WEBVTT - On Background: Preparing for Sam Bankman-Fried's Trial 0:00:15.316 --> 0:00:15.796 Pushkin. 0:00:21.516 --> 0:00:23.436 For most of this year, I've been sharing some of 0:00:23.436 --> 0:00:26.156 the interviews I've been doing for background research for my 0:00:26.196 --> 0:00:30.036 book Going Infinite, the rise and fall of a new tycoon, 0:00:30.476 --> 0:00:33.196 the tycoon being Sam Bankman Freed, the founder of the 0:00:33.236 --> 0:00:35.156 cryptocurrency exchange FTX. 0:00:36.156 --> 0:00:36.916 It's been a kind of. 0:00:36.836 --> 0:00:40.636 Crazy journey, and this series has been an experiment for me. 0:00:40.836 --> 0:00:43.356 I've always done these kinds of background interviews and their 0:00:43.396 --> 0:00:45.316 interviews where I know it's not going to end up 0:00:45.316 --> 0:00:47.596 in the book. I'm just trying to educate myself, but 0:00:47.636 --> 0:00:49.876 I've never done them on stage, so to speak. 0:00:50.436 --> 0:00:51.956 And I appreciate you listening in. 0:00:52.636 --> 0:00:55.676 It's forced me to think creatively about these things, and 0:00:55.716 --> 0:00:58.276 the experts i've talked to have been really gracious with 0:00:58.316 --> 0:01:02.436 your time. Well, now the book's almost done and I 0:01:02.516 --> 0:01:05.596 have just one more conversation to share, but maybe the 0:01:05.636 --> 0:01:09.436 most important one I've done in this series. This is 0:01:09.436 --> 0:01:14.596 on background from Against the Rules. I'm Michael Lewis. Sam 0:01:14.636 --> 0:01:17.876 Bekman Freed faces federal charges of stealing billions of dollars 0:01:17.916 --> 0:01:23.156 of customer funds. His trial is supposed to begin this fall. 0:01:23.196 --> 0:01:25.916 But what sort of sentence is he likely to get? Really? 0:01:26.956 --> 0:01:28.676 How are the prosecutors building the. 0:01:28.636 --> 0:01:32.196 Case against him, and how can his defense team prepare 0:01:32.276 --> 0:01:34.796 him for what looks like it will be a really 0:01:34.836 --> 0:01:42.076 complicated trial. Rebecca Mermelstein is the very best person to 0:01:42.116 --> 0:01:45.996 answer my questions, short of the prosecutors themselves, who aren't 0:01:46.036 --> 0:01:50.036 talking to me on background or otherwise these days. Rebecca's 0:01:50.036 --> 0:01:53.156 a defense attorney at the law firm of Omelviny and Meers, 0:01:53.516 --> 0:01:56.636 but before joining the firm, she was a prosecutor in 0:01:56.676 --> 0:01:59.956 the very southern district of New York. That's prosecuting Sam 0:01:59.956 --> 0:02:03.756 Bankman Freed. My father used to practice law, and he 0:02:03.796 --> 0:02:06.836 absolutely hated it. So I couldn't stop myself from asking 0:02:06.876 --> 0:02:09.116 Rebecca what drew her to the profession in the first place. 0:02:10.076 --> 0:02:12.036 I was always the kind of kid who liked to 0:02:12.316 --> 0:02:15.836 argue the point. But somewhat coincidentally, I was a senior 0:02:15.876 --> 0:02:17.756 in college. I thought I was going to take the 0:02:17.796 --> 0:02:19.996 summer off, and my best friend wanted to go to 0:02:20.076 --> 0:02:22.236 the public interest job fair, and she didn't want to 0:02:22.276 --> 0:02:25.116 go by herself, and we went together and I dropped 0:02:25.196 --> 0:02:29.356 one resume in the District Attorney's office paralegal box, and 0:02:29.436 --> 0:02:32.676 I ended up there, and I fell in love with it. She, 0:02:32.796 --> 0:02:34.596 by the way, also ended up there and then got 0:02:34.596 --> 0:02:37.036 a PhD in art history. So it wasn't for everybody, 0:02:37.676 --> 0:02:40.236 but I decided that's what I wanted to do, and 0:02:40.236 --> 0:02:42.036 so I went to law school knowing I wanted to 0:02:42.076 --> 0:02:45.396 be a prosecutor, and then I followed that path, and 0:02:45.476 --> 0:02:48.436 for about twelve years I was a prosecutor in the 0:02:48.436 --> 0:02:49.556 Southern