likely thoughts
Bases formulated following the arrival of the Tanna email the
previous day. As such, Bases’s messages were properly ex-
cluded as hearsay, and the district court did not abuse its dis-
cretion.
  Even if the messages were improperly excluded, any error
was harmless. The district court permitted Bases to introduce
26                                     Nos. 23-1528 & 23-1530

ample evidence addressing whether he had knowledge that
his conduct was prohibited. This evidence included: Tanna’s
email about Coscia; Bases’s reference to that email in the chat
messages the next day; Bases’s contextual statement, “oﬀered
it or bid it to do the opposite;” and Bases’s questions, “And
that’s illegal?” During closing argument, Bases’s counsel re-
lied on this admitted evidence to argue Bases’s belief “that his
trading was lawful.” As the government points out, Bases was
able to introduce evidence on the very question he claims he
was precluded from addressing. Therefore, the exclusion of
other statements relevant to Bases’s good faith did not show
beyond a reasonable doubt that a rational jury would have
found the defendant guilty absent the error. The district court
acted within its discretion.
                       III. Conclusion
    For these reasons, we AFFIRM the judgments of the dis-
trict court.