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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: We have said that the burden that you're assuming of

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Speaker 1: disentangling race and politics in a situation like this is very,

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Speaker 1: very difficult.

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Speaker 2: The Chief Justice aptly described the problem in the case

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Speaker 2: before the Supreme Court the limits of parties in jerrymandering

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Speaker 2: when it intersects with race. It's a case that could

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Speaker 2: help determine which party controls the House after next year's election.

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Speaker 2: A panel of three federal judges, after an eight day trial,

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Speaker 2: concluded that Republican lawmakers had engaged in unconstitutional racial gerrymandering

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Speaker 2: in drawing South Carolina's first congressional district, but at oral arguments.

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Speaker 2: The conservative justice has expressed skepticism about that panel's decision

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Speaker 2: and suggested they will reinstate the Republican drawn map. Here's

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Speaker 2: Chief Justice John Roberts, but.

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Speaker 1: We've never had a case where there's been no direct evidence,

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Speaker 1: no map, no strangely configured districts, a very large amount

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Speaker 1: of political evidence, whether the district court chose to credit

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Speaker 1: it or not, and instead it all resting on circumstantial evidence.

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Speaker 2: While the three liberal justices suggested the lower court had

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Speaker 2: adequate evidence to conclude that South Carolina lawmakers improperly relied

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Speaker 2: on race to get to its established target of seventeen

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Speaker 2: percent black voters in the district by shifting thirty thousand

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Speaker 2: black voters out of the district to hit that goal.

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Speaker 2: Here's Justice Elena Kagan.

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Speaker 3: You have two experts here, Reguso and Lou who answered

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Speaker 3: the exact question that is supposed to be answered in

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Speaker 3: such a case. In other words, is this gerrymander based

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Speaker 3: on politics or is it a way to get to

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Speaker 3: an ultimate goal? An ultimate political goal? But the gerrymanderin

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Speaker 3: is based on race. And what the two of them

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Speaker 3: do is that they show that black Democrats are excluded

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Speaker 3: from District one at a far greater percentage than white

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Speaker 3: Democrats are joining.

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Speaker 2: Me is elections law expert Richard Brefald, a professor at

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Speaker 2: Columbia Law School. So Rich tell us about the case

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Speaker 2: and the main issue here.

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Speaker 4: So, this case is about a challenge to the redistricting

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Speaker 4: of South Carolina's congressional plan in twenty twenty two following

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Speaker 4: the twenty twenty census. The major development affected District one,

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Speaker 4: which is basically around Charleston, and it made the district

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Speaker 4: more Republican by moving out of a significant number of

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Speaker 4: black voters into an adjacent black majority district. District one

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Speaker 4: had been a Republican district, but in recent years had

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Speaker 4: been more closely contested, and in twenty eighteen the Democrats

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Speaker 4: actually won it for one term. Twenty twenty the Republicans

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Speaker 4: wanted that very narrowly. So one of the things the

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Speaker 4: legislature did in twenty twenty two was changed the composition

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Speaker 4: to make it more Republican, and it's so doing It

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Speaker 4: basically moved about thirty thousand black voters from Charleston out

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Speaker 4: of the district into an adjacent district. By the way,

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Speaker 4: District one is the district that elects Nancy Mace, who

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Speaker 4: had been previously considered a moderate that since her district

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Speaker 4: was change, seems to become more conservative. But she's one

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Speaker 4: of the eight who voted to depose Kevin McCarthy. So

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Speaker 4: the question before the court, it's a tough question, is

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Speaker 4: whether the legislature was motivated by race or by party.