District of New York. 0:02:50.556 --> 0:02:52.596 Before we get to Sam Bankman Freed, I am kind 0:02:52.596 --> 0:02:55.836 of curious, like, why did you fall in love with 0:02:55.876 --> 0:02:56.956 it and your friend didn't? 0:02:58.636 --> 0:03:02.836 For me, it is a combination of things, and one 0:03:02.956 --> 0:03:07.636 is how mission driven it is. And so I think prosecutors, 0:03:07.756 --> 0:03:12.236 and definitely prosecutors my home office, so to speak, really 0:03:12.276 --> 0:03:15.636 feel that they work in pursuit of a particular mission 0:03:15.676 --> 0:03:18.756 of pursuing justice, which is a little different than what 0:03:18.916 --> 0:03:22.836 defense lawyers do because you don't really have a client 0:03:22.956 --> 0:03:25.276 when you're a prosecutor. Your client is the people of 0:03:25.316 --> 0:03:27.476 the Southern District of New York, the people of the 0:03:27.556 --> 0:03:28.316 United States. 0:03:29.156 --> 0:03:30.756 But your job is to do the. 0:03:30.756 --> 0:03:33.996 Right thing, and it's not to win unless you think 0:03:34.036 --> 0:03:37.076 winning is the right thing. So prosecutors investigate cases all 0:03:37.116 --> 0:03:41.236 the time that they don't charge they decide either nobody 0:03:41.236 --> 0:03:44.156 committed a crime or probably someone committed a crime, but 0:03:44.196 --> 0:03:46.996 they don't have enough evidence to be sure, and that 0:03:47.196 --> 0:03:51.556 mission really drives people's I think, interest in doing it. 0:03:51.756 --> 0:03:53.316 You know, what you reminded me of is the way 0:03:53.356 --> 0:03:56.236 I hunt stories that I will spend all kinds of 0:03:56.276 --> 0:03:58.196 time on all kinds of things. 0:03:58.156 --> 0:04:01.036 And then just decide there's not a story there and 0:04:01.596 --> 0:04:03.036 move on. Here. 0:04:03.076 --> 0:04:05.476 To guess what percentage of the things you thought about 0:04:05.796 --> 0:04:09.036 prosecuting do you actually prosecute, I. 0:04:09.156 --> 0:04:13.116 Would say maybe eighty percent sort of go somewhere and 0:04:13.156 --> 0:04:14.156 twenty percent don't. 0:04:14.716 --> 0:04:16.236 Okay, if I had to guess. 0:04:16.316 --> 0:04:18.836 It's a reverse of my process. Twenty percent goes somewhere 0:04:18.876 --> 0:04:19.956 in eighty percent don't. 0:04:20.236 --> 0:04:22.396 But it's interesting that you say that you sort of 0:04:22.396 --> 0:04:25.916 are interested in this finding the story, because I think 0:04:25.956 --> 0:04:31.396 once prosecutors decide that they want to do it, crafting 0:04:31.436 --> 0:04:36.196 that narrative, making something comprehensible to a jury, distilling things down, 0:04:36.876 --> 0:04:40.156 appealing to people's emotions. Telling a good story is also 0:04:40.196 --> 0:04:43.636 a big part of what lawyers do, and doing it 0:04:43.836 --> 0:04:46.676 in a live format on a stage is a little 0:04:46.676 --> 0:04:49.596 more like being a stage actor, because when you get 0:04:49.596 --> 0:04:52.836 in front of a jury, the cameras are rolling, there's 0:04:52.836 --> 0:04:56.756 no kind of redos, there's no pause, and that excitement 0:04:56.796 --> 0:04:59.036 in that sense that you never one hundred percent know 0:04:59.076 --> 0:05:01.316 what's going to happen. I think also is something that 0:05:01.356 --> 0:05:03.236 people who want to be prosecutors think is fun. 0:05:03.876 --> 0:05:06.756 I have a weird question for sure, if I've often 0:05:06.796 --> 0:05:13.636 found this with reporters, like newsrooms, I've always been surprised 0:05:13.636 --> 0:05:17.756 at how they can write quite bland stories about things 0:05:17.756 --> 0:05:20.476 when they're out to dinner talking about them, they make 0:05:20.556 --> 0:05:23.836 sound thrilling and fun. They actually have great material, and 0:05:24.076 --> 0:05:25.796 they kind of leave it on the cutting room floor. 