WEBVTT - Judging Sam: Caroline Ellison Takes The Stand

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<v Speaker 1>Pushkin. Hey there, it's Michael Lewis. Before we get to

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<v Speaker 1>Apple Podcasts or at Pushkin, dot fm, Slash Plus. Welcome

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<v Speaker 1>to Judging Sam The Trial of Sam Bankman Freed. I'm

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<v Speaker 1>Michael Lewis. Bankman Freed was worth tens of billions of

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<v Speaker 1>dollars before FTX his cryptocurrency exchange came a part at

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<v Speaker 1>the scenes, and now he's being tried for financial crimes.

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<v Speaker 1>They could send him to prison for the rest of

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<v Speaker 1>his life.

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<v Speaker 2>I'm Jacob Goldstein. I'm sitting in for Michael Lewis. I've

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<v Speaker 2>been covering crypto since twenty eleven. I host a Pushkin

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<v Speaker 2>show called What's Your Problem, where I actually interviewed Sam

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<v Speaker 2>Bankman freed before he got indicted, So I am delighted

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<v Speaker 2>to be here today. It's week two of the Sam

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<v Speaker 2>Bankman Freed trial, and today was a very big day.

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<v Speaker 2>Caroline Ellison, who of course was the co CEO of

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<v Speaker 2>Alameda Research and SBF's former girlfriend, she took the stand

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<v Speaker 2>today and Lydia Jean you of course were there.

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<v Speaker 3>Yes. I came to the courthouse bright and early, and

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<v Speaker 3>it was a day that reporters were particularly excited for.

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<v Speaker 3>There are a lot of us, and I interviewed a

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<v Speaker 3>few as we were waiting for the court doors to open,

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<v Speaker 3>and I'm going to play some of that tape for

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<v Speaker 3>you right now.

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<v Speaker 4>I'm Sam Kessler. I'm an editor at Coindasker.

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<v Speaker 3>What are you looking forward to learning from Caroline Allison's testimony?

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<v Speaker 4>Aside from the testimony itself, it's going to be really

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<v Speaker 4>interesting to see the line of questioning that, particularly the

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<v Speaker 4>defense decides to follow, and they're also going to maybe

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<v Speaker 4>touch on things around drug use and whether that makes

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<v Speaker 4>her an unreliable narrator. All that is going to be

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<v Speaker 4>really fascinating to see.

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<v Speaker 2>I'm Loz Lopato.

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<v Speaker 4>I'm a senior reporter at The Verge.

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<v Speaker 3>I am super curious about why she did this, Like

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<v Speaker 3>I don't know that she's going to talk about that.

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<v Speaker 1>But she didn't have equity.

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<v Speaker 2>And the boys did.

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<v Speaker 1>I've had some like lousy ex boyfriends in my time,

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<v Speaker 1>but nothing on the scale.

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<v Speaker 2>What's your name, I'm Kevin Dugan with New York magazine

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<v Speaker 2>The Sex. I want all the details.

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<v Speaker 1>I want all the stories, all the spine tingling kind

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<v Speaker 1>of sensation of all the sex that happened in the Bahamas.

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<v Speaker 2>Yeah, that's really what I'm looking forward to most, Lady Jean,

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<v Speaker 2>I don't want the details of the sex.

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<v Speaker 3>Well, good news for you. There wasn't a lot of

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<v Speaker 3>zaid and there was a lot of spreadsheets what happened.

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<v Speaker 2>I mean, this is like truly a high drama moment, right,

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<v Speaker 2>Like you have this romantic history, you have this executive history,

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<v Speaker 2>and you have this alleged crime. So like, what's the

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<v Speaker 2>like Caroline walking into the courtroom moment.

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<v Speaker 3>Yeah, so the courtroom was packed and the prosecutor said

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<v Speaker 3>that they were going to call their next witness, Caroline Allison.

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<v Speaker 3>You could tell the reporters are all really excited. You know,

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<v Speaker 3>usually when there's an intermission, people start to talk, but

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<v Speaker 3>no one was talking. Everyone was looking at the door.

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<v Speaker 3>Someone whispered that it was a bit like a weird

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<v Speaker 3>wedding since we were waiting for her walk down the aisle.

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<v Speaker 4>Oh, very good.

