- Sam Bankman-Fried faces more than 100 years in prison after being convicted on seven counts related to the collapse of his crypto empire.
- Some legal experts predict he will receive less than that because federal sentencing guidelines are “dizzying.”
- But others compare him to Bernie Madoff, sentenced to 150 years in prison for defrauding investors as part of his Ponzi scheme.
A twelve-person jury found FTX founder Sam Bankman-Fried guilty of all seven criminal charges against him. The question of how long he will remain in prison, however, is one that Judge Lewis Kaplan will spend the next few months deliberating on his own.
The pragmatic 78-year-old judge is a veteran of the Southern District of New York and has presided over some of the biggest cases brought before the courthouse at 500 Pearl Street in midtown Manhattan.
Kaplan is blunt and has no patience for pageantry in his courtroom. If a witness deliberately avoids a question or an attorney is redundant and sloppy in his or her cross-examination, Judge Kaplan is quick to reprimand the offender and get the conversation back on track. He also has no problem reporting gum-chewing gallery members in his courtroom.
The judge’s lack of patience with Bankman-Fried during the four days the defendant spent on the stand was evident to everyone who was present — or who later read the transcript.
The 31-year-old Massachusetts Institute of Technology graduate was a sight to behold at the booth. During direct interrogation, he would sometimes hastily formulate convoluted, repetitive and contradictory sentences.
“So I should start by saying I’m not a lawyer,” Bankman-Fried began.
“I’m not giving a legal interpretation of this. I’m just giving, as best I can, what my memory is. And the parts of this that agree with that, I, you know, I’m not trying to give a definitive legal ruling on what it says or doesn’t say. The — I’m not sure I answer yes to the question as you phrased it recently. I’ll try as best I can to give the answer that I believe, that is – as – at least as I remember understanding it at the time, FTX itself or, I think, as it actually happened, without FTX as an intermediary, customer trust funds would be sent to Alameda bank accounts., FTX would retain a – actually a debt of Alameda for these and a – in the lien section here, a lien on Alameda assets as collateral of this continuing liability, that it would be refundable upon instruction from FTX in the returns section here, and – and in the payment guidelines section.
Later, during cross-examination, Bankman-Fried suddenly went silent, responding with “Yeah” and “I don’t remember” hundreds of times. After several dozen such cases, the government often presented evidence that would directly refute the defendant’s testimony or offer an answer to the question Bankman-Fried had dodged.
Several litigants told CNBC that Bankman-Fried’s combative attitude toward Assistant U.S. Attorney Danielle Sassoon also wasn’t a good idea for the jury or judge.
So now the question of prison time comes back to Judge Kaplan. The sentencing date is March 28 at 9:30 a.m. ET.
Government exposure in case against former FTX CEO Sam Bankman-Fried.
Bankman-Fried was convicted of wire fraud and conspiracy to commit wire fraud against FTX customers and against Alameda Research lenders, conspiracy to commit securities fraud and conspiracy to committing commodity fraud against FTX investors, and conspiracy to commit money laundering.
The fact that the jury was able to reach a unanimous verdict in just a few hours suggests that they were truly convinced and that there were no holdouts to convince, Yesha Yadav, a law professor and associate dean at Vanderbilt University.
“This overwhelming consensus should give the judge the confidence to follow the jury’s judgment in imposing a harsher sentence rather than a lighter one,” Yadav continued.
In this case, the statutory maximum sentence is approximately 115 years, but there is a sliding scale of sentencing under recommended guidelines given the magnitude of the crimes and the criminal history of the defendant.
“I wouldn’t be surprised if SBF spent the next 20 or 25 years of his life in prison,” Renato Mariotti, a former prosecutor in the U.S. Department of Justice’s Securities and Commodities Fraud Section, told CNBC.
“The scale of his fraud was immense, he was defiant and lied on the witness stand, and Judge Kaplan had very little patience for his antics while out on bail. He will have more sympathy for victims than for Bankman-Fried.”, Mariotti added.
Caroline Ellison, former chief executive officer of Alameda Research LLC, leaves Manhattan Federal Court after testifying in the trial of FTX CEO Sam Bankman-Fried on October 10, 2023 in New York.
Michael M. Santiago | Getty Images
In August, Judge Kaplan revoked Bankman-Fried’s bail and sent him back to prison on witness tampering charges.
“The federal sentencing guidelines will likely be very high, but they are just that – guidelines – and the judge is required to consider all of the circumstances surrounding SBF and his offense,” Mariotti said .
Yadav added that the issue of sentencing is governed by guidelines that take into account factors such as the number of people harmed and the overall dollar amount, as well as the severity of the harm inflicted by the accused.
“There are factors here that could push the judge toward a very long prison sentence, perhaps close to the 110 years suggested by the sentencing guidelines,” Yadav said.
The sentence will be reduced to what the judge deems sufficient to punish Bankman-Fried, deter others and promote respect for the law, he added.
Former Assistant United States Attorney Kevin J. O’Brien, who specialized in white-collar criminal defense in New York, shared this view, stating: “Since judges have discretion, even under guidelines, I think his sentence will be in the range of 15 to 20 years. “.
O’Brien added that given Bankman Fried’s age, he thinks the judge will be inclined to give him a chance to live a full life after his prison sentence.
Bankman-Fried’s case has been compared to that of Elizabeth Holmes, founder of medical device company Theranos, which ceased operations in 2018.
Holmes, 39, was convicted in early 2022 of four counts of defrauding Theranos investors after testifying in her own defense. She was sentenced to more than 11 years in prison and began serving her sentence in May at a minimum-security facility in Bryan, Texas.
But former federal prosecutor Paul Tuchmann told CNBC that he expects tougher conditions for the former FTX CEO because “the amount of losses suffered is simply staggering.”
Tuchmann compared Bankman-Fried’s case to that of Bernie Madoff, who was sentenced to 150 years in prison.
“Like Madoff, a lot of the losses in this case are due to small investors. It’s not just large institutions, which tends to create greater pressure for a significant sentence,” said Tuchmann.
“Certainly, there may be some mitigation here. Sam Bankman-Fried is very young. The judge may take that into consideration. Bernie Madoff spent 150 years in prison when he was obviously much older – with few years productive,” Yadav said. of the Madoff comparison.
“Sam Bankman-Fried still has the opportunity to make a positive contribution during his life. His crimes were also not violent in nature,” Yadav continued.
Another wild card is the fact that the Justice Department could file a second, entirely different case with separate charges against Bankman-Fried in March 2024. The government has until February 1 to let the court know whether it plans to pursue charges .
“Another issue here is that the sentencing will take place in March 2024 – very close to the second criminal trial that Sam Bankman-Fried faces for campaign finance violations and bribery of foreign public officials,” Yadav said. “The prosecution will likely feel very confident heading into this upcoming trial. In other words, if he is also convicted of these additional charges, he could face an even longer sentence than the several decades (at least) that he has served. he is currently watching.”