Speaker 1: Pushkin.
Speaker 2: For most of this year, I've been sharing some of
Speaker 2: the interviews I've been doing for background research for my
Speaker 2: book Going Infinite, the rise and fall of a new tycoon,
Speaker 2: the tycoon being Sam Bankman Freed, the founder of the
Speaker 2: cryptocurrency exchange FTX.
Speaker 1: It's been a kind of.
Speaker 2: Crazy journey, and this series has been an experiment for me.
Speaker 2: I've always done these kinds of background interviews and their
Speaker 2: interviews where I know it's not going to end up
Speaker 2: in the book. I'm just trying to educate myself, but
Speaker 2: I've never done them on stage, so to speak.
Speaker 1: And I appreciate you listening in.
Speaker 2: It's forced me to think creatively about these things, and
Speaker 2: the experts i've talked to have been really gracious with
Speaker 2: your time. Well, now the book's almost done and I
Speaker 2: have just one more conversation to share, but maybe the
Speaker 2: most important one I've done in this series. This is
Speaker 2: on background from Against the Rules. I'm Michael Lewis. Sam
Speaker 2: Bekman Freed faces federal charges of stealing billions of dollars
Speaker 2: of customer funds. His trial is supposed to begin this fall.
Speaker 1: But what sort of sentence is he likely to get? Really?
Speaker 1: How are the prosecutors building the.
Speaker 2: Case against him, and how can his defense team prepare
Speaker 2: him for what looks like it will be a really
Speaker 2: complicated trial. Rebecca Mermelstein is the very best person to
Speaker 2: answer my questions, short of the prosecutors themselves, who aren't
Speaker 2: talking to me on background or otherwise these days. Rebecca's
Speaker 2: a defense attorney at the law firm of Omelviny and Meers,
Speaker 2: but before joining the firm, she was a prosecutor in
Speaker 2: the very southern district of New York. That's prosecuting Sam
Speaker 2: Bankman Freed. My father used to practice law, and he
Speaker 2: absolutely hated it. So I couldn't stop myself from asking
Speaker 2: Rebecca what drew her to the profession in the first place.
Speaker 3: I was always the kind of kid who liked to
Speaker 3: argue the point. But somewhat coincidentally, I was a senior
Speaker 3: in college. I thought I was going to take the
Speaker 3: summer off, and my best friend wanted to go to
Speaker 3: the public interest job fair, and she didn't want to
Speaker 3: go by herself, and we went together and I dropped
Speaker 3: one resume in the District Attorney's office paralegal box, and
Speaker 3: I ended up there, and I fell in love with it. She,
Speaker 3: by the way, also ended up there and then got
Speaker 3: a PhD in art history. So it wasn't for everybody,
Speaker 3: but I decided that's what I wanted to do, and
Speaker 3: so I went to law school knowing I wanted to
Speaker 3: be a prosecutor, and then I followed that path, and
Speaker 3: for about twelve years I was a prosecutor in the
Speaker 3: Southern District of New York.
Speaker 2: Before we get to Sam Bankman Freed, I am kind
Speaker 2: of curious, like, why did you fall in love with
Speaker 2: it and your friend didn't?
Speaker 3: For me, it is a combination of things, and one
Speaker 3: is how mission driven it is. And so I think prosecutors,
Speaker 3: and definitely prosecutors my home office, so to speak, really
Speaker 3: feel that they work in pursuit of a particular mission
Speaker 3: of pursuing justice, which is a little different than what
Speaker 3: defense lawyers do because you don't really have a client
Speaker 3: when you're a prosecutor. Your client is the people of
Speaker 3: the Southern District of New York, the people of the
Speaker 3: United States.
Speaker 4: But your job is to do the.
Speaker 3: Right thing, and it's not to win unless you think
Speaker 3: winning is the right thing. So prosecutors investigate cases all
Speaker 3: the time that they don't charge they decide either nobody
Speaker 3: committed a crime or probably someone committed a crime, but
Speaker 3: they don't have enough evidence to be sure, and that
Speaker 3: mission really drives people's I think, interest in doing it.
Speaker 2: You know, what you reminded me of is the way
Speaker 2: I hunt stories that I will spend all kinds of
Speaker 2: time on all kinds of things.
