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Speaker 1: Pushkin.

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Speaker 2: Hey there, it's Michael Lewis. Before we get to this episode,

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Speaker 2: I want to let you know that you can listen

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Speaker 2: to each episode of Judging Sam The Trial of Sam

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Speaker 2: Bankman Freed ad free by becoming a Pushkin Plus subscriber,

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Speaker 2: Happiness Lab from Doctor Lorie Santos, and tons of other

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Speaker 2: top shows from Pushkin. Sign up an Apple Podcasts or

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Speaker 2: at Pushkin, dot fm, Slash Plus. Welcome to Judging Sam,

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Speaker 2: The Trial of Sam Bankman Freed. I'm Michael Lewis. Sam

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Speaker 2: is the founder of a cryptocurrency exchange called ftx that

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Speaker 2: at one point was worth forty billion dollars. Some thought

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Speaker 2: that he'd bring cryptocurrency into the mainstream. Others thought that

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Speaker 2: he might save the world with his philanthropy. But instead

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Speaker 2: his fortune is gone and he's been charged with financial

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Speaker 2: crimes that could put him in prison for the rest

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Speaker 2: of his life. I spent a year and a half

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Speaker 2: reporting on Sam. I was there for the good days,

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Speaker 2: which were astronomically good, and I was there for the

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Speaker 2: catastrophic collapse. While Sam was under house arrest, I visited

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Speaker 2: him often, and I wrote a book about it all.

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Speaker 2: It's called Going Infinite, The Rise and Fall of a

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Speaker 2: New Tycoon. You can hear more about the book in

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Speaker 2: Sam's Backstory in our last episode. But now we're picking

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Speaker 2: up where the book left off and following the trial

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Speaker 2: that will decide Sam's fate. I won't be able to

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Speaker 2: go every day, but producer and reporter Lydia Jane cottwill

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Speaker 2: and she and I will be talking regularly about the

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Speaker 2: twists and turns of the proceedings and will bring you

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Speaker 2: more like interviews with experts, eyewitnesses, and sources I've developed

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Speaker 2: throughout my time reporting on Sam. In this episode, lydia

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Speaker 2: Jene has questions for me and Rebecca Mermelstein, a defense

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Speaker 2: attorney at the law firm Omelvini and Myers. We'll talk

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Speaker 2: about what we can expect to happen today, which is

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Speaker 2: the first day of Sam's trial. So, Lydia Jean, what's

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Speaker 2: on your mind?

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Speaker 1: Thanks Michael, and welcome Rebecca. We're recruiting this on September

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Speaker 1: twenty six. But it's exciting to think that when this

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Speaker 1: episode comes out, Sam's trial will be underway. As I'm

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Speaker 1: getting ready to report on it. I have a few

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Speaker 1: questions for both of you. Michael, I'm going to start

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Speaker 1: with you. So, I was wondering if maybe we could

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Speaker 1: go back to the beginning of this chapter of Sam's life.

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Speaker 1: Where were you when you heard that Sam Makmin Freed

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Speaker 1: had been indicted?

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Speaker 2: God, you know, it's funny. I don't remember where I

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Speaker 2: was then because the trouble had been brewing for so

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Speaker 2: long before then. I spread God, I might have been

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Speaker 2: in the Bahamas. I was back and forth for this period,

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Speaker 2: from the point that FTX collapsed in November of last

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Speaker 2: year to the point when he's extradited in end of December.

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Speaker 2: I was in Bahamas at least half the time.

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Speaker 1: Yeah, And what were you thinking when all of this

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Speaker 1: was beginning? How did you process it at the time.

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Speaker 2: And unravel so quickly? It went from being a company

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Speaker 2: that venture capitalists were valuing at forty billion dollars to

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Speaker 2: a company that was bankrupt in like three days. And

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Speaker 2: when that happened, I had a couple of thoughts at once.

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Speaker 2: Some of them. Several of these thoughts I had were ignoble.

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Speaker 2: The ignoble thought was I wasn't quite sure how I

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Speaker 2: was going to write this book, And now I know

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Speaker 2: how I'm going to write this book, and the story

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Speaker 2: is unbelievable, and I can't believe I'm sitting in the

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Speaker 2: middle of it and getting to watch it. The immediate

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Speaker 2: thought was the incredulity at the panic in the air

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Speaker 2: that there were hundreds of employees of FTX in the

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Speaker 2: Bahamas who just ran for the airport, and it was

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Speaker 2: this wonderful quiet where it was just me and Sam,

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Speaker 2: and Sam's parents and Sam's therapists and one or two

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Speaker 2: brave souls from FTX who hadn't fled. I also thought

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Speaker 2: how curious it was the speed with which it went

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Speaker 2: from this pretty widely admired and reputable operation to being

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Speaker 2: viewed as this vast criminal enterprise without there being a

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Speaker 2: whole lot of new data except for the fact the

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Speaker 2: money was in the wrong place. The money wasn't there.

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Speaker 2: There was supposed to be fifteen billion dollars inside of FTX.

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Speaker 2: That and a lot of that was not inside of FTX.

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Speaker 2: It was clearly inside of Sam's hedge foot, but before

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Speaker 2: the most important executives in the place could explain what

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Speaker 2: had happened or had any idea what had happened, everybody

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Speaker 2: changed their mind all at once, So there was it

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Speaker 2: was It's just like how fast it went from one

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Speaker 2: judgment to another judgment.

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Speaker 1: Was there a part of you that was like maybe

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Speaker 1: this swall blow over or were you like this, there's

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Speaker 1: a before and there's an after, and now this is

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Speaker 1: an after. Thanks will never be the same?

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Speaker 2: That's a good question. No, I thought things would never

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Speaker 2: be the same. Sam thought for the first five or

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Speaker 2: six weeks that he was going to revive the exchange

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Speaker 2: with the help of some aging crypto people and that

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Speaker 2: this was all resolvable. I couldn't really see that path,

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Speaker 2: and that the things run on trust and it went

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Speaker 2: from being very trusted, like nothing in crypto is that trusted.

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Speaker 2: But as things going, Crypto maybe the most trusted. I mean,

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Speaker 2: it's brand was trust to being completely not trusted, and

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Speaker 2: once that happens, it's very hard to kind of get

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Speaker 2: it back. So I didn't think. I didn't think he

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Speaker 2: was coming back. It was interesting to watch him flop

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Speaker 2: around trying to figure out how to get it back.