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<v Speaker 3>Someone went like done, done, done, And then the door

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<v Speaker 3>opened and she walked through. She was wearing like a

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<v Speaker 3>reddish pinkish dress. She had on a blazer. She's really small,

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<v Speaker 3>she's even shorter than I am. She was holding a

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<v Speaker 3>water bottle and she walked really confidently down the aisle

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<v Speaker 3>as everyone was watching, to the witness stand, and then

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<v Speaker 3>she sat down. The prosecutor immediately had her admit that

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<v Speaker 3>she had committed financial crimes, and she said that she

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<v Speaker 3>had committed them with Sam.

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<v Speaker 2>And just to be clear, she's already previously pleaded guilty

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<v Speaker 2>to these.

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<v Speaker 3>Crimes, right exactly, she has. And then the prosecutor had

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<v Speaker 3>her point out Sam. She was sitting down, and then

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<v Speaker 3>she kind of stood up and she looked all over

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<v Speaker 3>the courtroom for him. She was looking in the jury box,

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<v Speaker 3>she was looking in the where the reporters were sitting.

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<v Speaker 3>It was a full thirty seconds, and it was the

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<v Speaker 3>longest thirty seconds ever and then finally she found him

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<v Speaker 3>and she pointed at him when she finally saw him,

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<v Speaker 3>and I couldn't see his face, but people in the

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<v Speaker 3>overflow room said that they kind of smiled at each other,

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<v Speaker 3>and then the prosecutor said, can you say what Sam

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<v Speaker 3>was wearing? And she said he was wearing a suit?

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<v Speaker 3>And she laughed a little bit and sat down.

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<v Speaker 2>So I have a couple questions about that, one like,

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<v Speaker 2>wasn't he just sitting at the defense table or whatever?

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<v Speaker 2>She putting on a show? Did she actually not know

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<v Speaker 2>where he was what was going on there?

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<v Speaker 3>I don't think she was putting on a show. I

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<v Speaker 3>think it must be really overwhelming. Was probably her first

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<v Speaker 3>time in this courtroom. It was really packed. There are

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<v Speaker 3>a lot of people there. I'm assuming that that walk

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<v Speaker 3>down the aisle when we were all staring at her

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<v Speaker 3>was pretty terrifying, and I'm thinking it probably took her

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<v Speaker 3>a few seconds to orient herself. People have also speculated

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<v Speaker 3>that she hasn't seen him since he got his hair cut,

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<v Speaker 3>and she's never seen him in a suit.

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<v Speaker 2>Okay, I have another question about that. Why do prosecutors

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<v Speaker 2>do this? I mean, I've seen it in like the

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<v Speaker 2>movies or whatever. You know, is he in the courtroom

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<v Speaker 2>with us? Can you point him out? But like Sam

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<v Speaker 2>Agrinfried was like there were pictures of him on TV

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<v Speaker 2>and didn't magazine, Like we all know who he is

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<v Speaker 2>and what he looks like. Is there some legal reason

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<v Speaker 2>they do it? Is it theater?

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<v Speaker 3>I don't know. There's a lot of pointing in court. Also,

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<v Speaker 3>I learned that our opening statements, it's really common to

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<v Speaker 3>point at the defendant.

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<v Speaker 2>Okay, so she's there, she's identified, Sam bankmin Freed. We

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<v Speaker 2>got our drama. Like, are there a few key moments,

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<v Speaker 2>whether they are emotional moments or kind of substantive moments

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<v Speaker 2>in terms of, you know, the case itself that stand

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<v Speaker 2>out to you of what happened today? Like what are

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<v Speaker 2>the most important things that happen?

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<v Speaker 3>Yeah, Well, the prosecution started pretty early by having Caroline

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<v Speaker 3>talk about her romantic relationship with Sam and to characterize

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<v Speaker 3>a little bit what it was like. And she said that,

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<v Speaker 3>and I'm quoting from my notes that there is a

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<v Speaker 3>general theme where I would want more, but he was

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<v Speaker 3>being distant and not paying attention. So she kind of

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<v Speaker 3>characterized their on and off again romantic relationship as one

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<v Speaker 3>where Sam kind of had an upper hand. She also

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<v Speaker 3>said that Sam was her boss and that at times

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<v Speaker 3>made things awkward.

