United States v. Jordan, 813 F.3d 442

Background

FBI conducted a penny-stock sting; undercover agent proposed to overpay for restricted shares in exchange for a 50% kickback disguised as a consulting fee.
John C. Jordan, then CEO of Vida Life International, agreed to sell 400,000 restricted Vida Life shares to the undercover agent for $32,000 and paid the 50% kickback.
Jordan was convicted of conspiracy to commit securities fraud and mail/wire fraud; originally sentenced to 30 months.
On initial appeal, convictions were affirmed but the sentence was vacated and remanded for factual findings about the value of the Vida Life shares to calculate loss.
At resentencing, the government’s FINRA expert (Carocci) testified the 400,000 restricted shares were worthless (loss = $32,000); the defense’s expert (Watts) valued them at $16,000.
The district court credited the government expert, set loss at $32,000 (triggering a six-level guideline increase), and again sentenced Jordan to 30 months; Jordan appeals the admission/crediting of the expert testimony and the loss calculation.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Admissibility of government expert testimony under Fed. R. Evid. 702	Government: Carocci is qualified and his methodology (market trading data) is reliable and helps the factfinder	Jordan: Carocci lacked qualification and used flawed, speculative methodology	Court: No abuse of discretion; Carocci qualified and his methodology met Rule 702 standards
Proper valuation date/method for restricted shares in loss calculation	Government: Courts may consider post-sale market changes and expert market analysis to measure loss	Jordan: Valuation should be based on price at sale (subjective value agreed by parties) and not on later market collapse	Court: Valuation may consider subsequent market value and effects of defendant’s conduct; custody sale was fraudulent so no valid “return” rule applied
Whether district court clearly erred in crediting government expert over defense expert	Government: Trading data and Carocci’s analysis show little or no market for Vida Life shares, supporting $32,000 loss	Jordan: Watts’ subjective valuation (half the paid price) better reflects the parties’ intent and actual value	Court: No clear error; when experts conflict, trial court’s credibility choice stands and Carocci’s conclusion is supported by data and record facts
Impact of loss finding on sentencing range	Government: $32,000 loss triggers six-level guideline increase and GSR of 30–37 months	Jordan: Lower loss (< $30,000) would yield lower offense level and likely lower sentence	Court: Loss fixed at $32,000; resulting guideline calculation sustained

Key Cases Cited

United States v. Prange, 771 F.3d 17 (1st Cir. 2014) (prior appeal: convictions affirmed; sentencing vacated for loss-findings)
Samaan v. St. Joseph Hosp., 670 F.3d 21 (1st Cir. 2012) (standard of review for expert admission)
Beaudette v. Louisville Ladder, Inc., 462 F.3d 22 (1st Cir. 2006) (deference to district court on expert reliability)
Ruiz-Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77 (1st Cir. 1998) (abuse-of-discretion review standard)
Breidor v. Sears, Roebuck & Co., 722 F.2d 1134 (3d Cir. 1983) (expert opinion may rest on reasonable data without absolute certainty)
United States v. Lilly, 13 F.3d 15 (1st Cir. 1994) (loss amount affects guideline range in fraud cases)
United States v. Innarelli, 524 F.3d 286 (1st Cir. 2008) (clear-error review of sentencing factual findings)
United States v. Volungus, 730 F.3d 40 (1st Cir. 2013) (appellate court should not reweigh expert credibility)
Anderson v. City of Bessemer City, 470 U.S. 564 (1985) (trial court’s credibility choices are entitled to great deference)