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Speaker 2: The other thing I remember, and Rebecca could speak to this.

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Speaker 2: The lawyers came in and out. His lawyers came in

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Speaker 2: a couple of times, and I remember talking to them

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Speaker 2: early December, mid December, how long it would take before

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Speaker 2: the United States government actually felt it had its case

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Speaker 2: and it was strong enough that they wanted the Bahamas

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Speaker 2: to extradite him and then bring him to the States.

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Speaker 2: And I remember the lawyers thinking they had many months

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Speaker 2: like that. They didn't think this was going to happen

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Speaker 2: that fast because it's too complicated and everybody needed to

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Speaker 2: understand what happened first, and that was it. So that

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Speaker 2: was a shock to everyone, even the pros, like how

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Speaker 2: fast they got him out of there and how fast

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Speaker 2: they got him here.

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Speaker 1: Rebecca, could you maybe just summarize what exactly Sam has

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Speaker 1: been charged with?

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Speaker 3: Sure, I think they largely fall into really three related issues.

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Speaker 3: The first is there's an allegation that he defrauded the

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Speaker 3: investors in FTX basically by lying, right, And that's going

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Speaker 3: to be a theme here again and again and again

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Speaker 3: about misrepresentation. So there's some charges that relate to lies

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Speaker 3: and defrauding of investors in FTX, there are alleged lies

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Speaker 3: to lender. So there's were loans that had been made

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Speaker 3: to his entities, and there's allegations that he lied to

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Speaker 3: those lenders both to get money from them and then

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Speaker 3: to keep money from them to keep them from taking

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Speaker 3: their money back. And then of course lies to FTX customers,

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Speaker 3: to people who were sending a currency right dollars yen

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Speaker 3: lira two accounts that were purportedly held at FTX, it

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Speaker 3: turns out they were largely held at Alameda, it's part

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Speaker 3: of the problem. And then stealing that money from his

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Speaker 3: customers without their knowledge. So that's the big framework. I

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Speaker 3: think those are the three areas you're going to hear

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Speaker 3: the most about at the trial. That breaks down into

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Speaker 3: seven different charges in this case. Often you're going to

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Speaker 3: see a what we call a substantive offense that he

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Speaker 3: did a certain crime, he committed a certain crime, and

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Speaker 3: also a conspiracy, which is a companion to it. Right,

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Speaker 3: it's a separate crime to agree to commit the crime

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Speaker 3: with other people, and so you're going to see those

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Speaker 3: go together a lot. So you have a wire fraud

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Speaker 3: on the FTX customers and a conspiracy to do that

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Speaker 3: same thing. You have a wire fraud on Alameda's lenders,

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Speaker 3: you have a conspiracy to do that same thing, and

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Speaker 3: then you have conspiracy to commit securities fraud in relation

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Speaker 3: to FTX investors, a conspiracy to commit commodities fraud on

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Speaker 3: FTX customers, and finally money laundering, which basically is an

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Speaker 3: allegation that he was hiding the money he was stealing.

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Speaker 2: It's interesting to me if a lay person reads the charges,

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Speaker 2: there's no they can't visualize the crime. I think of

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Speaker 2: the problem is like all one big problem. The money

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Speaker 2: was in the wrong place, and that's pretty simple, like

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Speaker 2: money that should have been in cold storage and FTX

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Speaker 2: was in hot little hands of alimeter research. And then

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Speaker 2: it gets framed with all these complicated words and in

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Speaker 2: kind of abstract terms like why are fraud? How does

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Speaker 2: that even come about as an idea that we're going

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Speaker 2: to charge him not with the money being in the

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Speaker 2: wrong place, but in him sending electronic messages that hide

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Speaker 2: the fact that the money is in the wrong place.

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Speaker 3: Yeah, it's a great question. I think it's really a

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Speaker 3: quirk of the federal system, which is to say, some

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Speaker 3: thing happens, everyone has the feeling it's a crime. You

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Speaker 3: have to match it to a statute. There has to

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Speaker 3: be something that makes it a crime. But the reason

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Speaker 3: wire fraud is a federal crime is because after you

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Speaker 3: have to have the misleading statement and the effort to defraud,

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Speaker 3: you have to have an interstate or international wire, and

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Speaker 3: that gives the federal government the power to regulate it,

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Speaker 3: and it gives federal prosecutors the power to prosecute it.

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Speaker 3: So it's a little bit of a funny quirk.

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Speaker 1: If Sam is found guilty on all seven counts that

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Speaker 1: he's been charged with, how long could he go to prison? For?

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Speaker 3: The maximum as a matter of law is a little

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Speaker 3: over one hundred years. Is that likely?

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Speaker 2: Though?

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Speaker 1: Would you serve them consecutively?

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Speaker 3: It's a great question, so you can structure a sentence

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Speaker 3: a lot of different ways. Will he actually get one

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Speaker 3: hundred and ten years in prison? It would be a

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Speaker 3: very extraordinary sentence for a white collar defendant, even a

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Speaker 3: white collar defendant at this scale. I think it's unlikely.

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Speaker 3: The statute'd say this is the most amount of time

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Speaker 3: a judge could give him in jail, But the sentence

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Speaker 3: and guidelines are a very complicated algorithm that gives judges

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Speaker 3: a recommended range for someone, and in a fraud case,

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Speaker 3: the overwhelming the most important factor is the loss amount

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Speaker 3: in the case, and this one's obviously off the charts. Yeah,

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Speaker 3: and so his guidelines range here, I haven't looked at it,

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Speaker 3: but I'm almost certain will be life in prison, which

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Speaker 3: is not very useful as a recommendation to a judge.

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Speaker 3: So I would say, he's looking at a lot of time,

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Speaker 3: but you shouldn't use the statutory maximum sentence as a

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Speaker 3: presumption about what he's looking at.

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Speaker 1: Sam's now in jail at the Metropolitan Detention Center in Brooklyn,

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Speaker 1: and his lawyers have been saying that the fact that

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Speaker 1: he's held there has been making it hard for them

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Speaker 1: to work with him. You've had clients at the Metropolitan

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Speaker 1: Detention Center?

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Speaker 3: Is that right I have?

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Speaker 1: Can you describe what it's been like to work with them?