Speaker 1: And then just decide there's not a story there and
Speaker 1: move on. Here.
Speaker 2: To guess what percentage of the things you thought about
Speaker 2: prosecuting do you actually prosecute, I.
Speaker 3: Would say maybe eighty percent sort of go somewhere and
Speaker 3: twenty percent don't.
Speaker 4: Okay, if I had to guess.
Speaker 2: It's a reverse of my process. Twenty percent goes somewhere
Speaker 2: in eighty percent don't.
Speaker 3: But it's interesting that you say that you sort of
Speaker 3: are interested in this finding the story, because I think
Speaker 3: once prosecutors decide that they want to do it, crafting
Speaker 3: that narrative, making something comprehensible to a jury, distilling things down,
Speaker 3: appealing to people's emotions. Telling a good story is also
Speaker 3: a big part of what lawyers do, and doing it
Speaker 3: in a live format on a stage is a little
Speaker 3: more like being a stage actor, because when you get
Speaker 3: in front of a jury, the cameras are rolling, there's
Speaker 3: no kind of redos, there's no pause, and that excitement
Speaker 3: in that sense that you never one hundred percent know
Speaker 3: what's going to happen. I think also is something that
Speaker 3: people who want to be prosecutors think is fun.
Speaker 2: I have a weird question for sure, if I've often
Speaker 2: found this with reporters, like newsrooms, I've always been surprised
Speaker 2: at how they can write quite bland stories about things
Speaker 2: when they're out to dinner talking about them, they make
Speaker 2: sound thrilling and fun. They actually have great material, and
Speaker 2: they kind of leave it on the cutting room floor.
Speaker 2: And I'm wondering if there's a phenomenal like that with
Speaker 2: prosecutors where if you're sitting around they sit around talking
Speaker 2: about a case, that it will be vastly more entertaining
Speaker 2: to listen to that what goes on in the courtroom.
Speaker 4: I don't think so.
Speaker 3: I think the courtroom is a pretty exciting place, and
Speaker 3: I don't think they leave things on the cutting room
Speaker 3: floor that are the best parts. I do think you
Speaker 3: will hear prosecutors when they talk about how to structure
Speaker 3: trial evidence, how to prove a case. They'll use the
Speaker 3: phrase thin to win. And what they mean by that
Speaker 3: is a streamlined body of proof. That sometimes you have
Speaker 3: a piece of evidence that can be used really effectively
Speaker 3: for the prosecution, but it can be twisted exactly on
Speaker 3: its head and used for the defense too. And now,
Speaker 3: of course a prosecution is obligated to give the defense
Speaker 3: all the materials it has, so the defense could call
Speaker 3: that witness yep. But as a strategic matter, the defense
Speaker 3: really doesn't generally want to call any witnesses because they
Speaker 3: don't have a burden of proof. So as a prosecutor,
Speaker 3: you may say, you know, I could call this witness.
Speaker 3: They have this one great fact, but I don't need it,
Speaker 3: and I'm opening up a can of worms, and so
Speaker 3: we're gonna We're gonna sort of leave that on the
Speaker 3: cutting room floor.
Speaker 1: This is there's a version of this in writing.
Speaker 2: It's the famous eb White victim that writing is about
Speaker 2: killing your darlings. That you have this one pungent thing
Speaker 2: that you just think has to be in and in
Speaker 2: the end you realize you need to thin to win,
Speaker 2: that you need to streamline it for the sake of
Speaker 2: the story, and you've got to get used to that
Speaker 2: feeling of getting rid of something you just really attached to.
Speaker 2: You just said something that I kind of knew but
Speaker 2: I didn't completely know. Is it really true that everything
Speaker 2: the prosecution has gets given to the defense before the trial.