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<v Speaker 2>And what do you think is going on there? I

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<v Speaker 2>mean I kind of get it, but like, what's the

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<v Speaker 2>point of that part of it?

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<v Speaker 3>Well, there's something that lawyers do called taking the sting out,

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<v Speaker 3>where they bring up things that they think the defense

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<v Speaker 3>is going to bring out on Cross and they say

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<v Speaker 3>it during direct So that way it kind of makes

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<v Speaker 3>it seem less bad because I'm sure that on Cross

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<v Speaker 3>the defense is going to say something like you dated

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<v Speaker 3>Sam and it didn't go that loud.

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<v Speaker 2>So the prosecution is just preempting the you're just the

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<v Speaker 2>bitter ex girlfriend kind of defense.

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<v Speaker 3>And they're also setting something else up I think where

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<v Speaker 3>they talked about Sam and Caroline's professional relationship, and they

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<v Speaker 3>talked about how in that relationship, Sam also had the

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<v Speaker 3>upper hand. Caroline talked about how her job at Alameda

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<v Speaker 3>was really the second job she's ever had before that

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<v Speaker 3>she worked at Jane Street with Sam, and she felt

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<v Speaker 3>really insecure and not prepared for that job. And she

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<v Speaker 3>checked in with Sam about all of the important decisions

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<v Speaker 3>that she made, and they made it sound like he

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<v Speaker 3>was very involved and he was overseeing what was happening

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<v Speaker 3>at Alameda, So any crimes that were happening at Alameda,

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<v Speaker 3>by extension, Sam would also know about, uh huh and

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<v Speaker 3>sign off one they really amphasized that he was signed

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<v Speaker 3>off on everything that Caroline did.

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<v Speaker 2>That makes sense because I mean, clearly very bad things

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<v Speaker 2>happened with FTX and Alameda, and the key question is

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<v Speaker 2>did Sam do them? Everybody else has admitted to doing them.

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<v Speaker 2>Did Sam do them? And the prosecution is trying to

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<v Speaker 2>prove that yes, he did. Okay, so they got there,

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<v Speaker 2>both their personal and their professional relationship. What else?

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<v Speaker 3>She also give us some interesting insight into Sam as

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<v Speaker 3>a person. They asked her about what his goals were

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<v Speaker 3>for himself for FTX, and she said that he was

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<v Speaker 3>very ambitious and that actually he told her one time

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<v Speaker 3>that there was a five percent chance that he believed

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<v Speaker 3>that he might be president one day.

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<v Speaker 2>You know, I'll say, when I interviewed him, like the

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<v Speaker 2>hubris was striking, which I mean, I guess that's probably

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<v Speaker 2>true for everybody. It's not like, oh my insight, but

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<v Speaker 2>it really is striking. When I interviewed him is when

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<v Speaker 2>he talked about helping trillions of people, not just the

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<v Speaker 2>billions of people who are alive today, but he said

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<v Speaker 2>the trillions or even hundreds of trillions who might summ live.

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<v Speaker 2>But then it was like, look, there are people who

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<v Speaker 2>have had a huge impact on the world, why shouldn't

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<v Speaker 2>it be me? And like similarly, like rich people get

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<v Speaker 2>to be president, like it was super rich, maybe it

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<v Speaker 2>could have been Yeah.

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<v Speaker 3>Yeah, I talked to some reporters who were like, there

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<v Speaker 3>was a time where it wasn't that crazy to think

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<v Speaker 3>that there is a five percent chance that he would

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<v Speaker 3>become president. The prosecutors also asked her about Sam's approach

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<v Speaker 3>to risk, and she said something that I found really interesting,

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<v Speaker 3>which is, imagine if you flipped a coin and if

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<v Speaker 3>the coin landed on tails, the world would be destroyed,

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<v Speaker 3>and if the coin landed on heads, the world would

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<v Speaker 3>be twice as good as it is now. Sam would

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<v Speaker 3>believe in flipping the coin.