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Speaker 3: There's no question it's extraordinarily harder to help someone prepare

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Speaker 3: for trial or even for any part of their case

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Speaker 3: when they're in prison. For any number of reasons. Prisoner's

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Speaker 3: by and large can't make phone calls. They do have

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Speaker 3: some access to phone time. Those phone calls are recorded.

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Speaker 3: In every instance, there is inmate email. Again, the government

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Speaker 3: has access to that they are almost certainly reading Sam

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Speaker 3: Bankman's freed'ze emails, and you don't want to risk that

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Speaker 3: they're going to look at something you're saying to your client.

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Speaker 3: So if you think about what that means about visiting

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Speaker 3: your client, that means every time you want to see

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Speaker 3: your client, you have to go out to Brooklyn, MDC

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Speaker 3: is kind of a little bit in the middle of nowhere,

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Speaker 3: relatively speaking. It's not an easy place to get to.

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Speaker 3: You have to go through prison security, You have to

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Speaker 3: lock your possessions in a locker, you have to go

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Speaker 3: through a metal detector. That are very strict rules about

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Speaker 3: what colors you can wear. You can't wear colors that

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Speaker 3: are the colors of inmate uniform, so no khaki, no orange.

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Speaker 3: And then there's a lot of waiting. There's a lot

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Speaker 3: of bureaucracy, and you are really at the mercy of

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Speaker 3: a bop prison guard who's not all that interested in

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Speaker 3: being helpful, and so you wait, You wait to be

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Speaker 3: let into the visiting room, You wait for them to

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Speaker 3: bring your client down. Twice a day inmates are counted.

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Speaker 3: That is, the whole prison shuts down so that every

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Speaker 3: single person can be counted and nobody can leave or

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Speaker 3: enter at that time. Sometimes it takes an hour, so

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Speaker 3: you could get stuck. You're done but you can't leave,

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Speaker 3: or the other way you could be waiting to get in.

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Speaker 3: So everything is very, very very slow and without seeming

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Speaker 3: rhyme or reason. There's often just a shut down and

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Speaker 3: you get there and you can't go in, so it's

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Speaker 3: extremely frustrating, as you might imagine.

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Speaker 1: Yeah, I actually tried to visit the MDC yesterday a

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Speaker 1: half an hour uber and they were doing prisoner account

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Speaker 1: and I wasn't allowed in and they made me stand

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Speaker 1: in this basically bus stop area where I couldn't see

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Speaker 1: anything that was happening at all, and I gave up

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Speaker 1: and went so.

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Speaker 2: Did you actually knock on the door and say can

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Speaker 2: I come in?

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Speaker 1: I stood in front of the door, and then a

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Speaker 1: guard came up to me and asked me what I

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Speaker 1: was doing, and I said I was a journalist, and

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Speaker 1: he said, you can't come in.

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Speaker 2: You had no one to see though, you're no purpose.

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Speaker 1: There, I know, I just wanted to see how far

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Speaker 1: I lead got.

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Speaker 2: You're the only one in America trying to get into jail.

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Speaker 1: Yeah, I did not make a very I made it

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Speaker 1: right to the front steps.

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Speaker 2: We'll be right back. Welcome back to judging Sam the

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Speaker 2: trial of Sam Bankman.

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Speaker 3: Freed, Rebecca.

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Speaker 1: I was wondering if you could give us a preview

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Speaker 1: of what we should expect to happen on the first day.

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Speaker 3: Sure. So the first day I expect will largely consist

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Speaker 3: of jury selection, which is to say that people will

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00:13:37,836 --> 00:13:41,556
Speaker 3: be brought in in a veneer thirty forty fifty people

264
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Speaker 3: at a time typically, and these are people who live

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Speaker 3: in the New York City area. So it's going to

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Speaker 3: include Manhattan, the Bronx, Westchester, and a few of the

267
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Speaker 3: southernmost counties of the Southern District of New York. And

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Speaker 3: they're going to have received a summons in the mail

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Speaker 3: that tells them to come in. They won't know that

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Speaker 3: they're coming in for any particular case. And actually there'll

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Speaker 3: be hundreds of people sitting in a main room called

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Speaker 3: up one of the you know, in groups to whatever

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Speaker 3: courtroom needs to pick a jury that day. It may

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Speaker 3: not only be Sam bankman Fried next week. And then

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Speaker 3: the judge will ask a series of questions, some of

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Speaker 3: which are virtually standard for every single criminal trial, and

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Speaker 3: other of which the parties have asked the judge to

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Speaker 3: ask and he's agreed that are specific to this trial.

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Speaker 3: To try to ascertain a few things, is this a

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Speaker 3: person who can sit at this trial or any trial?

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Speaker 3: For example, if you don't speak English fluently, then you

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Speaker 3: can't be a jur right, if you have a medical

283
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Speaker 3: condition that means you can't sit for a long period

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Speaker 3: of time in a chair, you can't be a jur

285
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Speaker 3: Do you have a small child at home and you're

286
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Speaker 3: not able to stay until five o'clock because you have

287
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Speaker 3: to do school pickups. So you're going to get a

288
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Speaker 3: lot of people who just say I can't be here

289
00:14:47,996 --> 00:14:50,556
Speaker 3: for logistical reasons, some of them really can't, and some

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Speaker 3: of them just don't want to be on a jury.

291
00:14:52,396 --> 00:14:54,556
Speaker 3: And then you're going to get people who have strong

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00:14:54,596 --> 00:14:57,716
Speaker 3: opinions about facts that are related to this case that

293
00:14:57,756 --> 00:14:59,796
Speaker 3: they are going to say or the parties are going

294
00:14:59,836 --> 00:15:03,316
Speaker 3: to determine make them unable to be an impartial juror

295
00:15:03,356 --> 00:15:06,156
Speaker 3: if you lost money in the FTX bankruptcy, you probably

296
00:15:06,196 --> 00:15:08,596
Speaker 3: can't be a juror on this case. If you are

297
00:15:09,116 --> 00:15:11,596
Speaker 3: be friends with Chris Everdale, who's one of Sam Bankman's

298
00:15:11,596 --> 00:15:14,276
Speaker 3: Freed's lawyers, then you probably can't be on this jury,

299
00:15:14,316 --> 00:15:16,396
Speaker 3: and so you'll have a long process of trying to

300
00:15:16,436 --> 00:15:20,236
Speaker 3: weed through people who can really be impartial and sit

301
00:15:20,316 --> 00:15:23,036
Speaker 3: in a fair way and listen to the facts and

302
00:15:23,116 --> 00:15:25,516
Speaker 3: learn them for the first time and not be affected

303
00:15:25,556 --> 00:15:28,436
Speaker 3: by what they may have heard other places and decide.