Speaker 3: So it's a little more of a I think a
Speaker 3: nuanced answer than just yes. But fundamentally that is the
Speaker 3: intent of the various rules that govern disclosure, and it
Speaker 3: goes in phases, so there is if we want to
Speaker 3: get technical about it, there's a rule in the Federal
Speaker 3: Rules of Criminal Procedure are called Rule sixteen that governs
Speaker 3: what you have to give to the defense as quote,
Speaker 3: discovery materials, and that starts getting turned over as soon
Speaker 3: as charges are brought yep. And that's going to include
Speaker 3: sort of all the paperwork, right, every document in the case,
Speaker 3: every recording in the case, any kind of physical evidence
Speaker 3: or expert testing so DNA testing, fingerprint testing, all is
Speaker 3: going to get turned over as part of that. And
Speaker 3: that requires the production of all statements of witnesses who
Speaker 3: are expected to testify at trial. And then the third
Speaker 3: category is impeachment material, which is to say, if you
Speaker 3: know something that undermines what someone's saying, you have to
Speaker 3: tell the defense that too. So if, for example, you
Speaker 3: have a witness was a conviction, you're gonna have to
Speaker 3: turn that over as well. And so it should really
Speaker 3: be that the two sides have the same information. Of course,
Speaker 3: it's a little more nuanced than that, and prosecutors have
Speaker 3: huge institutional advantages, and they're not going to turn over
Speaker 3: that witness information until relatively close to trial. When I
Speaker 3: started as an ASA, that was turnover the Friday morning
Speaker 3: before a Monday trial. Oh my god, that's not true anymore.
Speaker 3: Now you're talking in a white collar case four weeks
Speaker 3: six weeks out right. But even so, that means that
Speaker 3: if you're a defense lawyer trying to prepare for a
Speaker 3: white collar case and trying to decide should we go
Speaker 3: to trial, you're not going to know what the witnesses
Speaker 3: against your client says until very close to the trial.
Speaker 1: Right.
Speaker 2: Two questions about this. One is does the defense have
Speaker 2: the same obligation to turn over what it has to
Speaker 2: the prosecution.
Speaker 4: No, is the answer.
Speaker 3: They do have some obligations, so they have to turn
Speaker 3: over things they actually intend to use a trial. Prosecutors
Speaker 3: knowing that they can't know until the moment every single
Speaker 3: thing they're going to use just turn over all the
Speaker 3: paperwork in their possession. I think the defense has a
Speaker 3: lot more leeway to say, look, we don't have any
Speaker 3: burden of proof. We don't know what we're going to
Speaker 3: do till we see what the prosecution is going to do,
Speaker 3: and so they get a lot more leeway with that
Speaker 3: sort of thing. So you don't see it going in
Speaker 3: both directions evenly.
Speaker 1: Gotcha?
Speaker 2: But is there a way Is there a possibility for
Speaker 2: the defense to show up with a just total shocker
Speaker 2: and the prosecution just didn't see it coming.
Speaker 4: Yes, I think it is.
Speaker 1: Okay, that's interesting to me.
Speaker 2: And the other thing is that this is I'm just
Speaker 2: kind of curious how sneaky can prosecutors be about what
Speaker 2: they turn over and don't turn over. I mean, what
Speaker 2: is the likelihood that the defense turns up and finds, oh,
Speaker 2: my god, they've got this thing we didn't know about.
Speaker 3: Well, you'd like to think it would never happen, but
Speaker 3: I think that that is obviously not true. You read
Speaker 3: about things all the time in reporting, about situations where
Speaker 3: prosecutors acted with malice to withhold relevant and exculpatory information, right,
Speaker 3: and then of course there's human error, right.
Speaker 4: I mean, you're talking.
Speaker 3: About in a white collar case, millions of pages of documents,
Speaker 3: and I think people can make mistakes, you know, I
Speaker 3: think federal prosecutors as a group are acting with careful
Speaker 3: and good intentions, and so I don't think that there
Speaker 3: is sort of a pervasive problem of things being intentionally withheld.
Speaker 3: I think if you think about, you know, what the
Speaker 3: universe of documents a person has on their phone, on
Speaker 3: their laptop, on their Google's history versus what it was
Speaker 3: twenty five years ago, it gets harder and harder to
Speaker 3: keep up with.
Speaker 1: YEP.
Speaker 2: I have two more general questions about prosecutors, and the
Speaker 2: first is, if if I spent a whole bunch of
Speaker 2: time with a whole bunch of prosecutors, what would I
Speaker 2: notice they had in common? Like what kind of person
Speaker 2: ends up in this role?
Speaker 4: Rule fall?
Speaker 3: I would say, I don't think there's one type. I
Speaker 3: think there are lots of types. There are people who
Speaker 3: really love the law, There are people who do it,
Speaker 3: who love the facts, there are people who love the performance.
