NEW YORK — Former FTX CEO Sam Bankman-Fried’s probabilities of getting a contemporary trial appear to be dwindling, judging by the pointed questions of an appellate court docket throughout a listening to in Manhattan on Tuesday.
Bankman-Fried’s lawyer Alexandra Shapiro informed the trio of Second Circuit judges that the high-profile trial was “basically unfair” as a result of her consumer was prevented by District Decide Lewis Kaplan from telling the jury his facet of the story, or presenting the 17 jurors with “goal proof” that FTX was, in reality, solvent on the time it filed for chapter following its spectacular collapse in November 2022.
Bankman-Fried’s push for a brand new trial largely hinges on his long-standing argument that, as a result of nearly all of FTX collectors had been made complete within the ongoing chapter course of — which has closely relied on the sale of illiquid belongings together with actual property and enterprise capital investments — that there was, in reality, no precise theft.
Throughout Shapiro’s presentation, the appellate judges repeatedly reduce in to query her arguments.
“There’s a proper to current proof as to his intent, completely, however I don’t perceive what you’re saying about there [being] goal corroboration, when the target corroboration appears to be that, effectively, after the chapter, more cash was made,” stated Circuit Decide Eunice Lee.
When Shapiro responded saying that it was clear on the time of the chapter that there have been “very helpful belongings within the FTX property that corroborated Mr. Bankman-Fried’s view that the [FTX and Alameda Research] had been solvent,” one other decide, Circuit Decide Maria Araújo Kahn, pushed again, saying:
“However [Bankman-Fried’s] misrepresentations had been to not solvency, however liquidity … a part of the federal government’s principle of the case is that the defendant misrepresented to buyers that their cash was secure, was not being utilized in the best way that it was the federal government claims and the jury convicted it was, in reality, used. So it wasn’t a difficulty of solvency, proper? It was a difficulty of liquidity, whether or not they may get their cash in the event that they requested for it.”
Decide Kahn identified {that a} latest Supreme Court docket choice, Kousisis v. United States, discovered that fraud needn’t essentially end in financial loss to be thought-about fraud.
Blame the legal professionals
Shapiro additionally tried to argue that Bankman-Fried’s trial was unfair as a result of he was not allowed to sufficiently argue his place that he was basically led astray by FTX’s legal professionals. Although Shapiro stated that Bankman-Fried was not technically counting on an advice-of-counsel protection (by which the defendant claims that they can’t be held responsible for fraud as a result of they acted in good religion and relied on the recommendation of legal professionals), he was legally entitled to “current a protection primarily based on the involvement of legal professionals, whether or not or not he’s claiming to have particularly relied on their recommendation.”
“It’s proof of fine religion, and [Bankman-Fried] was entitled to current that the decide rejected his capacity to current proof about, for instance, the formation of the North Dimension entities,” Shapiro added. North Dimension, a wholly-owned subsidiary of Alameda Analysis, was the entity that managed the financial institution accounts the place FTX prospects had been informed to wire cash with a view to commerce on the trade.
“How is that related to any of the counts within the indictment?” interrupted Circuit Decide Barrington Parker. “The truth that an lawyer drafted a certificates of incorporation or drafted an settlement between two of the subsidiaries —assist me perceive how that’s proof related to any of the counts?”
Shapiro urged the court docket to contemplate the “cumulative image” of Bankman-Fried’s decision-making.
“The federal government claimed these entities had been set as much as take buyer cash in order that the defendant may use it as he happy,” Shapiro stated. “So the truth that legal professionals had been concerned in creating the entities, legal professionals had been concerned in drafting the contract whereby the funds had been deposited in these financial institution accounts for the good thing about FTX prospects — in fact, that is all related to the defendant’s good religion.”
Whereas each Judges Lee and Parker acknowledged that there was “some relevance” to the involvement of FTX legal professionals, they identified that Bankman-Fried particularly selected to not advance an advice-of-counsel protection.
“In case you had superior the advice-of-counsel protection, a variety of these things, I agree, would have been far more probative, however you gave that up, and also you simply have this obscure, , ‘there have been attorneys on the market someplace,’ protection,” Parker stated, including that he wasn’t clear the way it was proof of Bankman-Fried’s supposed “good religion” that FTX had legal professionals on employees.
“Are you critically suggesting to us that in case your consumer had been in a position to
testify in regards to the function that attorneys performed in creating these varied paperwork, the ‘not guilties’ would have rolled in?” Parker requested.
Shapiro stated that Bankman-Fried’s incapability to inform the jury about his legal professionals’ involvement, mixed with what she described as Decide Kaplan’s “uneven rulings on loss,” had a cumulative impact on the trial consequence.
Parker pushed again, saying: “This was a excessive profile trial, either side represented by ready counsel. There was the same old backwards and forwards and aggressive up-to-the-line advocacy. You received some issues, you misplaced some issues. And, I imply, it virtually appears at occasions that you simply’re spending extra ink on Decide Kaplan than you might be on the
deserves.”
“I don’t agree in any respect, your Honor,” Shapiro stated.
Prosecutors push again
Assistant U.S. Legal professional Nathan Rehn, certainly one of lead prosecutors in Bankman-Fried’s unique trial, informed the appellate court docket that the jury had been offered with “overwhelming proof” that the previous FTX CEO had dedicated a large-scale fraud on the trade’s prospects.
“Not one of the claims that Bankman-Fried raises on attraction present any foundation to overturn the conviction on this case, particularly in gentle of the overwhelming proof that was offered at trial,” he stated.
Rehn argued that what Decide Kaplan prevented Bankman-Fried from testifying about at trial was the present-day worth of sure investments that Bankman-Fried had directed to be made with buyer cash.
“As this court docket has affirmed for many years, proof in regards to the potential final restoration for victims or the defendant’s perception within the potential final restoration for victims is just not a protection to fraud,” Rehn stated. “The federal government did not make the argument that the cash was gone eternally. The federal government’s arguments had been targeted on the disaster that consumed FTX in 2022 when, in reality, the cash had been misappropriated when prospects had been in search of to make the withdrawals that that they had been assured by FTX they might be capable of make, and that may be obtainable to them, and so they weren’t ready to take action.”
Decide Parker requested Rehn to touch upon Shapiro’s declare that Decide Kaplan was biased in favor of the prosecution. Rehn denied the allegations, saying that lots of the protection’s arguments at trial had been “meritless, and so the court docket appropriately dominated towards the protection on these.”“Even when there had been any error, and we submit there wasn’t … this can be a case if ever there was one the place any error can be innocent past an inexpensive doubt,” Rehn added. “There have been 4 individuals who knew in regards to the misappropriation of buyer deposits. Three of them testified that they conspired with Sam Bankman-Fried to do this fraudulently. All people else testified that that they had no concept as a result of that they had relied on Sam Bankman-Fried’s representations that that wasn’t what was taking place inside FTX, and there was ample documentary proof to assist that, along with that overwhelming witness testimony. So the suggestion that any of those errors may need led to a unique consequence at this trial merely cannot be sustained on this report.”