0:05:26.076 --> 0:05:27.796 And I'm wondering if there's a phenomenal like that with 0:05:27.876 --> 0:05:30.196 prosecutors where if you're sitting around they sit around talking 0:05:30.196 --> 0:05:32.796 about a case, that it will be vastly more entertaining 0:05:32.836 --> 0:05:34.596 to listen to that what goes on in the courtroom. 0:05:35.076 --> 0:05:35.836 I don't think so. 0:05:35.956 --> 0:05:38.556 I think the courtroom is a pretty exciting place, and 0:05:38.596 --> 0:05:40.996 I don't think they leave things on the cutting room 0:05:40.996 --> 0:05:43.796 floor that are the best parts. I do think you 0:05:44.316 --> 0:05:47.476 will hear prosecutors when they talk about how to structure 0:05:47.716 --> 0:05:50.236 trial evidence, how to prove a case. They'll use the 0:05:50.276 --> 0:05:53.156 phrase thin to win. And what they mean by that 0:05:53.316 --> 0:05:59.516 is a streamlined body of proof. That sometimes you have 0:05:59.556 --> 0:06:02.596 a piece of evidence that can be used really effectively 0:06:02.596 --> 0:06:05.196 for the prosecution, but it can be twisted exactly on 0:06:05.276 --> 0:06:08.716 its head and used for the defense too. And now, 0:06:08.756 --> 0:06:11.516 of course a prosecution is obligated to give the defense 0:06:11.556 --> 0:06:13.756 all the materials it has, so the defense could call 0:06:13.796 --> 0:06:17.156 that witness yep. But as a strategic matter, the defense 0:06:17.196 --> 0:06:19.436 really doesn't generally want to call any witnesses because they 0:06:19.436 --> 0:06:21.436 don't have a burden of proof. So as a prosecutor, 0:06:21.476 --> 0:06:24.836 you may say, you know, I could call this witness. 0:06:24.876 --> 0:06:26.876 They have this one great fact, but I don't need it, 0:06:26.916 --> 0:06:28.956 and I'm opening up a can of worms, and so 0:06:28.996 --> 0:06:30.796 we're gonna We're gonna sort of leave that on the 0:06:30.796 --> 0:06:31.596 cutting room floor. 0:06:31.876 --> 0:06:33.676 This is there's a version of this in writing. 0:06:33.716 --> 0:06:36.876 It's the famous eb White victim that writing is about 0:06:36.916 --> 0:06:40.636 killing your darlings. That you have this one pungent thing 0:06:40.716 --> 0:06:42.636 that you just think has to be in and in 0:06:42.716 --> 0:06:44.516 the end you realize you need to thin to win, 0:06:44.636 --> 0:06:46.996 that you need to streamline it for the sake of 0:06:46.996 --> 0:06:48.756 the story, and you've got to get used to that 0:06:49.276 --> 0:06:51.636 feeling of getting rid of something you just really attached to. 0:06:52.876 --> 0:06:55.516 You just said something that I kind of knew but 0:06:55.596 --> 0:06:59.756 I didn't completely know. Is it really true that everything 0:06:59.836 --> 0:07:02.676 the prosecution has gets given to the defense before the trial. 0:07:03.596 --> 0:07:05.076 So it's a little more of a I think a 0:07:05.236 --> 0:07:10.676 nuanced answer than just yes. But fundamentally that is the 0:07:10.716 --> 0:07:15.196 intent of the various rules that govern disclosure, and it 0:07:15.236 --> 0:07:18.836 goes in phases, so there is if we want to 0:07:18.836 --> 0:07:21.396 get technical about it, there's a rule in the Federal 0:07:21.436 --> 0:07:24.676 Rules of Criminal Procedure are called Rule sixteen that governs 0:07:24.796 --> 0:07:26.716 what you have to give to the defense as quote, 0:07:26.756 --> 0:07:29.796 discovery materials, and that starts getting turned over as soon 0:07:29.836 --> 0:07:32.796 as charges are brought yep. And that's going to include 0:07:33.036 --> 0:07:36.196 sort of all the paperwork, right, every document in the case, 0:07:36.276 --> 0:07:39.716 every recording in the case, any kind of physical evidence 0:07:39.836 --> 0:07:46.316 or expert testing so DNA testing, fingerprint testing, all is 0:07:46.316 --> 0:07:48.996 going to get turned over as part of that. And 0:07:49.036 --> 