Speaker 3: They're all joined I think by that same sense of mission.
Speaker 3: And I think in a similar way as you'd see
Speaker 3: in say a military unit, that kind of this is
Speaker 3: a hard job and a serious job, and an intense
Speaker 3: job kind of bonds people, and so you'd see that.
Speaker 3: I think it's a group that takes its job seriously,
Speaker 3: but not themselves seriously. But they are also all people
Speaker 3: who hold themselves to a higher standard, because I think
Speaker 3: when you send other people to jail, when you make
Speaker 3: decisions that alter the course of someone's life, you realize
Speaker 3: that you have to live your own life. I think
Speaker 3: sort of above reproach.
Speaker 1: Stay with us when we come back from the break.
Speaker 2: Rebecca and I turned to Sam Bankman Freed and how
Speaker 2: prosecutors might argue their case against him. I'm back with
Speaker 2: Rebecca Mermelstein, a former prosecutor in the Southern District of
Speaker 2: New York. So can you just explain to me your
Speaker 2: relationship to the office that is actually prosecuting Sam Bankman Freed.
Speaker 4: Sure.
Speaker 3: So, I was a prosecutor in the Southern District of
Speaker 3: New York until August. So I left before any of
Speaker 3: the started, but not that long before any of it started,
Speaker 3: And I spent a few years in the Securities Fraud Unit,
Speaker 3: which is one of the units principally responsible for this case,
Speaker 3: before leaving that to supervise what's called the General Crimes Unit,
Speaker 3: which is where new prosecutors start and get their training.
Speaker 3: So I'm very familiar with the institution and with the players,
Speaker 3: but I don't know, I have no inside information about
Speaker 3: this particular case.
Speaker 2: So you didn't even hear a whisper of Sam Bankman
Speaker 2: Freed being investigated.
Speaker 1: Before you left.
Speaker 4: I did not.
Speaker 2: Okay, there are a bunch of things I'd love for
Speaker 2: you to explain to me about the case. But you
Speaker 2: have paid life at least casual attention to it. I
Speaker 2: have you have what interests you about it?
Speaker 3: Well, look, it's it's on the front page of you know,
Speaker 3: the Wall Street Journal, on the New York Times on
Speaker 3: a regular basis. As a matter of scale, it's obviously
Speaker 3: among the largest crypto prosecutions to date. And I think
Speaker 3: that the fallout from it or it has real implications
Speaker 3: for the crypto industry writ large, and so you know,
Speaker 3: I think it's something that white collar practitioners are probably
Speaker 3: following pretty consistently.
Speaker 4: Now Here.
Speaker 3: What happened is a little complicated, and you have to
Speaker 3: back all the way up to the way this played out,
Speaker 3: which is you remember the timeline is that in November
Speaker 3: of twenty twenty two, the Alameda financials are leaked and
Speaker 3: people start to have concerns about what's going on, and
Speaker 3: the Southern District moves very fast, so by December they
Speaker 3: have an indictment against Sam Bankman Freed.
Speaker 1: Is that unusual to move that fast?
Speaker 4: Very very unusual.
Speaker 1: I would say it surprised you.
Speaker 3: Yeah, I think it did surprise me. White color cases
Speaker 3: are complicated, it's hard to get things together, and so
Speaker 3: that speed was more than someone unusual for this kind
Speaker 3: of case.
Speaker 2: What would justify in their minds moving so fast or
Speaker 2: why would would there be such a hurry.
Speaker 3: I think you can think of a number of reasons
Speaker 3: they might have felt that they had to move so quickly.
Speaker 3: The first is Sam Bankminfrid was in the Bahamas. The
Speaker 3: United States has an extradition treaty with the Bahamas, so
Speaker 3: there was the possibility of charging him and having him
Speaker 3: brought back to the United States. But when you launch
Speaker 3: a big investigation and you start talking to people and
Speaker 3: demanding documents, the people you're investigating are going to know
Speaker 3: you're investigating them, and there's of course always the possibility
Speaker 3: that someone decides, you know, i'd rather live in Venezuela
Speaker 3: where there's no extradition treaty and just never come back.
Speaker 1: Yeah.
Speaker 4: Right.
Speaker 3: So one possibility is that a concern that you won't
Speaker 3: be able to rest the person if you don't move quickly.