304
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Speaker 3: And I could be wrong. Judge Caaplin's a very efficient judge,

305
00:15:31,636 --> 00:15:33,916
Speaker 3: but that is very likely to take the whole first day,

306
00:15:33,956 --> 00:15:35,996
Speaker 3: and that will be all that happens. And it's a

307
00:15:35,996 --> 00:15:37,556
Speaker 3: little interesting for a few minutes, and then it gets

308
00:15:37,556 --> 00:15:38,316
Speaker 3: a little repetitive.

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Speaker 2: Is it possible it goes on for a much longer time?

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Speaker 2: Can it?

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Speaker 1: Case?

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00:15:42,556 --> 00:15:46,676
Speaker 3: Certainly could. I would say it's not unusual for it

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Speaker 3: to spill into a second day. It would be pretty

314
00:15:49,716 --> 00:15:53,596
Speaker 3: unusual for it to spill into a third, but it could.

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Speaker 1: You mentioned that Judge Coplin is pretty efficient. So yeah,

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Speaker 1: the judge in this case, his name is Lewis Caplan

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Speaker 1: And Rebecca, you're a former prosecutor in the Southern District

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Speaker 1: of New York. That's the office that's bringing this case

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Speaker 1: against Sam.

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Speaker 3: That's right.

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Speaker 1: What can you tell us about Judge Coplin?

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Speaker 3: So I never tried a case in front of Judge Caplin,

323
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Speaker 3: But I would say his reputation is as someone who

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Speaker 3: is very smart, very confident in his own decision making.

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Speaker 3: He makes decisions quickly. Some judges have a reputation that

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Speaker 3: whoever spoke last kind of convinces them. I don't think

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00:16:24,396 --> 00:16:27,436
Speaker 3: that's true with him, and I think on balance he's

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Speaker 3: seen as someone who's a good judge for the government,

329
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Speaker 3: both because I think he's friendly to the government's purpose,

330
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Speaker 3: which is not to say that he's not impartial, but

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Speaker 3: he's not an aunt, doesn't have an anti prosecutor bent,

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Speaker 3: and at the end of the day, I always felt

333
00:16:43,076 --> 00:16:44,876
Speaker 3: as a prosecutor and now I still feel this way

334
00:16:44,876 --> 00:16:48,676
Speaker 3: as defense lawyer, that judges who are rigorous about enforcing

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Speaker 3: the rules of the court room, about enforcing limitations on

336
00:16:52,796 --> 00:16:55,796
Speaker 3: what's admissible and the rules of evidence, are better for

337
00:16:55,836 --> 00:16:58,276
Speaker 3: the government because the government is more likely to be

338
00:16:59,236 --> 00:17:01,756
Speaker 3: playing by the book, and as defense lawyers, we often

339
00:17:01,796 --> 00:17:04,156
Speaker 3: are trying to find a little more wiggle room, and

340
00:17:04,196 --> 00:17:06,036
Speaker 3: so a judge who doesn't allow that is better for

341
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Speaker 3: the government than for the defense.

342
00:17:07,996 --> 00:17:11,076
Speaker 1: Right It's like the rule followers versus the rule breakers.

343
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Speaker 3: I don't know that I like to think about myself

344
00:17:13,836 --> 00:17:15,556
Speaker 3: now as a rule breaker, But it's a fair point

345
00:17:16,116 --> 00:17:19,156
Speaker 3: the rural skeptics, Yes, the rule skeptics. I think that's right.

346
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Speaker 3: And of course, the other thing that's interesting about Judge

347
00:17:21,436 --> 00:17:24,156
Speaker 3: Capelin here is that the defendant has really pissed him

348
00:17:24,156 --> 00:17:27,996
Speaker 3: off by his pre trial antics, if you will. And

349
00:17:28,236 --> 00:17:30,036
Speaker 3: I don't think that Judge Kaplin is going to let

350
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Speaker 3: that affect the way he handles the trial itself. But

351
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Speaker 3: I think it's a bad sign for sentencing ray.

352
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Speaker 1: I was going to say, in a case like this,

353
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Speaker 1: what difference does who the judge is make? Because at

354
00:17:41,356 --> 00:17:42,836
Speaker 1: the end of the day, right, it's the jury that

355
00:17:42,876 --> 00:17:44,596
Speaker 1: decides whether Sam is guilty or innocent.

356
00:17:44,756 --> 00:17:46,556
Speaker 3: Oh, but I think the judge makes an enormous amount

357
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Speaker 3: of difference in lots of ways. The first is that

358
00:17:49,956 --> 00:17:52,836
Speaker 3: there are lots of evidentiary rulings that could go either

359
00:17:52,836 --> 00:17:56,156
Speaker 3: way that reasonable minds can disagree, And trial judges have

360
00:17:56,196 --> 00:17:59,676
Speaker 3: an enormous amount of discretion to control the flow of

361
00:17:59,716 --> 00:18:03,196
Speaker 3: evidence in their courtroom. Some judges, even though they tell

362
00:18:03,236 --> 00:18:05,876
Speaker 3: a jury, you shouldn't read anything into my questions, you

363
00:18:05,916 --> 00:18:08,716
Speaker 3: shouldn't read anything into how I rule on objections. I

364
00:18:08,756 --> 00:18:12,396
Speaker 3: don't have an opinion. Juries love judges. They watch judges

365
00:18:12,476 --> 00:18:15,636
Speaker 3: for signs and they interpret every single thing the judge

366
00:18:15,716 --> 00:18:18,676
Speaker 3: is doing. So again really matters. And then judges have

367
00:18:18,756 --> 00:18:23,236
Speaker 3: an enormous amount of discretion at sentencing. And so if

368
00:18:23,236 --> 00:18:25,596
Speaker 3: you can they're actually our statistics published on this, you

369
00:18:25,636 --> 00:18:28,476
Speaker 3: can see some judges are really light sentencers, some are

370
00:18:28,476 --> 00:18:30,596
Speaker 3: really harsh sentencers. Again, it really matters.