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Speaker 4: You might say that in a state where race and

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Speaker 4: party are so intertwined, that's an impossible question answers. It's

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Speaker 4: the same thing, but It's crucial because the Supreme Court

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Speaker 4: has said that racial gerrymandering, that is to say, the

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Speaker 4: intentional movement of voters because of their race from one

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Speaker 4: district into another is unconstitutional. But partisan jerry mandering, as

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Speaker 4: we all know since the RUCO decision in twenty nineteen,

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Speaker 4: is non justiciable. So it's okay for the state to

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Speaker 4: engage in partisan gerrymandering, it's not okay for the state

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Speaker 4: to engage in racial gerrymandering. South Carolina says it was

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Speaker 4: both the following traditional district lines but also had a

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Speaker 4: partisan political purpose. What the lower court found was that

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Speaker 4: actually the movements of voters did exhibit racial predominance, that

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Speaker 4: given away the voters, which voters were targeted, and relying

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Speaker 4: on the testimony of experts, they basically said that a

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Speaker 4: disproportionate number of black Democrats relative to white Democrats were

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Speaker 4: the ones who were moved, and therefore the district court

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Speaker 4: was able to conclude that this was a racial gerrymander.

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Speaker 4: That's what's being tested in the Supreme Court right now,

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Speaker 4: whether this is a racial or a partisan gerrymander. Did

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Speaker 4: the district court do it right? To what extent is

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Speaker 4: the Supreme Court required to defer to the findings of

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Speaker 4: the district Court, and the district Court's findings are really

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Speaker 4: sort of factual. They basically made a determination based on

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Speaker 4: the testimony of a person who wrote the South Carolina

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Speaker 4: Plan and of other experts that this was racially motivated.

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Speaker 4: So one of the big issues before the court is

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Speaker 4: what difference the district court finding was supposed to gets. Normally,

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Speaker 4: the standard that applies to something called clearly erroneous, which

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Speaker 4: means the district court gets a lot of difference. But

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Speaker 4: you saw some of the more conservative justices pushing back

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Speaker 4: on that here, saying that given the fact that the

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Speaker 4: district Court doesn't appear to have given trusted in the

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Speaker 4: good faith of the legislature, and given some of the

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Speaker 4: other challenges to the evidence in front of the district Court,

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Speaker 4: maybe the district Court doesn't get the kind of difference

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Speaker 4: that the clearly erroneous standard normally would give them.

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Speaker 2: Okay, so let's take those That's a lot of issues,

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Speaker 2: one one by one. So the three judge federal panel

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Speaker 2: referred to the revised map as effective bleaching of African

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Speaker 2: American voters out of the Charleston County portion of the

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Speaker 2: district and they came to that conclusion after an extensive

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Speaker 2: eight day trial featuring forty two witnesses and six hundred

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Speaker 2: and fifty two exhibits. So doesn't the court usually defer

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Speaker 2: to the factual findings of lower court judges?

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Speaker 4: Yes, I mean, indeed, that is the standard they're supposed

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Speaker 4: to apply, with col the clearly erroneous standard, not just

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Speaker 4: with the district court right on balance, but as long

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Speaker 4: as the district court did was plausible, long as they

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Speaker 4: didn't do something which was clearly wrong as opposed to

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Speaker 4: debatably wrong, they're supposed to defer. And you definitely heard

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Speaker 4: the liberal justices emphasizing the importance of adhering to the

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Speaker 4: clearly erroneous standard that there was evidence to support with

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Speaker 4: the district court found, and indeed the United States came

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Speaker 4: in the United States had not been a party to

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Speaker 4: the case originally, but this listener General's Office came if

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Speaker 4: the United States had actually emphasized the importance of following

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Speaker 4: the clearly erroneous standard.

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Speaker 2: Chief Justice John Roberts said that the challengers of the

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Speaker 2: map had no direct evidence that race had predominated in

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Speaker 2: the decision making process, just circumstantial evidence. This would be

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Speaker 2: breaking new ground in our voting rights jurisprudence. Is that true?

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Speaker 2: I mean, isn't circumstantial evidence enough?

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Speaker 4: Right? They've often found circums relied on circumstantial evidence. But

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Speaker 4: his full statement was there were there's no direct evidence.

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Speaker 4: He also said it was not an oddly shaped district,

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Speaker 4: and the number of the early other cases in which

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Speaker 4: the Court has found racial gerrymandering, the district was oddly shaped.

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Speaker 4: On this one, there was a big change in the district.