0:07:52.676 that requires the production of all statements of witnesses who 0:07:52.716 --> 0:07:55.676 are expected to testify at trial. And then the third 0:07:55.756 --> 0:07:59.756 category is impeachment material, which is to say, if you 0:07:59.996 --> 0:08:03.796 know something that undermines what someone's saying, you have to 0:08:03.836 --> 0:08:08.276 tell the defense that too. So if, for example, you 0:08:08.316 --> 0:08:11.476 have a witness was a conviction, you're gonna have to 0:08:11.556 --> 0:08:15.236 turn that over as well. And so it should really 0:08:15.276 --> 0:08:19.436 be that the two sides have the same information. Of course, 0:08:19.636 --> 0:08:22.276 it's a little more nuanced than that, and prosecutors have 0:08:22.396 --> 0:08:25.996 huge institutional advantages, and they're not going to turn over 0:08:26.076 --> 0:08:29.556 that witness information until relatively close to trial. When I 0:08:29.596 --> 0:08:32.836 started as an ASA, that was turnover the Friday morning 0:08:33.116 --> 0:08:36.996 before a Monday trial. Oh my god, that's not true anymore. 0:08:37.156 --> 0:08:39.556 Now you're talking in a white collar case four weeks 0:08:39.596 --> 0:08:42.796 six weeks out right. But even so, that means that 0:08:43.116 --> 0:08:45.516 if you're a defense lawyer trying to prepare for a 0:08:45.556 --> 0:08:47.796 white collar case and trying to decide should we go 0:08:47.836 --> 0:08:50.276 to trial, you're not going to know what the witnesses 0:08:50.356 --> 0:08:53.036 against your client says until very close to the trial. 0:08:53.476 --> 0:08:53.636 Right. 0:08:54.476 --> 0:08:57.956 Two questions about this. One is does the defense have 0:08:58.036 --> 0:09:00.396 the same obligation to turn over what it has to 0:09:00.436 --> 0:09:01.076 the prosecution. 0:09:02.636 --> 0:09:03.596 No, is the answer. 0:09:04.036 --> 0:09:07.316 They do have some obligations, so they have to turn 0:09:07.356 --> 0:09:10.916 over things they actually intend to use a trial. Prosecutors 0:09:12.156 --> 0:09:14.636 knowing that they can't know until the moment every single 0:09:14.636 --> 0:09:16.836 thing they're going to use just turn over all the 0:09:16.876 --> 0:09:19.956 paperwork in their possession. I think the defense has a 0:09:19.996 --> 0:09:22.276 lot more leeway to say, look, we don't have any 0:09:22.276 --> 0:09:26.196 burden of proof. We don't know what we're going to 0:09:26.276 --> 0:09:28.356 do till we see what the prosecution is going to do, 0:09:28.956 --> 0:09:31.196 and so they get a lot more leeway with that 0:09:31.556 --> 0:09:34.076 sort of thing. So you don't see it going in 0:09:34.076 --> 0:09:35.076 both directions evenly. 0:09:35.556 --> 0:09:35.916 Gotcha? 0:09:36.236 --> 0:09:38.596 But is there a way Is there a possibility for 0:09:38.636 --> 0:09:40.956 the defense to show up with a just total shocker 0:09:41.596 --> 0:09:43.756 and the prosecution just didn't see it coming. 0:09:44.276 --> 0:09:45.196 Yes, I think it is. 0:09:45.996 --> 0:09:47.276 Okay, that's interesting to me. 0:09:47.436 --> 0:09:49.076 And the other thing is that this is I'm just 0:09:49.116 --> 0:09:53.116 kind of curious how sneaky can prosecutors be about what 0:09:53.156 --> 0:09:55.236 they turn over and don't turn over. I mean, what 0:09:55.396 --> 0:09:58.716 is the likelihood that the defense turns up and finds, oh, 0:09:58.716 --> 0:10:00.556 my god, they've got this thing we didn't know about. 0:10:01.516 --> 0:10:03.596 Well, you'd like to think it would never happen, but 0:10:03.676 --> 0:10:06.716 I think that that is obviously not true. You read 0:10:06.716 --> 0:10:10.876 about things all the time in reporting, about situations where 0:10:10.916 --> 0:10:16.516 prosecutors acted with malice to withhold relevant and exculpatory information, right, 0:10:16.716 --> 0:10:18.196 and then of course there's human error, right. 