371
00:18:30,756 --> 00:18:33,996
Speaker 1: Okay, another question for you, Rebecca. Let's move forward to

372
00:18:34,156 --> 00:18:37,036
Speaker 1: opening statements. If you were to make a bingo card

373
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Speaker 1: for what you would expect the prosecution and the defense

374
00:18:40,316 --> 00:18:42,916
Speaker 1: to say in their opening statements, what would you put

375
00:18:42,956 --> 00:18:45,356
Speaker 1: on those cards. Let's start with the prosecution.

376
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Speaker 3: Okay, that's a fun question. You'll see. I predict that

377
00:18:48,796 --> 00:18:51,796
Speaker 3: the government's opening will have the same form it always does.

378
00:18:51,836 --> 00:18:54,716
Speaker 3: It's going to have what's called a grab, a quick, pithy,

379
00:18:54,956 --> 00:18:57,836
Speaker 3: kind of interesting way to grab the jury's attention, and

380
00:18:57,876 --> 00:19:00,036
Speaker 3: then they'll kind of pause. They're going to explain what

381
00:19:00,276 --> 00:19:03,156
Speaker 3: happened here. They're going to tell the story of the

382
00:19:03,156 --> 00:19:06,196
Speaker 3: downfall of FTX, and then they'll talk about how they're

383
00:19:06,196 --> 00:19:08,356
Speaker 3: going to prove that to the jury. Who's going to

384
00:19:08,436 --> 00:19:10,316
Speaker 3: come talk to them what kind of documents they're going

385
00:19:10,396 --> 00:19:12,036
Speaker 3: to say, So they're going to talk about lies. They're

386
00:19:12,036 --> 00:19:15,396
Speaker 3: going to say, lie lie lie, lie to FDx investors,

387
00:19:15,796 --> 00:19:18,956
Speaker 3: lied to customers, lied to lenders. I think there's a

388
00:19:18,996 --> 00:19:23,556
Speaker 3: possibility that you'll hear some kind of victim vignettes, right,

389
00:19:23,636 --> 00:19:27,916
Speaker 3: the little lady in Topeka who lost her life savings

390
00:19:27,996 --> 00:19:30,756
Speaker 3: in the downfall, right, because it puts a human element

391
00:19:30,796 --> 00:19:33,316
Speaker 3: on it. Otherwise it's a little abstract, and you want

392
00:19:33,316 --> 00:19:37,156
Speaker 3: to really say, these are real people. This wasn't monopoly money.

393
00:19:37,196 --> 00:19:41,756
Speaker 3: It mattered. So I expect you'll hear about victims. I

394
00:19:41,756 --> 00:19:46,316
Speaker 3: think you'll hear the word victim. I wouldn't be surprised

395
00:19:46,356 --> 00:19:49,356
Speaker 3: if you surprised if you heard things like greed, right.

396
00:19:49,756 --> 00:19:53,596
Speaker 3: And I guess that's not enough words for a BINGO card,

397
00:19:53,916 --> 00:19:57,076
Speaker 3: but I think that's probably the top ones i'd pick.

398
00:19:57,236 --> 00:19:59,756
Speaker 3: And if you're the defense, you're going to hear a

399
00:19:59,796 --> 00:20:03,076
Speaker 3: lot about cooperators. I predict, as I think has been

400
00:20:03,316 --> 00:20:05,996
Speaker 3: sort of widely published at this point, there are people

401
00:20:06,036 --> 00:20:09,036
Speaker 3: who have pled guilty and agreed to cooperate in this trial,

402
00:20:09,596 --> 00:20:10,916
Speaker 3: and so the defense is going to have to go

403
00:20:10,956 --> 00:20:13,116
Speaker 3: on the offense there and You're going to hear a

404
00:20:13,156 --> 00:20:16,596
Speaker 3: lot about why those people can't be trusted, what their

405
00:20:16,636 --> 00:20:20,516
Speaker 3: incentives were to cooperate, and why they're lying. I also

406
00:20:20,556 --> 00:20:22,516
Speaker 3: think you're going to hear a lot about a rush

407
00:20:22,556 --> 00:20:26,516
Speaker 3: to judgment. This moved really fast, and so it moved

408
00:20:26,516 --> 00:20:28,796
Speaker 3: so fast in ways that the jury won't actually get

409
00:20:28,796 --> 00:20:31,396
Speaker 3: to hear about that. Charges had to be dropped because

410
00:20:31,436 --> 00:20:33,916
Speaker 3: they weren't brought fast enough and the government got over

411
00:20:33,956 --> 00:20:35,796
Speaker 3: at Skis. And you're going to want to say they

412
00:20:35,796 --> 00:20:38,996
Speaker 3: don't understand what happened. They saw this thing, these young

413
00:20:39,116 --> 00:20:42,196
Speaker 3: hungry prosecutors wanted to make a name for themselves, and

414
00:20:42,276 --> 00:20:45,196
Speaker 3: they jump the gun and they don't really understand it.

415
00:20:45,516 --> 00:20:47,276
Speaker 3: And I think tied to that theme is going to

416
00:20:47,276 --> 00:20:50,476
Speaker 3: be complexity. Right, this stuff is hard to understand. It's

417
00:20:50,516 --> 00:20:53,796
Speaker 3: easy to make a mistake, either that the government has

418
00:20:53,836 --> 00:20:56,796
Speaker 3: made a mistake or that Sam Bankmin freed himself. Didn't

419
00:20:56,916 --> 00:20:59,436
Speaker 3: understand certain things I would expect to be part of

420
00:20:59,436 --> 00:21:00,116
Speaker 3: the defense theme.

421
00:21:01,316 --> 00:21:03,676
Speaker 1: For a final question, it's for both of you. You

422
00:21:03,716 --> 00:21:06,116
Speaker 1: both have talked about how on the trial, right the

423
00:21:06,196 --> 00:21:09,396
Speaker 1: prosecution is going to say a story about whether Sam

424
00:21:09,476 --> 00:21:11,836
Speaker 1: is guilty or innocent, and the defense is going to

425
00:21:11,916 --> 00:21:14,636
Speaker 1: say a story about whether Sam is guilty or innocent,

426
00:21:15,276 --> 00:21:17,996
Speaker 1: And Michael, you called it a story war. I guess

427
00:21:18,036 --> 00:21:20,356
Speaker 1: I wonder what do you think the bigger story is?