Speaker 3: The other is the government has alleged that in those
Speaker 3: final days where there's a run on FTX, investors are
Speaker 3: trying to pull their money out, that Sam bankman Fried
Speaker 3: and some of his cohort are moving money out of
Speaker 3: it for their own purposes. And so if you're trying
Speaker 3: to protect investors and you want to make sure you
Speaker 3: stop that, you want to move quickly to sort of
Speaker 3: charge people and start locking down the money. So I
Speaker 3: think there may have been very good reasons to do it,
Speaker 3: but they did move sort of very very quickly here,
Speaker 3: and one effect of that is that they brought an
Speaker 3: indictment that had very limited description of the charges and
Speaker 3: also didn't include all the charges that they ultimately decided
Speaker 3: to bring. And so he gets charged, he agrees to
Speaker 3: be extra righted it comes to the United States, and
Speaker 3: then because of that, there's something called the rule of specialty,
Speaker 3: which basically means that if the Bahamas, let you know,
Speaker 3: let you take someone from their country based on an
Speaker 3: agreement that they were going to face a particular set
Speaker 3: of charges. You cannot add new charges after that happens. Now,
Speaker 3: it's interesting because the party who's wronged if you add
Speaker 3: new charges is not the defendant under the law, it's
Speaker 3: the Bahamas. So the Bahamas can agree to let you
Speaker 3: proceed on more charges. So what happens here is the
Speaker 3: government added additional charges twice, they superseded, brought a new
Speaker 3: indictment with more charges, and then another one after sam
Speaker 3: Bankman Freed had been extradited. And now what's happening is
Speaker 3: the government has gone back to the Bahamas and said,
Speaker 3: will you approve this? But that process is going to
Speaker 3: be slow, and there's been a determination by the Bahamanian
Speaker 3: court that Sam Bankman Freed can challenge it and can
Speaker 3: be heard in the Bahamas. So as a practical matter,
Speaker 3: it's not going to be done before the October trial
Speaker 3: date in this case.
Speaker 1: And the Bahamas has the power to squash all that.
Speaker 3: Yes, and the government has said if the Bahama squashes it,
Speaker 3: the United States will not proceed. They agree that if
Speaker 3: that is the decision, then that's the end of it.
Speaker 2: But if the Bahamas, lets them go forward with these
Speaker 2: other charges. In any case, there will be a second trial,
Speaker 2: even if he's convicted it the first one.
Speaker 3: Well, I think as a practical matter, that's pretty unlikely
Speaker 3: if you look at sort of what the first set
Speaker 3: of charges are and what the second set of charges are.
Speaker 3: The first set of charges are very serious, and they
Speaker 3: contain the majority of the core criminal allegations with respect
Speaker 3: to FDx and Alameda. Yep, it's really not necessary if
Speaker 3: that happens, to do a second trial, right yep. So
Speaker 3: I think as a practical matter, it's unlikely if the
Speaker 3: first trial results in a conviction that they will actually
Speaker 3: pursue the second charges. I expect they'll dismiss them or
Speaker 3: they'll be a plea agreement, but they'll be resolved in
Speaker 3: some way.
Speaker 1: We're going to take a short break.
Speaker 2: When we come back, I ask Rebecca about the pros
Speaker 2: and cons of Sam Bankman freed taking the stand. I'm
Speaker 2: back with Rebecca Mermelstein, former federal prosecutor. So, if SBF
Speaker 2: is convicted and he receives the maximum sentence, we're looking
Speaker 2: at multiple decades in jail, probably the rest of his life. Right, Yeah,
Speaker 2: what's the like the range of likely outcomes.
Speaker 3: Look, you know made off got life right, that's among
Speaker 3: the largest scale white collar frauds to date, and he
Speaker 3: pled guilty. He did not challenge the charges. This case
Speaker 3: is in front of Judge Kaplan, who I think is
Speaker 3: seen as a on the spectrum of judges, probably a
Speaker 3: more harsh sentencer. I think Judge Kaplan is clearly lost
Speaker 3: some of his patients with the defendant's conduct, which is
Speaker 3: not a place you want to be. There are two
Speaker 3: different sets of rules in operation. One is the statutory
Speaker 3: scheme that's going to give you a floor and a
Speaker 3: ceiling on what the possible sentence is. Often the floor
Speaker 3: is zero. That's what it is here. In theory, the
Speaker 3: judge could if he wanted to give Sam Mgminfrey nothing.