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Speaker 4: People were moved around a lot, but the district itself

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Speaker 4: didn't flunk any kind of test of odd shape, which

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Speaker 4: is somethings the Court has sometimes used. And the other

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Speaker 4: issue that came up before the court was the fact

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Speaker 4: that the plaintiffs had not presented an alternative map. Basically,

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Speaker 4: the question was could the state have gotten its partisan

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Speaker 4: goals without moving as many black voters around? And the

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Speaker 4: question came up, should the plaintiffs have been required to

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Speaker 4: present an alternative map showing that the state could have

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Speaker 4: made the district just as republican without moving as many

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Speaker 4: black voters. And there was a debate in the court

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Speaker 4: as to whether the plaintiffs had to do that, and

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Speaker 4: the president is that they don't have to. Indeed, Justice

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Speaker 4: Kagan was quite strong on that, because she'd actually written

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Speaker 4: the case that said that, a case called Cooper about

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Speaker 4: five years ago. But nonetheless, the other justices sort of

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Speaker 4: came back and said, well, maybe you didn't have to,

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Speaker 4: but why didn't you Why wouldn't that have helped your

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Speaker 4: case if you could have shown that they could obtained

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Speaker 4: their partisan goals without using race quite as much. I mean,

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Speaker 4: it really went into the question this difficulty of separating

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Speaker 4: out race and party an effect the conservative justices were

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Speaker 4: sort of creating it, even though the prior case Cooper

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Speaker 4: had said there's no such requirement. You saw some of

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Speaker 4: them basically kind of suggesting that either that there is,

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Speaker 4: or that there should be, or that it's a problem

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Speaker 4: when there isn't.

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Speaker 2: Justice Kagan argued that the map makers wouldn't just have

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Speaker 2: relied on the twenty twenty election results. She said this

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Speaker 2: to the lawyer arguing for South Carolina. Your defense was

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Speaker 2: we didn't look at the racial data for this purpose,

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Speaker 2: and what the lower court said was I don't believe that.

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Speaker 2: And she also said they had not only the opportunity,

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Speaker 2: it was sit they're on their computers, but the clear

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Speaker 2: incentive to be looking at this race data. So explain

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Speaker 2: what you was getting at there and did you find

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Speaker 2: it persuasive.

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Speaker 4: So the couple questions here are one is why would

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Speaker 4: they Why would the state bother using race when they

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Speaker 4: could just use party? And if their goal was to

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Speaker 4: make the district more Republican, why not just use the

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Speaker 4: party voting? Why use race as approxy when you actually

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Speaker 4: have the party data. One response to that is, actually,

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Speaker 4: they had much more information on race than on party.

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Speaker 4: They only had because of the way in which votes

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Speaker 4: were counted in South Carolina. They only had one election

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Speaker 4: in which they had good party data, and that was

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Speaker 4: the twenty twenty presidential election, and the least the argument

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Speaker 4: was that wasn't a good predictor because there had been

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Speaker 4: more kind of a white crossover voting for Biden over

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Speaker 4: Trump in that election. So the plaintiffs argued, and Justice

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Speaker 4: Kagan suggested she agreed that in this case, actually the

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Speaker 4: state used the race data because race data was more reliable,

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Speaker 4: better predicted value than the more limited party data. The

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Speaker 4: next question was, well, again this goes to Justice roberts

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Speaker 4: point about there's no direct evidence, nobody got up in

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Speaker 4: the state legislature and said, let's move the black voters.

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Speaker 4: Her point was that it was on their computers, that

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Speaker 4: was in their data, was in their face, and they

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Speaker 4: couldn't have been unaware of it. And indeed, at one

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Speaker 4: point in the trial, the lead witness for South Carolina,

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Speaker 4: the principal map maker, basically said, well, we weren't doing

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Speaker 4: this for race, but yes, of course we were aware

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Speaker 4: of the racial data. And this is where the lower

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Speaker 4: court basically concluded they really didn't believe him on that.

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Speaker 4: They said that given the omnipresence of the race data

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Speaker 4: as they were joining the maps, that they simply didn't

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Speaker 4: believe his statement that the state was not rowing on

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Speaker 4: the race data when it drew the maps.