428
00:21:20,396 --> 00:21:23,076
Speaker 1: Like why should listeners care or why do they care

429
00:21:23,156 --> 00:21:25,836
Speaker 1: so much about Sam's skilter innocence.

430
00:21:27,596 --> 00:21:32,756
Speaker 2: It's a great question that it's puzzled me. Like I

431
00:21:32,836 --> 00:21:35,876
Speaker 2: thought when all this thing, when it blew up in November,

432
00:21:36,236 --> 00:21:38,796
Speaker 2: that I thought by January everybody'd be bored with it.

433
00:21:38,876 --> 00:21:41,756
Speaker 2: The culture moves so fast from one story to the next,

434
00:21:41,956 --> 00:21:45,796
Speaker 2: and its memory is so short. This story has not

435
00:21:45,956 --> 00:21:51,316
Speaker 2: done that. People have had an enduring interest, consuming interest

436
00:21:50,636 --> 00:21:56,996
Speaker 2: in FTX and Sam Bankman freed. My first guess that's

437
00:21:57,116 --> 00:21:59,596
Speaker 2: why that is is they don't feel like actually, no

438
00:21:59,636 --> 00:22:02,836
Speaker 2: matter what they say on Twitter, they don't feel they

439
00:22:02,876 --> 00:22:06,036
Speaker 2: actually understand it. So it hasn't resolved itself in their

440
00:22:06,076 --> 00:22:11,276
Speaker 2: minds as a completely clean story. There's a tendiness to oh,

441
00:22:11,636 --> 00:22:14,076
Speaker 2: crypto crook. He was a crypto crook from the beginning.

442
00:22:14,116 --> 00:22:16,956
Speaker 2: You know, we already fooled everybody. That story's kind of

443
00:22:16,996 --> 00:22:20,836
Speaker 2: a boring story. They know it's more interesting than that.

444
00:22:20,876 --> 00:22:23,556
Speaker 2: They just don't know that they don't know and that

445
00:22:23,676 --> 00:22:27,236
Speaker 2: they don't know bothers them, do you know, I think so.

446
00:22:28,116 --> 00:22:30,396
Speaker 2: I mean, I think his best is I've tried to

447
00:22:30,436 --> 00:22:32,876
Speaker 2: describe it. I hope the reader puts down the book

448
00:22:32,876 --> 00:22:36,196
Speaker 2: and feels their own conviction about what happened. But it's

449
00:22:36,236 --> 00:22:39,636
Speaker 2: never died down. You know, Sam Bagman Freed is discovered

450
00:22:39,676 --> 00:22:42,236
Speaker 2: to be living on peanut butter and bread in the

451
00:22:42,556 --> 00:22:45,836
Speaker 2: in the Metropolitan Detention Center in Brooklyn, and it's front

452
00:22:45,876 --> 00:22:49,596
Speaker 2: page news in the New York Times. People can't get

453
00:22:49,676 --> 00:22:52,316
Speaker 2: enough of it. And I think it's because they don't.

454
00:22:52,676 --> 00:22:54,556
Speaker 2: They think they don't completely understand it.

455
00:22:54,716 --> 00:22:56,556
Speaker 1: There's something about this story that's not adding up.

456
00:22:56,716 --> 00:22:57,116
Speaker 2: That's right.

457
00:22:57,156 --> 00:23:00,556
Speaker 1: We're bothered by that. We want to know. Yes, what

458
00:23:00,556 --> 00:23:01,676
Speaker 1: do you think, Rebecca, Well.

459
00:23:01,596 --> 00:23:04,396
Speaker 3: It's interesting because you ask two questions, which is why

460
00:23:04,436 --> 00:23:07,556
Speaker 3: should we care and why do people care? And actually

461
00:23:07,556 --> 00:23:09,876
Speaker 3: I'm not sure we should care as much as people do.

462
00:23:10,836 --> 00:23:15,356
Speaker 3: You know, this is in some ways just one of

463
00:23:15,396 --> 00:23:17,996
Speaker 3: so many crimes, and you know, especially when we talk

464
00:23:18,036 --> 00:23:20,356
Speaker 3: about something like the food at the MDC. And I

465
00:23:20,356 --> 00:23:22,756
Speaker 3: think you've seen some statements in the press by the

466
00:23:22,756 --> 00:23:25,796
Speaker 3: federal defenders saying like we hope this press attention on

467
00:23:25,836 --> 00:23:29,276
Speaker 3: this one person will actually motivate change for everyone, because

468
00:23:29,276 --> 00:23:32,116
Speaker 3: these are not new things, right, Lots of these things

469
00:23:32,196 --> 00:23:35,156
Speaker 3: are true for every person who's in jail, and MDC

470
00:23:35,316 --> 00:23:38,076
Speaker 3: is a jail for people, by and large awaiting trial,

471
00:23:38,156 --> 00:23:40,396
Speaker 3: So every single one of them has not yet been

472
00:23:40,436 --> 00:23:43,516
Speaker 3: found guilty and they're subject to these conditions. And why

473
00:23:43,556 --> 00:23:46,836
Speaker 3: should we care so much about this one person? Why

474
00:23:46,876 --> 00:23:48,636
Speaker 3: do we care? I think part of it is an

475
00:23:48,796 --> 00:23:51,036
Speaker 3: Icarus story, right, there's a shot and freud to it,

476
00:23:51,076 --> 00:23:54,676
Speaker 3: which is, here's this boy, wonder King who seemed to

477
00:23:54,716 --> 00:23:59,116
Speaker 3: be using his you know, brain to just print money

478
00:23:59,396 --> 00:24:01,556
Speaker 3: and become so successful. And there's a little bit of

479
00:24:02,036 --> 00:24:04,636
Speaker 3: human nature to say, kind of good, right, I knew

480
00:24:04,636 --> 00:24:06,716
Speaker 3: it couldn't be that easy. If it were that easy,

481
00:24:06,756 --> 00:24:08,796
Speaker 3: we'd all be doing it. And it must have been

482
00:24:09,196 --> 00:24:10,596
Speaker 3: must have been a fraud. And I'm glad to see

483
00:24:10,636 --> 00:24:12,516
Speaker 3: him kind of get what's coming. And so I think

484
00:24:12,516 --> 00:24:14,956
Speaker 3: that creates kind of an interest in it. And then