Speaker 1: There's no floor here.
Speaker 3: There's no floor here. So it's really up to Judge
Speaker 3: Kaplin to do it whatever he wants. But then there's
Speaker 3: a thing called the sentencing guidelines. And the sentencing guidelines
Speaker 3: are a distillation based on for the most part, actual
Speaker 3: data of how sentencing was historically done. That tries to
Speaker 3: assign pluses and minus values to various things, and it
Speaker 3: spits out a proposed range for a crime.
Speaker 1: It's like Zillow does a house price.
Speaker 3: It's kind of I think that's kind of right. So here, right,
Speaker 3: the principal guideline is the one that governs fraud cases
Speaker 3: where there's a monetary loss, and so you're going to
Speaker 3: have a plus factor for the amount of money that
Speaker 3: was an issue here now here that seems to be
Speaker 3: extraordinarily high, and.
Speaker 4: So it's going to be off the charts, right.
Speaker 3: The highest category is if it exceeds five hundred and
Speaker 3: fifty million dollars, which.
Speaker 1: I think that's chump change in this one.
Speaker 3: I think that's probably right. And then there are all
Speaker 3: these plus values and minus values. How many victims were involved?
Speaker 3: Did you use what's called sophisticated means? Did you have
Speaker 3: a minor role in the offense where you a leader
Speaker 3: in the offense? And then you get credit if you
Speaker 3: plead guilty, you get a reduction if you accept responsibility.
Speaker 3: And so I think he's looking at probably a range
Speaker 3: of either three hundred and sixty months to life, so
Speaker 3: thirty years to life or life itself, depending on exactly
Speaker 3: how the math comes out, which in some ways is
Speaker 3: unhelpful to the judge because you know, what does that
Speaker 3: mean is the right sentence? But I think he's looking
Speaker 3: at a long sentence if he's convicted, if you look
Speaker 3: at comparable data points, right, Elizabeth Holmes, someone also young,
Speaker 3: you know, on the younger side of a white collar defendant,
Speaker 3: not maybe this scale, but pretty big.
Speaker 4: I think he's looking at a long time.
Speaker 2: What about his colleagues, the other FTX executives who've played.
Speaker 3: Guilty, They obviously are in a completely different category because
Speaker 3: they are cooperating and assuming that they fulfill their cooperation obligation,
Speaker 3: the average white collar first time defendant who's a cooper
Speaker 3: in the southern distrie f New York, I would say,
Speaker 3: typically does not go to jail really. Now, to be clear, right,
Speaker 3: cooperators don't always get get no jail time.
Speaker 4: They get big benefits.
Speaker 3: You may remember famously, Sammy the Bull cooperated having been
Speaker 3: involved in nineteen murders, and I think he got maybe
Speaker 3: five years in jail.
Speaker 4: Look, cooperators are.
Speaker 3: Always hard because and here it's clear that they have
Speaker 3: three at least three that we know of. And you
Speaker 3: know the problem with cooperators, of course, is that these
Speaker 3: are people who are going to have to come to
Speaker 3: court and say I lied to investors, to customers, to colleagues.
Speaker 3: I did it, you know, for my own purposes in
Speaker 3: some cases. But now I'm telling the truth.
Speaker 1: Yeah, now is when you should believe me.
Speaker 4: And it's no coincidence that I'm telling the truth now.
Speaker 3: By the way, I'm also hoping not to go to jail, yeap,
Speaker 3: And that's hard, right, So you know, making sure that
Speaker 3: the jury is in a position to credit what's being
Speaker 3: said is always a challenge.
Speaker 2: Now.
Speaker 3: I think it's a little easier when you have three cooperators,
Speaker 3: because that line of cross examination of aren't you just
Speaker 3: doing this because you don't want to go to jail?
Speaker 3: And aren't don't you have all these incentives gets a
Speaker 3: little old the third time, and really you start to think, okay,
Speaker 3: maybe one person would do that, but do you really
Speaker 3: think they're all kind of doing it together. That's one challenge.