0:10:18.236 --> 0:10:19.076 I mean, you're talking. 0:10:18.836 --> 0:10:21.676 About in a white collar case, millions of pages of documents, 0:10:21.676 --> 0:10:24.916 and I think people can make mistakes, you know, I 0:10:24.916 --> 0:10:30.916 think federal prosecutors as a group are acting with careful 0:10:30.996 --> 0:10:33.396 and good intentions, and so I don't think that there 0:10:33.476 --> 0:10:37.756 is sort of a pervasive problem of things being intentionally withheld. 0:10:38.236 --> 0:10:40.596 I think if you think about, you know, what the 0:10:40.796 --> 0:10:43.556 universe of documents a person has on their phone, on 0:10:43.596 --> 0:10:47.036 their laptop, on their Google's history versus what it was 0:10:47.076 --> 0:10:49.276 twenty five years ago, it gets harder and harder to 0:10:49.356 --> 0:10:49.796 keep up with. 0:10:50.276 --> 0:10:50.596 YEP. 0:10:51.996 --> 0:10:54.436 I have two more general questions about prosecutors, and the 0:10:54.476 --> 0:10:58.156 first is, if if I spent a whole bunch of 0:10:58.156 --> 0:11:01.716 time with a whole bunch of prosecutors, what would I 0:11:01.756 --> 0:11:05.156 notice they had in common? Like what kind of person 0:11:05.476 --> 0:11:06.556 ends up in this role? 0:11:08.556 --> 0:11:08.996 Rule fall? 0:11:09.476 --> 0:11:12.036 I would say, I don't think there's one type. I 0:11:12.036 --> 0:11:13.716 think there are lots of types. There are people who 0:11:13.796 --> 0:11:15.716 really love the law, There are people who do it, 0:11:15.716 --> 0:11:18.036 who love the facts, there are people who love the performance. 0:11:18.356 --> 0:11:22.156 They're all joined I think by that same sense of mission. 0:11:22.876 --> 0:11:24.716 And I think in a similar way as you'd see 0:11:24.836 --> 0:11:28.436 in say a military unit, that kind of this is 0:11:28.516 --> 0:11:31.396 a hard job and a serious job, and an intense 0:11:31.516 --> 0:11:34.636 job kind of bonds people, and so you'd see that. 0:11:35.236 --> 0:11:38.516 I think it's a group that takes its job seriously, 0:11:38.596 --> 0:11:41.796 but not themselves seriously. But they are also all people 0:11:41.796 --> 0:11:44.396 who hold themselves to a higher standard, because I think 0:11:44.396 --> 0:11:47.276 when you send other people to jail, when you make 0:11:47.316 --> 0:11:51.236 decisions that alter the course of someone's life, you realize 0:11:51.276 --> 0:11:53.276 that you have to live your own life. I think 0:11:53.476 --> 0:11:54.996 sort of above reproach. 0:11:55.836 --> 0:11:59.116 Stay with us when we come back from the break. 0:11:59.596 --> 0:12:02.436 Rebecca and I turned to Sam Bankman Freed and how 0:12:02.476 --> 0:12:11.356 prosecutors might argue their case against him. I'm back with 0:12:11.396 --> 0:12:14.716 Rebecca Mermelstein, a former prosecutor in the Southern District of 0:12:14.756 --> 0:12:20.356 New York. So can you just explain to me your 0:12:20.396 --> 0:12:25.676 relationship to the office that is actually prosecuting Sam Bankman Freed. 0:12:26.556 --> 0:12:26.836 Sure. 0:12:26.876 --> 0:12:29.276 So, I was a prosecutor in the Southern District of 0:12:29.276 --> 0:12:31.756 New York until August. So I left before any of 0:12:31.796 --> 0:12:34.756 the started, but not that long before any of it started, 0:12:35.316 --> 0:12:37.756 And I spent a few years in the Securities Fraud Unit, 0:12:37.796 --> 0:12:40.676 which is one of the units principally responsible for this case, 0:12:41.156 --> 0:12:45.556 before leaving that to supervise what's called the General Crimes Unit, 0:12:45.556 --> 0:12:48.876 which is where new prosecutors start and get their training. 0:12:49.156 --> 0:12:52.636 So I'm very familiar with the institution and with the players, 0:12:52.636 --> 0:12:54.996 but I don't know, I have no inside information about 0:12:55.036 --> 0:12:55.916 this particular case. 0:12:56.116 --> 0:12:58.956 So you didn't even hear a whisper of Sam Bankman 0:12:59.076 --> 0:13:02.676 Freed being investigated. 