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Speaker 2: Coming up next, we'll take a look at how the

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Speaker 2: court might rule.

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Speaker 3: This is Bloomberg.

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Speaker 2: I've been talking to Columbia Law School professor Richard Brefalt

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Speaker 2: about Supreme Court arguments this week over whether it will

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Speaker 2: reinstate a Republican drawn congressional map in South Carolina after

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Speaker 2: a lower court concluded that Republican lawmakers engaged in unconstitutional

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Speaker 2: racial gerrymandering in drawing what is now a Republican held district.

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Speaker 2: Justice Samuel Alito was the most aggressive questioner of the

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Speaker 2: validity of the lower court's decision. He posed nearly forty

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Speaker 2: questions to the NAACP's attorney. What was the thrust of

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Speaker 2: his questions or problems?

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Speaker 4: I think he basically said that this is politics and

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Speaker 4: that the burden was heavy on the plaintiffs to show

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Speaker 4: that it wasn't politics and that it was race. Much

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Speaker 4: of this went into some of the details about what

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Speaker 4: some of the experts testify to or their failure to

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Speaker 4: address every point that the state raised. Some of the

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Speaker 4: experts testify to whether or not the district complied with

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Speaker 4: traditional districting criteria, but not whether or not it was

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Speaker 4: Others focused on whether it was partisan or racial, but

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Speaker 4: not in the district criteria. So he felt that the

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Speaker 4: expert testimony was inadequate to support the trial court's find

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Speaker 4: He repeatedly raised the question about the alternative map, even

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Speaker 4: as he acknowledged that an alternative map was not required.

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Speaker 4: He sort of found that the absence of an alternative

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Speaker 4: map undermined the plaintiff's case, and again he basically said

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Speaker 4: that in some sense suggests that there was a heavier

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Speaker 4: burden on the District Court to prove that it was

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Speaker 4: race and not party, given the way that the two

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Speaker 4: were so tightly intertwined.

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Speaker 2: Justice Katanji Brown Jackson kept stressing that the court relies

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Speaker 2: on the factual findings of lower courts, and she said

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Speaker 2: it would be a dramatic shift to precedent if they

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Speaker 2: overturned the trial court's findings. Is that true or if

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Speaker 2: they find clear error, which Justice Clarence Thomas brought up

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Speaker 2: right at the beginning, would it not be violative of precedent?

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Speaker 4: Well, if they found clear error, it wouldn't be because

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Speaker 4: the standard is clearly ironing. Is the district Court's findings

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Speaker 4: are not immune from review to be clear error, as

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Speaker 4: opposed to whether or not it was debatable in some sense.

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Speaker 4: The US government, as I said, they came in on

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Speaker 4: the side of the plaintiffs, on the side of the NAACP,

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Speaker 4: and said, in effect, we think that the three judge

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Speaker 4: court could have gone either way. There was evidence to

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Speaker 4: support either position, but the position that the District Court

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Speaker 4: found was reasonable given the evidence they had, and so

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Speaker 4: that's why you should defer to them. I mean, one

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Speaker 4: question that Justice Barrett raised to just maybe whether the

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Speaker 4: standard should be higher in a case involving a state legislature.

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Speaker 4: Maybe there should be more burden on the district court

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Speaker 4: to show that the legislature wasn't acting in good faith.

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Speaker 4: There's a kind of presumption that legislators state legislatures act

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Speaker 4: in good faith, so maybe there should be a higher

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Speaker 4: legal burden on the district court. And you're right. Justice

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Speaker 4: Jackson was very heavy on it, sort of sticking to

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Speaker 4: the traditional role of the district court in finding the

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Speaker 4: facts and the duty of appellate court so that the

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Speaker 4: first year had been at district court judge. It was

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Speaker 4: kind of a civil procedure argument as much as anything else,

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Speaker 4: that the traditional role of the court is to see

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Speaker 4: whether the lower court applied the law properly, but to

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Speaker 4: defer to their factual finding. The liberals were the strongest

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Speaker 4: on this about the importance of following this traditional judicial

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Speaker 4: role of deferring to lower courts on their factual findings.