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<v Speaker 2>You know, it's funny you should mention that because again,

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<v Speaker 2>before he got indicted, he was on this podcast that

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<v Speaker 2>I like called Conversations with Tyler, with this kind of

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<v Speaker 2>economist public intellectual, Tyler Cowen, and there was a similar

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<v Speaker 2>thing in that interview where Tyler Cowan said said, if

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<v Speaker 2>there was a fifty one to forty nine percent chance

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<v Speaker 2>of a similar thing. Either the universe is twice as

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<v Speaker 2>good or the universe gets destroyed. Do you take the bet?

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<v Speaker 2>And Sam said every time? And Tyler kW was like, yeah,

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<v Speaker 2>but if you keep taking it every time, you're clearly

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<v Speaker 2>going to end with the destroyed universe. And Sam was like,

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<v Speaker 2>or a really awesome universe And I was like what.

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<v Speaker 2>And then when everything blew up, that was what I

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<v Speaker 2>thought back to. There was another interview where this other

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<v Speaker 2>smart person, Matt Levine, sort of get Sam to say

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<v Speaker 2>that what he was doing was kind of a Ponzi scheme.

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<v Speaker 2>Was basically a Ponzi scheme. But to me, the more

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<v Speaker 2>Sam thing was that I'll keep taking the bet. And

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<v Speaker 2>it seems like that is a sort of perfect metaphor

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<v Speaker 2>for what he did, or at least a very good

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<v Speaker 2>metaphor for what he seems.

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<v Speaker 4>To have done.

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<v Speaker 3>Yeah. I underlined in my notebook, like this is the

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<v Speaker 3>crux of the story is he flipped a coin and

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<v Speaker 3>it landed the wrong way for.

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<v Speaker 2>A while, it landed the right way right. That's how

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<v Speaker 2>you get to be worth many tens of billion dollars

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<v Speaker 2>when you're not thirty.

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<v Speaker 3>I would never flip that coin. Not only not flip

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<v Speaker 3>that coin, I would leave the room. I would leave

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<v Speaker 3>the house.

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<v Speaker 2>That's why we're making podcasts, low risk, low return. Presumably

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<v Speaker 2>the prosecutors called Caroline Ellison because you know, they're trying

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<v Speaker 2>to convict Sam of a bunch of crime. So so

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<v Speaker 2>you know what was sort of the crime part of

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<v Speaker 2>her testimony?

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<v Speaker 3>Yes, okay, So remember that the crime that Sam is

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<v Speaker 3>accused of is using money that FTX customers thought that

0:11:38.636 --> 0:11:43.396
<v Speaker 3>they had safely deposited onto the FTX cryptocurrency exchange and

0:11:43.516 --> 0:11:49.356
<v Speaker 3>instead investing it through his investment firm, Alameda. Caroline is

0:11:49.476 --> 0:11:54.676
<v Speaker 3>the head of Alameda, and she said that when Alameda

0:11:55.116 --> 0:11:58.436
<v Speaker 3>used FTX customer funds, it was at Sam's direction.

0:11:59.036 --> 0:12:02.276
<v Speaker 2>Uh huh. So like that's the core, that's it, Like,

0:12:02.396 --> 0:12:02.916
<v Speaker 2>that's the.

0:12:02.796 --> 0:12:04.156
<v Speaker 3>Thing, that's the thing.

0:12:04.236 --> 0:12:07.836
<v Speaker 2>Yeah, that's like a good portrait of the day. One

0:12:07.836 --> 0:12:10.156
<v Speaker 2>of the things I've been interested in and listening to

0:12:10.396 --> 0:12:12.916
<v Speaker 2>the other episodes episodes you did with Michael and with

0:12:13.036 --> 0:12:16.996
<v Speaker 2>Jacob Weisberg, was what's the jury doing? Who was asleep today?

0:12:17.316 --> 0:12:20.516
<v Speaker 2>I find it striking that jurors are asleep, Like, were

0:12:20.516 --> 0:12:22.996
<v Speaker 2>there jurors asleep today? How many was it the same?

0:12:23.116 --> 0:12:24.756
<v Speaker 2>Was it the juror who works the overnight shift.