485
00:24:14,996 --> 00:24:19,156
Speaker 3: of course it is important because I think for a

486
00:24:19,156 --> 00:24:21,276
Speaker 3: lot of people, Crypto felt like an area where you

487
00:24:21,316 --> 00:24:24,516
Speaker 3: could print money, where anybody could make money, and it's

488
00:24:24,516 --> 00:24:27,956
Speaker 3: important for people to understand sort of what the cost

489
00:24:28,036 --> 00:24:31,356
Speaker 3: is of having an unregulated currency. It's more and more regulated,

490
00:24:31,396 --> 00:24:35,436
Speaker 3: of course, but the dangers of crypto writ large are

491
00:24:35,476 --> 00:24:37,796
Speaker 3: a little bit on display when you talk about how

492
00:24:37,836 --> 00:24:40,676
Speaker 3: this could fail so spectacularly. Whether it was a crime

493
00:24:40,756 --> 00:24:42,836
Speaker 3: or not, it certainly failed spectacularly.

494
00:24:43,076 --> 00:24:44,916
Speaker 1: We'll be back in a minute with one last thing.

495
00:24:53,796 --> 00:24:56,836
Speaker 1: And we're back with one last thing. Our one last

496
00:24:56,836 --> 00:25:00,996
Speaker 1: thing today is about a lawsuit against Sam's parents. Recently,

497
00:25:01,156 --> 00:25:03,836
Speaker 1: lawyers for FTX sued them in an attempt to get

498
00:25:03,876 --> 00:25:08,516
Speaker 1: money back to repay their creditors. In this suit, FTX

499
00:25:08,556 --> 00:25:13,036
Speaker 1: alleges that Sam's parents either knew or willfully ignored signs

500
00:25:13,036 --> 00:25:18,476
Speaker 1: that Sam was quote orchestrating a vast fraudulent scheme. I

501
00:25:18,516 --> 00:25:21,116
Speaker 1: should also note here that my boyfriend is a lawyer

502
00:25:21,156 --> 00:25:24,036
Speaker 1: at Sullivan and Cromwell. That's one of the firms that's

503
00:25:24,076 --> 00:25:28,076
Speaker 1: been representing FTX in the bankruptcy, but not Sam Bankman Freed.

504
00:25:28,836 --> 00:25:31,036
Speaker 1: He and I have a firewall up about this case,

505
00:25:31,476 --> 00:25:33,956
Speaker 1: and Sullivan and Cromwell is not involved in this particular

506
00:25:34,036 --> 00:25:38,116
Speaker 1: lawsuit against Sam's parents. Rebecca, I wonder what stood out

507
00:25:38,116 --> 00:25:40,196
Speaker 1: to you most about this suit against Sam's parents.

508
00:25:40,876 --> 00:25:42,756
Speaker 3: I should preface it by saying that I am not

509
00:25:42,796 --> 00:25:45,036
Speaker 3: a bankruptcy lawyer. This is really sort of outside of

510
00:25:45,076 --> 00:25:48,476
Speaker 3: my area of interest. But I think one question it

511
00:25:48,556 --> 00:25:51,196
Speaker 3: raises for a lot of people outside the law is

512
00:25:51,396 --> 00:25:53,396
Speaker 3: are they next right? Are they going to be charged

513
00:25:53,396 --> 00:25:54,036
Speaker 3: with a crime?

514
00:25:54,156 --> 00:25:54,356
Speaker 1: Yeah?

515
00:25:54,516 --> 00:25:57,236
Speaker 3: And what can we interpret from the fact that this

516
00:25:57,396 --> 00:26:00,116
Speaker 3: lawsuit was brought? And I think the short answer is

517
00:26:00,396 --> 00:26:02,556
Speaker 3: not that much. And I should say that I did

518
00:26:02,556 --> 00:26:04,356
Speaker 3: some homework for this one and spoke to one of

519
00:26:04,396 --> 00:26:06,836
Speaker 3: the partners at my law firm, a Melvini named Daniel Shama,

520
00:26:06,876 --> 00:26:09,476
Speaker 3: who's an expert in bankruptcy. So here's what I learned

521
00:26:09,516 --> 00:26:11,876
Speaker 3: that was really interesting, which is there's something called a

522
00:26:11,956 --> 00:26:16,076
Speaker 3: clawback in bankruptcy, which is, once a bankruptcy happens, you

523
00:26:16,116 --> 00:26:19,076
Speaker 3: can clawback. You can take back money from people who

524
00:26:19,236 --> 00:26:22,156
Speaker 3: got money from the entity that went bankrupt. And there's

525
00:26:22,196 --> 00:26:24,396
Speaker 3: rules about how that works. There's time limits, there's all

526
00:26:24,436 --> 00:26:26,716
Speaker 3: kinds of things, but the one that's the most relevant

527
00:26:26,876 --> 00:26:31,396
Speaker 3: here is called a fraudulent transfer. And what that means

528
00:26:31,476 --> 00:26:33,756
Speaker 3: is that within a window of a number of years

529
00:26:33,796 --> 00:26:36,836
Speaker 3: before the bankruptcy, you can take back money from people

530
00:26:36,836 --> 00:26:40,316
Speaker 3: who got it. If two different kinds of things happened.

531
00:26:40,876 --> 00:26:46,036
Speaker 3: One is that there was an actual intent to defraud creditors.

532
00:26:46,156 --> 00:26:48,236
Speaker 3: That's the legal language. And what I mean by that

533
00:26:48,356 --> 00:26:51,156
Speaker 3: is you knew the ship was sinking, so you gave

534
00:26:51,196 --> 00:26:52,996
Speaker 3: a lot of money to your parents so that it

535
00:26:53,036 --> 00:26:54,876
Speaker 3: would be there for you. Right, that would be a

536
00:26:54,956 --> 00:26:58,116
Speaker 3: fraudulent transfer because you were doing it to keep the

537
00:26:58,116 --> 00:27:00,796
Speaker 3: money away from creditors in the bankruptcy people who were

538
00:27:00,796 --> 00:27:05,116
Speaker 3: owed money. The other one is when it might have

539
00:27:05,196 --> 00:27:07,356
Speaker 3: been that the person who got money didn't even know

540
00:27:07,396 --> 00:27:10,916
Speaker 3: that they were doing anything wrong, but they received something

541
00:27:11,396 --> 00:27:15,916
Speaker 3: for quote less than reasonably equivalent value or fair consideration.