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Speaker 2: Most legal commentators concluded after hearing the arguments that the

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Speaker 2: conservative majority is going to uphold the Republican drawn map.

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Speaker 2: Do you agree with that?

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Speaker 4: There were certainly a lot of negative questioning, even from

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Speaker 4: some of the so called more moderate conservative justices. Remember

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Speaker 4: the most recent case involving race and voting, Allen versus

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Speaker 4: Milligan went off five to four, with two of the conservatives,

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Speaker 4: Roberts and Kavanaugh, joining the liberals. Roberts was clearly pretty

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Speaker 4: skeptical about the lower courts finding in this case. He

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Speaker 4: seemed less likely. Kavanaugh's questions were a little bit harder

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Speaker 4: to read. I mean, some of it was again about

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Speaker 4: the evidence, but some of it also seemed to be

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Speaker 4: indicated he was thinking about, what's the burden on the

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Speaker 4: defendants in this case? Who are the appellants to show

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Speaker 4: that the district court was clearly wrong? I think it

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Speaker 4: was only a tough argument for the NAACP defending the

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Speaker 4: lower court's finding. I think if they have any chance,

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Speaker 4: it's going to be to the extent that the Court

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Speaker 4: decides to rally around the idea that unless it's clearly erroneous,

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Speaker 4: there should be difference in lower courts finding. On the

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Speaker 4: other hand, this is the court's first sort of race

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Speaker 4: party intertwined case since Rucho four years ago, when the

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Speaker 4: Court said that partisan gerrymandering is not on conceiutional, it's

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Speaker 4: non justiciable so it's the first time that they will

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Speaker 4: speak to the how do you separate out race and party?

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Speaker 4: And one could imagine they may want to shut down

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Speaker 4: the idea that you could get around Rucho by reframing

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Speaker 4: things around race. Now, the Court in the past has said,

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Speaker 4: even if there's a partisan factor, that the state can't

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Speaker 4: use the race as approxy for party when it draws

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Speaker 4: lines to favor a party. But one could imagine this

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Speaker 4: is a case where the Court might want to address

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Speaker 4: the how do you disentangle race and party in a

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Speaker 4: world in which racial jerry mannering is unconstitutional but partisan

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Speaker 4: jerry mannering is not.

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Speaker 2: Explain why this case is different from the case you

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Speaker 2: referred to, the Alabama case, where it was surprising that

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Speaker 2: the Chief and Justice Kavanaugh sided with the liberals there.

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Speaker 4: That case was really about whether or not the Alabama

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Speaker 4: violated the Voting Rights Act. This one is whether or

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Speaker 4: not South Carolina violated the Constitution. Although the result in

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Speaker 4: Alabama will have a partisan consequence, there wasn't an argument

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Speaker 4: that the state was doing it to help the Republicans.

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Speaker 4: It wasn't really an argument about the intent of the

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Speaker 4: state at all. That case, under the Voting Rights Act.

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Speaker 4: The plaintiffs can win if they show disparate impact, if

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Speaker 4: they show that the state drew lines in a way

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Speaker 4: that had the effect of minimizing minority voting power. I mean,

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Speaker 4: the thing is, in South Carolina, the district that was changed,

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Speaker 4: District one, was not going to be a majority minority district.

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Speaker 4: It was going to be a white majority district either way,

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Speaker 4: although for the larger black share of the voting population

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Speaker 4: it might have been a democratic district, probably a white

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Speaker 4: Democratic district. And that's sort of one of the differences

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Speaker 4: here is that the court is somewhat sensitive to state

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Speaker 4: actions that dilute minority voting power, but they don't care

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Speaker 4: about state actions that chap on one party over another.

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Speaker 4: And so the Alabama case was argued entirely around minority

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Speaker 4: voting rights, although it turns out if you increase minority

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Speaker 4: voting power in that state you were likely to get

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Speaker 4: it was all I could have a partisan consequence here.