0:12:25.836 --> 0:12:28.796
<v Speaker 3>I think the jurors, just like the journalists, were actually

0:12:28.796 --> 0:12:32.356
<v Speaker 3>really interested in what Caroline had to say. And she

0:12:32.676 --> 0:12:36.556
<v Speaker 3>also sounded I had heard her on an interviews before,

0:12:36.716 --> 0:12:39.836
<v Speaker 3>and she sounded much more confident. I think her voice

0:12:39.876 --> 0:12:42.516
<v Speaker 3>was deeper, So I wondered whether she got some voice coaching,

0:12:43.076 --> 0:12:44.916
<v Speaker 3>and I wonder if that was part of why she

0:12:45.036 --> 0:12:47.956
<v Speaker 3>was able to keep the juror's attention. It was honestly

0:12:47.996 --> 0:12:51.756
<v Speaker 3>a very technical testimony. They showed a lot of spreadsheets

0:12:51.796 --> 0:12:54.836
<v Speaker 3>and balance sheets, and I was surprised. I kept looking

0:12:54.836 --> 0:12:57.876
<v Speaker 3>over at the jury, but I personally did not witness

0:12:57.916 --> 0:12:59.356
<v Speaker 3>a single sleeping jury today.

0:12:59.916 --> 0:13:03.076
<v Speaker 2>That is a real testament to how Compella and Caroline

0:13:03.076 --> 0:13:05.676
<v Speaker 2>Ellison must have been. So how did the day end?

0:13:06.516 --> 0:13:08.396
<v Speaker 2>Where did you get to in the trial? Today?

0:13:08.476 --> 0:13:11.956
<v Speaker 3>The prosecution and didn't finish asking Caroline questions, So they're

0:13:11.996 --> 0:13:14.876
<v Speaker 3>going to continue with that, and then I think we're

0:13:14.876 --> 0:13:17.116
<v Speaker 3>all really interested to see what's going to come out

0:13:17.156 --> 0:13:18.236
<v Speaker 3>on cross examination.

0:13:19.556 --> 0:13:22.876
<v Speaker 2>I'm very curious to hear what comes out in cross examination.

0:13:23.156 --> 0:13:24.876
<v Speaker 2>We'll be back in a minute with one last thing.

0:13:31.636 --> 0:13:34.396
<v Speaker 2>Lidia Gene, we're back. Can you please give me one

0:13:34.436 --> 0:13:34.836
<v Speaker 2>last thing?

0:13:35.236 --> 0:13:37.756
<v Speaker 3>Our one last thing today is about Gary Wong's testimony.

0:13:38.156 --> 0:13:41.036
<v Speaker 2>Okay, you and Michael talked about Gary Wong. He's the

0:13:41.036 --> 0:13:43.756
<v Speaker 2>guy who doesn't talk right. If there's one thing to remember,

0:13:43.756 --> 0:13:46.036
<v Speaker 2>he's co founder, but mainly is the really quiet guy.

0:13:46.636 --> 0:13:48.636
<v Speaker 2>And then when he talked, apparently said on the show,

0:13:48.636 --> 0:13:49.476
<v Speaker 2>we talked really fast.

0:13:49.556 --> 0:13:50.276
<v Speaker 3>It's kind of interesting.

0:13:50.316 --> 0:13:51.596
<v Speaker 2>Yes, the guy get it over with.

0:13:52.236 --> 0:13:55.036
<v Speaker 3>And once he took the stand did actually talk. And

0:13:55.116 --> 0:13:59.396
<v Speaker 3>today was cross examination, okay, and everyone was really impressed

0:13:59.396 --> 0:14:02.596
<v Speaker 3>with how the defense lawyers did. I think up until

0:14:02.636 --> 0:14:05.476
<v Speaker 3>now they seemed really nervous. I think, I said earlier

0:14:05.476 --> 0:14:08.436
<v Speaker 3>one of their hands seemed to be shaking, and today

0:14:08.716 --> 0:14:12.836
<v Speaker 3>they moved very quickly. They hardly got interrupted by the prosecution.

0:14:13.156 --> 0:14:18.236
<v Speaker 3>They seemed very confident, and they did kind of leave

0:14:18.276 --> 0:14:21.836
<v Speaker 3>me feeling a little bit different about Gary's testimony than

0:14:21.876 --> 0:14:22.596
<v Speaker 3>I did earlier.

0:14:22.756 --> 0:14:25.596
<v Speaker 2>Interesting, So those are like the vibes, which is interesting.

0:14:25.636 --> 0:14:28.076
<v Speaker 2>What was the substance of the cross examination?