0:13:01.956 --> 0:13:02.756 Before you left. 0:13:03.156 --> 0:13:03.556 I did not. 0:13:04.116 --> 0:13:05.916 Okay, there are a bunch of things I'd love for 0:13:05.916 --> 0:13:08.516 you to explain to me about the case. But you 0:13:08.556 --> 0:13:12.196 have paid life at least casual attention to it. I 0:13:12.236 --> 0:13:14.516 have you have what interests you about it? 0:13:16.316 --> 0:13:19.396 Well, look, it's it's on the front page of you know, 0:13:19.476 --> 0:13:21.076 the Wall Street Journal, on the New York Times on 0:13:21.436 --> 0:13:25.076 a regular basis. As a matter of scale, it's obviously 0:13:25.116 --> 0:13:30.116 among the largest crypto prosecutions to date. And I think 0:13:30.156 --> 0:13:33.076 that the fallout from it or it has real implications 0:13:33.116 --> 0:13:37.556 for the crypto industry writ large, and so you know, 0:13:37.596 --> 0:13:40.076 I think it's something that white collar practitioners are probably 0:13:40.116 --> 0:13:41.916 following pretty consistently. 0:13:42.716 --> 0:13:43.076 Now Here. 0:13:43.116 --> 0:13:44.916 What happened is a little complicated, and you have to 0:13:44.956 --> 0:13:47.076 back all the way up to the way this played out, 0:13:47.756 --> 0:13:51.236 which is you remember the timeline is that in November 0:13:51.316 --> 0:13:54.516 of twenty twenty two, the Alameda financials are leaked and 0:13:54.556 --> 0:13:57.436 people start to have concerns about what's going on, and 0:13:57.476 --> 0:14:00.596 the Southern District moves very fast, so by December they 0:14:00.596 --> 0:14:02.836 have an indictment against Sam Bankman Freed. 0:14:03.356 --> 0:14:04.916 Is that unusual to move that fast? 0:14:05.236 --> 0:14:06.436 Very very unusual. 0:14:06.476 --> 0:14:09.116 I would say it surprised you. 0:14:09.796 --> 0:14:12.236 Yeah, I think it did surprise me. White color cases 0:14:12.236 --> 0:14:15.116 are complicated, it's hard to get things together, and so 0:14:15.436 --> 0:14:19.276 that speed was more than someone unusual for this kind 0:14:19.316 --> 0:14:19.716 of case. 0:14:20.156 --> 0:14:23.476 What would justify in their minds moving so fast or 0:14:23.516 --> 0:14:25.676 why would would there be such a hurry. 0:14:26.276 --> 0:14:28.156 I think you can think of a number of reasons 0:14:28.196 --> 0:14:30.196 they might have felt that they had to move so quickly. 0:14:30.916 --> 0:14:34.076 The first is Sam Bankminfrid was in the Bahamas. The 0:14:34.156 --> 0:14:36.996 United States has an extradition treaty with the Bahamas, so 0:14:37.396 --> 0:14:39.996 there was the possibility of charging him and having him 0:14:39.996 --> 0:14:42.796 brought back to the United States. But when you launch 0:14:42.796 --> 0:14:44.916 a big investigation and you start talking to people and 0:14:44.956 --> 0:14:47.996 demanding documents, the people you're investigating are going to know 0:14:48.036 --> 0:14:51.636 you're investigating them, and there's of course always the possibility 0:14:51.676 --> 0:14:54.796 that someone decides, you know, i'd rather live in Venezuela 0:14:55.236 --> 0:14:57.796 where there's no extradition treaty and just never come back. 0:14:58.156 --> 0:14:58.596 Yeah. 0:14:58.676 --> 0:14:58.876 Right. 0:14:58.916 --> 0:15:01.116 So one possibility is that a concern that you won't 0:15:01.156 --> 0:15:03.236 be able to rest the person if you don't move quickly. 