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Speaker 4: Wasn't really a claim the minority votes were being diluted,

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Speaker 4: just that voters were being moved around from one district

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Speaker 4: to another. And so the case was broad as a

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Speaker 4: case about intentional racial discrimination. But there was no claim

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Speaker 4: that if the voters had all been just left alone,

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Speaker 4: that district one would have been black majority district. It

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Speaker 4: would have been a white majority district, although one that

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Speaker 4: might have tilted more democratic.

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Speaker 2: This case is the third time in two years that

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Speaker 2: the Court has heard arguments about state's congressional lines, and

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Speaker 2: two other cases are advancing in the lower courts in

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Speaker 2: Georgia and Louisiana that challenge maps under the Voting Rights Act.

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Speaker 2: Is it that the Court's precedent is not clear or

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Speaker 2: are these kinds of cases always challenged?

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Speaker 4: Well, I think anything evolving redistricting is going to be challenged.

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Speaker 4: This case is different from the old ones. The other

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Speaker 4: two cases, the one you mentioned our Voting Rights Act

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Speaker 4: challenges where the plaintiffs are arguing that the way the

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Speaker 4: lines are drawn reduces the ability of black voters to

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Speaker 4: elect the candidates of their choice in districts which might

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Speaker 4: generate more minority representation. Louisiana clearly so. And this one again,

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Speaker 4: there wasn't a claim that you would have created another

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Speaker 4: black majority district. Interestingly, the Court has tend to look

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Speaker 4: at these things as to whether the going to be

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Speaker 4: a sort of a majority minority or district where minority

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Speaker 4: voters are likely to prevail at least have the opportunity prevail.

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Speaker 4: They've been less sympathetic to arguments about, well, maybe minority

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Speaker 4: voters must be more influential if they're a bigger share,

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Speaker 4: but not nearly a majority, and so they haven't bought

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Speaker 4: that argument. And so the voting rights arguments are always

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Speaker 4: difficult because the plaintiffs have to show that there could

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Speaker 4: have been another minority district, that there is racially polarized voting,

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Speaker 4: and that under the totality of the circumstances, the setup

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Speaker 4: is unfaired minority voters, and that's a tough standard to meet.

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Speaker 4: And many people thought that the court just didn't seem

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Speaker 4: that interested. The Allen case kind of maybe not revived

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Speaker 4: that standard, but confirm that that is still the standard.

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Speaker 4: And so I think it's what's given to wind at

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Speaker 4: the backs of the people bringing the challenges. Nonetheless, there's

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Speaker 4: a slow slog through the courts, even if the district

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Speaker 4: courts are favorable. What's happening in Louisiana is the appellate court,

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Speaker 4: the Fifth Circuit, is slowing everything down. So so it's

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Speaker 4: not clear we're going to get any decisive changes in

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Speaker 4: those two states before the twenty four election.

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Speaker 2: Lately, it always seems to be the fifth circuit that's

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Speaker 2: a hang up. Thanks so much, rich that's Professor Richard

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Speaker 2: Brafalt of Columbia Law School. Coming up next, we'll talk

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Speaker 2: about the star witness in Sam Bankman Freed's trial, his

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Speaker 2: former girlfriend. I'm June Grossow and you're listening to Bloomberg.

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Speaker 2: Prosecutors have built their case against Sam Bankman Freed by

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Speaker 2: tapping into his inner circle and reaching cooperation deals with

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Speaker 2: some of his closest confidants. And this week, the government's

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Speaker 2: star witness, Caroline Ellison, the former CEO of Alameda Research,

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Speaker 2: testified against her former boss and boyfriend. From her first

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Speaker 2: minutes on the witness stand, Ellison pointed to Bankman Freed

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Speaker 2: as the man responsible for the loss of billions in

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Speaker 2: customer funds and the collapse of the cryptocurrency platform FTX.