542
00:27:16,396 --> 00:27:18,516
Speaker 3: So what does that mean? If I give you a

543
00:27:18,596 --> 00:27:22,556
Speaker 3: monet right from my company and I only charge you

544
00:27:22,596 --> 00:27:25,476
Speaker 3: a dollar for it, you have not paid reasonable consideration

545
00:27:25,596 --> 00:27:28,076
Speaker 3: for it. Right. It's another way of getting the money

546
00:27:28,156 --> 00:27:30,716
Speaker 3: out of the entity before the ship sinks.

547
00:27:30,796 --> 00:27:32,756
Speaker 1: So the idea is still you you gave me the

548
00:27:32,756 --> 00:27:35,516
Speaker 1: monet because you wanted the money to be safe.

549
00:27:35,956 --> 00:27:37,876
Speaker 3: It doesn't have to be that. That's why, In other words,

550
00:27:37,996 --> 00:27:40,756
Speaker 3: if I gave it to you and it wasn't really justified,

551
00:27:41,236 --> 00:27:44,436
Speaker 3: even if there wasn't necessarily a nefarious intent, there can

552
00:27:44,476 --> 00:27:48,396
Speaker 3: be enough for a clawback. And so you know, you

553
00:27:48,396 --> 00:27:53,636
Speaker 3: can Imagine, for example, you know, the person who delivers

554
00:27:53,756 --> 00:27:57,076
Speaker 3: copy paper to FTX realizes things are not going well

555
00:27:57,076 --> 00:27:58,556
Speaker 3: and they say, we'd like you to pay our bill

556
00:27:58,596 --> 00:28:01,796
Speaker 3: in full right now instead of normally gets paid every

557
00:28:01,796 --> 00:28:04,996
Speaker 3: sixty days. That's not there's nothing fraudulent about that. But

558
00:28:05,236 --> 00:28:07,436
Speaker 3: now this creditor might have gotten more than their fair

559
00:28:07,476 --> 00:28:10,356
Speaker 3: share than someone else, right, So that's another kind of

560
00:28:10,396 --> 00:28:12,716
Speaker 3: place where you'd have a clawback. You'd say, well, wait

561
00:28:12,716 --> 00:28:14,316
Speaker 3: a minute, we have to get all the money back

562
00:28:14,396 --> 00:28:16,916
Speaker 3: on place and give everyone their fair share. You don't

563
00:28:16,916 --> 00:28:19,236
Speaker 3: get to paid in full, right. So I think the

564
00:28:19,316 --> 00:28:23,916
Speaker 3: question with Sam's parents here is, you know, were these

565
00:28:23,956 --> 00:28:27,556
Speaker 3: fraudulent transfers? And obviously the allegation is yes, that they

566
00:28:28,196 --> 00:28:30,716
Speaker 3: knew or should have known that this money that came

567
00:28:30,756 --> 00:28:34,836
Speaker 3: to them was not legitimate. What's the punchline? That is

568
00:28:34,956 --> 00:28:38,596
Speaker 3: just a totally different standard than a criminal standard to

569
00:28:38,676 --> 00:28:41,876
Speaker 3: say that they should have understood that something was awry

570
00:28:42,116 --> 00:28:45,036
Speaker 3: or that they got money that they didn't really deserve. Right,

571
00:28:45,356 --> 00:28:47,516
Speaker 3: did they earn that for some reason? What were they

572
00:28:47,556 --> 00:28:52,276
Speaker 3: doing that justified these huge payments. That's different than they

573
00:28:52,476 --> 00:28:56,436
Speaker 3: knowingly participated in the crime, and they themselves did things

574
00:28:56,476 --> 00:28:58,756
Speaker 3: in further owns of it. So I don't think you

575
00:28:58,796 --> 00:29:01,996
Speaker 3: can read from this civil lawsuit that charges against them

576
00:29:02,116 --> 00:29:06,076
Speaker 3: are likely, But I also don't think it's impossible. There

577
00:29:06,076 --> 00:29:09,956
Speaker 3: are allegations that Sam's mother in particular, told him to

578
00:29:10,076 --> 00:29:15,076
Speaker 3: hide certain donor identity information in connection with campaign contributions.

579
00:29:15,436 --> 00:29:17,716
Speaker 3: That's a little if that's true, that's kind of a

580
00:29:17,716 --> 00:29:20,556
Speaker 3: suggestion that she committed a crime. And of course his

581
00:29:20,636 --> 00:29:24,076
Speaker 3: father was involved in the business itself. So could they

582
00:29:24,116 --> 00:29:26,556
Speaker 3: be charged. I think time will tell, but I wouldn't

583
00:29:26,556 --> 00:29:27,716
Speaker 3: read too much into this lawsuit.

584
00:29:29,316 --> 00:29:33,436
Speaker 1: Well, michaelis Rebecca Ramolstein. I am excited to cover the

585
00:29:33,476 --> 00:29:34,956
Speaker 1: trial and check in with both of you.

586
00:29:35,156 --> 00:29:37,076
Speaker 3: Thank you, Alja anytime.

587
00:29:38,756 --> 00:29:41,716
Speaker 2: This episode of Judging Sam was hosted by Lydia, Jean Kott,

588
00:29:42,996 --> 00:29:47,076
Speaker 2: Catherine Gerardeau and Nisha Venken produced this show. Sophie Crane

589
00:29:47,156 --> 00:29:50,476
Speaker 2: is our editor. Our music was composed by Matthias Bossi

590
00:29:50,636 --> 00:29:54,396
Speaker 2: and John Evans of stell Wagons Symphonette. Judging Sam is

591
00:29:54,396 --> 00:29:57,756
Speaker 2: a production of Pushkin Industries. Got a question or comment

592
00:29:57,796 --> 00:30:01,836
Speaker 2: for me, There's a website for that ATR podcast dot com.

593
00:30:02,276 --> 00:30:07,996
Speaker 2: That's atr podcast dot com to find more Pushkin podcasts.

594
00:30:07,996 --> 00:30:12,076
Speaker 2: Listen on the iHeartRadio, Apple Podcasts, or wherever you listen

595
00:30:12,116 --> 00:30:15,756
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596
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597
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598
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