0:15:04.036 --> 0:15:07.476 The other is the government has alleged that in those 0:15:07.516 --> 0:15:11.116 final days where there's a run on FTX, investors are 0:15:11.116 --> 0:15:14.516 trying to pull their money out, that Sam bankman Fried 0:15:14.596 --> 0:15:17.116 and some of his cohort are moving money out of 0:15:17.156 --> 0:15:20.036 it for their own purposes. And so if you're trying 0:15:20.076 --> 0:15:22.156 to protect investors and you want to make sure you 0:15:22.236 --> 0:15:24.956 stop that, you want to move quickly to sort of 0:15:25.036 --> 0:15:28.476 charge people and start locking down the money. So I 0:15:28.476 --> 0:15:30.316 think there may have been very good reasons to do it, 0:15:31.156 --> 0:15:33.876 but they did move sort of very very quickly here, 0:15:34.796 --> 0:15:38.236 and one effect of that is that they brought an 0:15:38.236 --> 0:15:43.916 indictment that had very limited description of the charges and 0:15:43.996 --> 0:15:46.956 also didn't include all the charges that they ultimately decided 0:15:46.996 --> 0:15:50.196 to bring. And so he gets charged, he agrees to 0:15:50.236 --> 0:15:52.596 be extra righted it comes to the United States, and 0:15:52.636 --> 0:15:55.316 then because of that, there's something called the rule of specialty, 0:15:55.956 --> 0:15:58.796 which basically means that if the Bahamas, let you know, 0:15:58.916 --> 0:16:01.796 let you take someone from their country based on an 0:16:01.836 --> 0:16:04.036 agreement that they were going to face a particular set 0:16:04.036 --> 0:16:10.196 of charges. You cannot add new charges after that happens. Now, 0:16:10.276 --> 0:16:14.276 it's interesting because the party who's wronged if you add 0:16:14.276 --> 0:16:16.676 new charges is not the defendant under the law, it's 0:16:16.716 --> 0:16:20.236 the Bahamas. So the Bahamas can agree to let you 0:16:20.276 --> 0:16:22.996 proceed on more charges. So what happens here is the 0:16:23.036 --> 0:16:27.116 government added additional charges twice, they superseded, brought a new 0:16:27.156 --> 0:16:30.676 indictment with more charges, and then another one after sam 0:16:30.716 --> 0:16:34.116 Bankman Freed had been extradited. And now what's happening is 0:16:34.156 --> 0:16:36.636 the government has gone back to the Bahamas and said, 0:16:37.156 --> 0:16:40.276 will you approve this? But that process is going to 0:16:40.276 --> 0:16:43.996 be slow, and there's been a determination by the Bahamanian 0:16:44.116 --> 0:16:46.556 court that Sam Bankman Freed can challenge it and can 0:16:46.596 --> 0:16:49.196 be heard in the Bahamas. So as a practical matter, 0:16:49.276 --> 0:16:52.196 it's not going to be done before the October trial 0:16:52.276 --> 0:16:53.076 date in this case. 0:16:53.676 --> 0:16:56.276 And the Bahamas has the power to squash all that. 0:16:56.956 --> 0:16:59.356 Yes, and the government has said if the Bahama squashes it, 0:16:59.676 --> 0:17:01.996 the United States will not proceed. They agree that if 0:17:01.996 --> 0:17:03.956 that is the decision, then that's the end of it. 0:17:05.636 --> 0:17:08.156 But if the Bahamas, lets them go forward with these 0:17:08.236 --> 0:17:11.916 other charges. In any case, there will be a second trial, 0:17:12.036 --> 0:17:13.756 even if he's convicted it the first one. 0:17:13.996 --> 0:17:16.836 Well, I think as a practical matter, that's pretty unlikely 0:17:17.276 --> 0:17:19.516 if you look at sort of what the first set 0:17:19.516 --> 0:17:22.316 of charges are and what the second set of charges are. 0:17:23.236 --> 0:17:25.596 The first set of charges are very serious, and they 0:17:25.636 --> 0:17:30.916 contain the majority of the core criminal allegations with respect 0:17:30.956 --> 0:17:35.436 to FDx and Alameda. Yep, it's really not necessary if 0:17:35.436 --> 0:17:39.396 that happens, to do a second trial, right yep. So 0:17:39.476 --> 0:17:41.516 I think as a practical matter, it's unlikely if the 0:17:41.556 --> 0:17:44.116 first trial results in a conviction that they will actually 0:17:44.116 --> 0:17:47.036 pursue the second charges. I expect they'll dismiss them or 0:17:47.076 --> 0:17:49.036 they'll be a plea agreement, but they'll be resolved in 0:17:49.076 --> 0:17:49.476 some way. 0:17:50.396 --> 0:17:51.796 We're going to take a short break. 