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Speaker 2: My guest is former federal prosecutor Jordan Estez, a partner

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Speaker 2: at Kramer Leans. It seems like the government here has

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Speaker 2: an overwhelming amount of evidence against Bankman Freed. Witnesses who

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Speaker 2: were in on the alleged fraud code that was altered

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Speaker 2: balance sheets, texts, internal documents. As a defense attorney, how

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Speaker 2: do you defend against that kind of a case.

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Speaker 5: It's certainly very challenging in these circumstances. The one thing

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Speaker 5: I think the defense is doing, and they're trying to do,

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Speaker 5: is create a record that this was actually legitimate business.

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Speaker 5: Nobody thought they were doing anything wrong, So they're going

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Speaker 5: to try to do that through the cross examination of

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Speaker 5: the witnesses of the company. I do think it's a

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Speaker 5: real challenge in a case where witnesses like Caroline Ellison

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Speaker 5: seem to have fully embraced that the conduct was wrongful.

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Speaker 5: So if you have a witness like that, they're really

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Speaker 5: going to have to attack her credibility through cross examination.

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Speaker 5: And there seemed to be some angles for given her

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Speaker 5: prior relationship with the defendant. You know, perhaps they have

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Speaker 5: some documents up their sleeve that nobody knows about. That

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Speaker 5: is a benefit of being a defense attorney is that

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Speaker 5: you can hold some things back that can be surprising

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Speaker 5: during cross examination. But I do think from my read

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Speaker 5: of her testimony it was very overwhelming. It's in very

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Speaker 5: dramatic and compelling, So they're going to have to do

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Speaker 5: a lot of work in discrediting her, which will be hard.

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Speaker 2: I mean, she is the state star witness. How much

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Speaker 2: depends on the jury believing her.

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Speaker 5: So I think in a cooperator case, the government really

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Speaker 5: does need the jury to believe the cooperators. They need

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Speaker 5: them to believe not necessarily every cooperator, but at least

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Speaker 5: one of the principal wands, like Caroline Ellison. They're certainly

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Speaker 5: going to have to believe her. But you can imagine

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Speaker 5: the government has documents lined up that support her testimony.

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Speaker 5: I have not seen the full trial transcript, but often

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Speaker 5: as the cooperator testifies, you then introduce exhibits that confirm

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Speaker 5: what the cooperating witness is saying, or perhaps another witness

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Speaker 5: from FTX who testifies later may say something that's consistent

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Speaker 5: with Caroline Ellison's testimony. So there are a number of

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Speaker 5: ways to try to get the jury to believe the witness,

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Speaker 5: but that is ultimately it's very critical to the case.

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Speaker 2: The first four witnesses, one is his former girlfriend, another

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Speaker 2: is one of his oldest friends, another an mit friend.

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Speaker 2: Does that help or hurt their credibility that they were

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Speaker 2: friends who turned on him when things fell apart?

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Speaker 5: I think for the government's view is typically that that

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Speaker 5: helps their credibility. These were the people who were closest

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Speaker 5: to the defendant. They were inside the conspiracy, and they're

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Speaker 5: the ones who can tell you every detail of what happened.

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Speaker 5: If you have an outsider, it's easier to distance them

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Speaker 5: from the defendant and suggest how would they actually know

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Speaker 5: what he intended or what was really going on. But

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Speaker 5: because they have people that were right on the inside,

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Speaker 5: that worked side by side with him, that have admitted

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Speaker 5: their guilt, that's really tough for the defense, and I

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Speaker 5: think the government probably views that very favorably.

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Speaker 2: Do you think there could be an element of looking

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Speaker 2: for during nullification in that you have these people who

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Speaker 2: were also responsible to his three top lieutenants, and they're

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Speaker 2: all getting a deal and hanging it on him.

437
00:24:29,359 --> 00:24:32,680
Speaker 5: Maybe I don't know that that's the way to go.

438
00:24:32,920 --> 00:24:36,360
Speaker 5: I think it's maybe not dury nullification, but I would

439
00:24:36,440 --> 00:24:39,920
Speaker 5: use that to suggest they're lying. They threw him under

440
00:24:39,920 --> 00:24:43,120
Speaker 5: the bus because they knew they were sort of caught

441
00:24:43,200 --> 00:24:46,080
Speaker 5: red handed, and they knew there was only one way

442
00:24:46,160 --> 00:24:48,520
Speaker 5: to save themselves, and that's that the government wanted the

443
00:24:48,560 --> 00:24:50,280
Speaker 5: top guy, and so they had to give him up.