0:14:28.276 --> 0:14:30.076
<v Speaker 3>So to me, one of the most interesting things in

0:14:30.116 --> 0:14:34.436
<v Speaker 3>this trial is Sam tweeted shortly before FTX declared bankruptcy.

0:14:35.076 --> 0:14:38.356
<v Speaker 3>FTX is fine assets are fine. And this has been

0:14:38.396 --> 0:14:40.996
<v Speaker 3>pointed over and over again to an example of Sam

0:14:41.116 --> 0:14:44.396
<v Speaker 3>lying and on direct Gary said this was a lie

0:14:44.476 --> 0:14:47.836
<v Speaker 3>because FTX was not fine, assets were not fine, right,

0:14:48.556 --> 0:14:53.236
<v Speaker 3>But the lawyers pointed out how Gary in earlier conversations

0:14:53.396 --> 0:14:57.036
<v Speaker 3>with the prosecution did not characterize this as a lie

0:14:57.516 --> 0:15:00.836
<v Speaker 3>because he said that depending on how you looked at it,

0:15:01.556 --> 0:15:05.276
<v Speaker 3>FTX maybe was fine and assets were fine. It just

0:15:05.316 --> 0:15:09.876
<v Speaker 3>depends whether you were talking about liquid or ill liquid assets, which.

0:15:09.676 --> 0:15:14.396
<v Speaker 2>Is in fact a classic hard problem in financial crises. Right,

0:15:14.436 --> 0:15:16.996
<v Speaker 2>liquid assets basically means assets you can turn into cash

0:15:17.076 --> 0:15:20.156
<v Speaker 2>right now, and I liquid assets means yes, we have

0:15:20.236 --> 0:15:22.636
<v Speaker 2>the money whatever I own a house, say, but I

0:15:22.716 --> 0:15:25.036
<v Speaker 2>just can't sell it and turn it into money this minute.

0:15:25.076 --> 0:15:28.036
<v Speaker 2>And so did he say on cross that like, maybe

0:15:28.036 --> 0:15:30.716
<v Speaker 2>if you're considering I liquid assets, it would have been

0:15:30.756 --> 0:15:33.116
<v Speaker 2>reasonable to think that that FTX was fine.

0:15:33.676 --> 0:15:37.076
<v Speaker 3>He did seem to say that he said that Sam's

0:15:37.796 --> 0:15:41.116
<v Speaker 3>tweet was misleading since he was talking about ill liquid assets,

0:15:41.756 --> 0:15:44.836
<v Speaker 3>but he admitted that in early conversations with prosecutors he

0:15:44.876 --> 0:15:47.516
<v Speaker 3>did not call this tweet a lie. And I found

0:15:47.516 --> 0:15:49.396
<v Speaker 3>that cross examination to be really compelling.

0:15:50.676 --> 0:15:53.676
<v Speaker 2>Makes me only more interested to hear what happens when

0:15:53.756 --> 0:15:59.116
<v Speaker 2>Carolyn Ellison undergoes cross examination. Thanks for having me, Lydia, Jen.

0:15:59.316 --> 0:16:00.636
<v Speaker 3>Bye, Jacob, talk to you soon.

0:16:03.076 --> 0:16:06.076
<v Speaker 1>This episode of Judging Sam was hosted by Jacob Goldstein.

0:16:06.436 --> 0:16:09.396
<v Speaker 1>Lydia gen Caught is our court reporter. Catherine Gerrard and

0:16:09.476 --> 0:16:13.236
<v Speaker 1>Nisha Venken produced this show. Sophie Crane is our editor.

0:16:13.636 --> 0:16:16.996
<v Speaker 1>Our music was composed by Matthias Bossi and John Evans

0:16:17.076 --> 0:16:20.516
<v Speaker 1>of stell Wagons Symphonet. Judging Sam is a production of

0:16:20.596 --> 0:16:23.996
<v Speaker 1>Pushkin Industries. Got a question or comment for me, There's

0:16:23.996 --> 0:16:28.676
<v Speaker 1>a website for that atr podcast dot com. That's atr

0:16:28.836 --> 0:16:33.836
<v Speaker 1>podcast dot com. To find more Pushkin podcasts, listen on

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0:16:37.676 --> 0:16:41.476
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