0:17:52.676 --> 0:17:55.316 When we come back, I ask Rebecca about the pros 0:17:55.356 --> 0:18:05.876 and cons of Sam Bankman freed taking the stand. I'm 0:18:05.876 --> 0:18:11.956 back with Rebecca Mermelstein, former federal prosecutor. So, if SBF 0:18:11.996 --> 0:18:14.556 is convicted and he receives the maximum sentence, we're looking 0:18:14.596 --> 0:18:18.916 at multiple decades in jail, probably the rest of his life. Right, Yeah, 0:18:19.116 --> 0:18:21.716 what's the like the range of likely outcomes. 0:18:22.956 --> 0:18:25.716 Look, you know made off got life right, that's among 0:18:25.836 --> 0:18:28.796 the largest scale white collar frauds to date, and he 0:18:28.876 --> 0:18:34.196 pled guilty. He did not challenge the charges. This case 0:18:34.236 --> 0:18:35.876 is in front of Judge Kaplan, who I think is 0:18:35.916 --> 0:18:39.116 seen as a on the spectrum of judges, probably a 0:18:39.156 --> 0:18:44.836 more harsh sentencer. I think Judge Kaplan is clearly lost 0:18:44.876 --> 0:18:47.436 some of his patients with the defendant's conduct, which is 0:18:47.476 --> 0:18:50.396 not a place you want to be. There are two 0:18:50.876 --> 0:18:54.236 different sets of rules in operation. One is the statutory 0:18:54.276 --> 0:18:55.836 scheme that's going to give you a floor and a 0:18:55.876 --> 0:18:59.556 ceiling on what the possible sentence is. Often the floor 0:18:59.596 --> 0:19:01.596 is zero. That's what it is here. In theory, the 0:19:01.676 --> 0:19:04.396 judge could if he wanted to give Sam Mgminfrey nothing. 0:19:05.076 --> 0:19:06.076 There's no floor here. 0:19:06.236 --> 0:19:08.476 There's no floor here. So it's really up to Judge 0:19:08.516 --> 0:19:11.436 Kaplin to do it whatever he wants. But then there's 0:19:11.436 --> 0:19:14.516 a thing called the sentencing guidelines. And the sentencing guidelines 0:19:14.556 --> 0:19:17.956 are a distillation based on for the most part, actual 0:19:18.036 --> 0:19:21.596 data of how sentencing was historically done. That tries to 0:19:21.836 --> 0:19:26.276 assign pluses and minus values to various things, and it 0:19:26.356 --> 0:19:29.596 spits out a proposed range for a crime. 0:19:29.996 --> 0:19:31.556 It's like Zillow does a house price. 0:19:31.916 --> 0:19:34.716 It's kind of I think that's kind of right. So here, right, 0:19:34.756 --> 0:19:39.516 the principal guideline is the one that governs fraud cases 0:19:39.556 --> 0:19:42.356 where there's a monetary loss, and so you're going to 0:19:42.396 --> 0:19:44.716 have a plus factor for the amount of money that 0:19:44.836 --> 0:19:47.316 was an issue here now here that seems to be 0:19:47.636 --> 0:19:49.676 extraordinarily high, and. 0:19:49.636 --> 0:19:51.076 So it's going to be off the charts, right. 0:19:51.116 --> 0:19:54.756 The highest category is if it exceeds five hundred and 0:19:54.796 --> 0:19:56.276 fifty million dollars, which. 0:19:56.116 --> 0:19:58.036 I think that's chump change in this one. 0:19:58.116 --> 0:20:00.516 I think that's probably right. And then there are all 0:20:00.556 --> 0:20:03.436 these plus values and minus values. How many victims were involved? 0:20:03.476 --> 0:20:07.316 Did you use what's called sophisticated means? Did you have 0:20:07.396 --> 0:20:09.596 a minor role in the offense where you a leader 0:20:09.596 --> 0:20:11.796 in the offense? And then you get credit if you 0:20:11.956 --> 0:20:14.916 plead guilty, you get a reduction if you accept responsibility. 0:20:15.236 --> 0:20:19.516 And so I think he's looking at probably a range 0:20:19.556 --> 0:20:22.076 of either three hundred and sixty months to life, so 0:20:22.276 --> 0:20:25.276 thirty years to life or life itself, depending on exactly 0:20:25.276 --> 0:20:27.636 how the math comes out, which in some ways is 0:20:27.676 --> 0:20:30.356