Speaker 3: I think the other challenge is, which is always true
Speaker 3: in complex white collar cases, is you have to take
Speaker 3: a jury of twelve people, a real cross section of
Speaker 3: the community, and before you can start explaining why this
Speaker 3: was a crime, you have to give like a tutorial
Speaker 3: first on crypto and hedge funds and trading and trading
Speaker 3: algorithms and what it means. And then you have to
Speaker 3: start explaining why what happened here, you know, as they allege,
Speaker 3: was a problem, and why it was illegal and why
Speaker 3: these things weren't true. And that's hard to distill a
Speaker 3: complicated story down to something that everyone can understand.
Speaker 2: You're telling me, I know, it's yeah, exactly, no, it's
Speaker 2: it's I have my own way of dealing with this,
Speaker 2: But I don't envy them. Turning to Sam himself, if
Speaker 2: you were his defense lawyer, what would you be doing
Speaker 2: right now? How would you prepare him for the trial?
Speaker 3: Well, there's a big question, of course, which is is
Speaker 3: he going to testify? Right? And the general wisdom is
Speaker 3: always don't, because you have an absolute right not to
Speaker 3: say anything and it can't be held against you, and
Speaker 3: you don't have to offer any narrative. And the minute
Speaker 3: you tell a story as a defendant, the minute you
Speaker 3: explain your version, even though the judge of course instructs
Speaker 3: the jury on the burden of proof, I really think
Speaker 3: you lose a lot of that advantage because now there's
Speaker 3: two stories and the jury is going to evaluate, well,
Speaker 3: which one do we believe?
Speaker 4: And that's that's not the burden of proof, which one
Speaker 4: is more likely.
Speaker 1: Yeah, and you.
Speaker 3: Really, I think you don't want to do it now.
Speaker 3: Sometimes defendants feel, and this can in some limited circumstances
Speaker 3: be right, that the government's narrative is too powerful not
Speaker 3: to be rebutted in some fashion. There's no way to
Speaker 3: challenge it except for them to hear from you. And
Speaker 3: of course testifying is completely up to him. His lawyers
Speaker 3: can't control it. They can advise him. So one thing
Speaker 3: I'm sure they're talking about is is he going to testify?
Speaker 1: And if you were his lawyer, you would say.
Speaker 4: I think probably not. But I haven't seen the government's proof, which.
Speaker 1: You said I never really thought about.
Speaker 2: But the problem with testifying is instead of them having
Speaker 2: to evaluate just the government's case, you're giving them something
Speaker 2: else to evaluate.
Speaker 3: Yeah, and if the government's case has holes in it,
Speaker 3: then as defense layers, we get to show the jury that.
Speaker 3: But if your case also has holes, right, that's not
Speaker 3: a good look. It's easier to poke holes in someone
Speaker 3: else's story than to come up with a completely coherent narrative.
Speaker 4: So I think that's dangerous. What else would I be doing?
Speaker 3: Look, one interesting thing here is that by all accounts,
Speaker 3: the kind of executive group which includes the cooperators was
Speaker 3: very interpersonally close, many of them or living together. They
Speaker 3: must really know each other's secrets. And you know, if
Speaker 3: you're going to attack a cooperator, you're not only going
Speaker 3: to attack them based on small inconsistencies and things they've
Speaker 3: told the government. You want to know everything about them.
Speaker 3: You want to really investigate them. They government has cell
Speaker 3: phones and laptops that belong to the cooperators, and you're
Speaker 3: going to want to really spend a lot of time
Speaker 3: looking at everything on those.
Speaker 2: All right, this was fabulous. I have one last question
Speaker 2: for you, and then I'm gonna let you go. If
Speaker 2: you could give them one piece of advice right now,
Speaker 2: what would it be.
Speaker 4: I think he should probably think about a disposition.
Speaker 1: What does that mean?
Speaker 3: If I were him, I'd be thinking about whether or
Speaker 3: not there was a plea offer that made sense. There
Speaker 3: are two reasons that going to trial often results in
Speaker 3: longer sentences, and one is that the guidelines themselves give
Speaker 3: credit for people who accept responsibility, and so you can
Speaker 3: think of it as a benefit to people who accept
Speaker 3: responsibility or as a penalty to people who don't. But
Speaker 3: either way there's going to be a delta there. And
Speaker 3: the other is that there is a difference in the
Speaker 3: way a judge views you, I think on a cold record,
Speaker 3: on written submissions by lawyers, and at an actual trial
Speaker 3: where you're going to sit for weeks and weeks and
Speaker 3: weeks and read every text message and hear from your
Speaker 3: ex girlfriend and your closest friends about the conversations that
Speaker 3: you had, and where victims of the crime are going
Speaker 3: to come and talk about the consequence of having lost
Speaker 3: all their money. It sort of it affects judges who
Speaker 3: are their people, and so look, I don't know the
Speaker 3: government's proof, and I don't know what defenses he may have,
Speaker 3: but it doesn't look good right from the outside. And
Speaker 3: I think that he's a young person and his best
Speaker 3: chance of having a life outside of prison is probably
Speaker 3: to take a play.
Speaker 2: If you were his lawyer, plea, would you what deal
Speaker 2: would you happily accept?
Speaker 3: I don't think there's going to be a plea in
Speaker 3: this case that anyone's happy to accepts my guess. I
Speaker 3: think that given the nature of federal sentencing, there's an
Speaker 3: enormous amount of uncertainty in any plea in any plea agreement,
Speaker 3: the government and the defense will agree on the charges
Speaker 3: to that are being pled to and what the math
Speaker 3: is on the guidelines. But all that's going to give
Speaker 3: you is a range. You'll see that in the Southern
Speaker 3: District of New York, most sentences are below that range. Right,
Speaker 3: Most judges are less harsh than the guidelines. And you
Speaker 3: could take a plea and get a sentence that you
Speaker 3: felt was too much and then you're kind of stuck.
Speaker 3: Gets more holistic assessment of what's likely to result in
Speaker 3: the least bad outcome.
Speaker 2: Okay, thank you so much for the time, my pleasure.
Speaker 2: Rebecca Mermelstein was once a prosecutor in the Southern District
Speaker 2: of New York. She is now a defense attorney at
Speaker 2: Omelvinie and Myers. Thanks for listening to our On Background series.
Speaker 2: My book about Sam Bankman Freed Going Infinite, The Rise
Speaker 2: and All of a New Tycoon, will be in bookstores
Speaker 2: this October. And watch this feed there'll be a new
Speaker 2: season of Against the Rules before Long. On Background is
Speaker 2: hosted by me Michael Lewis and produced by Catherine Gerardeau
Speaker 2: and Lydia Jean Kott. Our editor is Julia Barton. Our
Speaker 2: engineer is Sarah Bruguer. Jake Flanagan helps us with licensing.
Speaker 2: Our show is recorded by tofer Ruth at Berkeley Advanced
Speaker 2: Media Studios. Our music was composed by Matthias Bossi and
Speaker 2: John Evans of Stellwagon Syphonette Special Thanks to a few
Speaker 2: more folks who made On Background possible. Our executive team
Speaker 2: including Jacob Weisberg, Malcolm Gladwell, Heather Fain, John Schnarz, Littalmullatt,
Speaker 2: Greta Cone, our business team including Christina Sullivan, Royston Preserve.
Speaker 1: Our marketing team including Eric.
Speaker 2: Sandler, Jordan McMillan, Isabella Narvaez, Brian sabrainik Owen Miller published each.
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Speaker 2: David Glover keeps our office running, and Ian Pexa tends
Speaker 2: to our tech. On Background is a production of Pushkin Industries.
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Speaker 3: You're investigating, you're issuing subpoenas, you're drafting search warrants, you're
Speaker 3: interviewing witnesses.
Speaker 1: That sounds like reporting.
Speaker 3: I think that's right. I think ways that beginning phase
Speaker 3: is a lot like reporting. If reporters had subpoena power
Speaker 3: and could issue search wards.
Speaker 1: Right, that'd be fun. That'd be really fun.
Speaker 3: Well, it's a very powerful tool, right, Really, if you
Speaker 3: read someone's email, if you can look at everything they've
Speaker 3: every Google search they've run, that tells you a lot
Speaker 3: about what's really happening.
Speaker 1: I would have so many best sellers, well, you.
Speaker 4: Have kind of a lot of best sellers.
Speaker 2: Never know how many more I would have if I
Speaker 2: could just hit buttons and gather all that material.