444
00:24:51,080 --> 00:24:56,439
Speaker 2: Was there anything about Caroline Ellison's testimony that struck you.

445
00:24:57,080 --> 00:25:00,000
Speaker 5: So I thought a lot of the anecdotes he provides

446
00:25:00,400 --> 00:25:03,639
Speaker 5: are the kinds of things that really stick out to

447
00:25:03,760 --> 00:25:06,200
Speaker 5: a juror. They may not be direct evidence of fraud,

448
00:25:06,280 --> 00:25:10,199
Speaker 5: but they're dramatic moments, like when she said that he

449
00:25:10,240 --> 00:25:12,560
Speaker 5: said there was a five percent chance that he would

450
00:25:12,560 --> 00:25:15,760
Speaker 5: be president. I'm sure that's something that stands out and

451
00:25:15,920 --> 00:25:20,119
Speaker 5: just I think raises questions about his judgment. But she

452
00:25:20,200 --> 00:25:23,119
Speaker 5: seemed to have a lot of dramatic moments in her testimony.

453
00:25:23,160 --> 00:25:27,040
Speaker 5: I think, in particular, given their relationship, there's this added

454
00:25:27,119 --> 00:25:30,359
Speaker 5: drama on top of what you have in a fraud case.

455
00:25:30,520 --> 00:25:33,959
Speaker 5: So it's very good for the government that when there

456
00:25:34,040 --> 00:25:37,440
Speaker 5: is drama when you have a complicated case, jurors can

457
00:25:37,440 --> 00:25:40,160
Speaker 5: go to sleep if you're talking about code and cryptocurrency

458
00:25:40,200 --> 00:25:42,000
Speaker 5: and things like that. But when you have a witness

459
00:25:42,080 --> 00:25:45,600
Speaker 5: who was in a romantic relationship when there was this

460
00:25:45,760 --> 00:25:49,720
Speaker 5: power dynamic, that's something that certainly captures the jury's attention

461
00:25:50,800 --> 00:25:55,200
Speaker 5: and I think creates this extra element there that her

462
00:25:55,240 --> 00:26:00,480
Speaker 5: boss and her former boyfriend is also asking her to

463
00:26:00,560 --> 00:26:03,800
Speaker 5: commit fraud or committing fraud with her. It's an interesting

464
00:26:03,840 --> 00:26:06,200
Speaker 5: power dynamic that I think will stand out to a jury.

465
00:26:06,480 --> 00:26:09,600
Speaker 2: Yeah. I think also what'll stand out is that she

466
00:26:09,760 --> 00:26:13,440
Speaker 2: talked about things like his concerns with his public image

467
00:26:13,480 --> 00:26:17,480
Speaker 2: and that he thought his long, unkempt hair was valuable

468
00:26:17,560 --> 00:26:21,000
Speaker 2: in contributing to the narrative. And he swapped a luxury

469
00:26:21,080 --> 00:26:24,080
Speaker 2: car for a Toyota Corolla because it was better for

470
00:26:24,119 --> 00:26:28,400
Speaker 2: his public image, So that also paints a picture of him.

471
00:26:29,080 --> 00:26:29,280
Speaker 1: Right.

472
00:26:29,400 --> 00:26:33,240
Speaker 5: There are many things that are they're not directly relevant

473
00:26:33,320 --> 00:26:37,320
Speaker 5: to fraud charges, and maybe in certain courts these may

474
00:26:37,359 --> 00:26:39,960
Speaker 5: not be admissible. There could be sustained objections. There were

475
00:26:39,960 --> 00:26:44,880
Speaker 5: things like his hair, But these are things that give

476
00:26:44,960 --> 00:26:48,879
Speaker 5: the jurors an image of the defendant that's not necessarily favorable.

477
00:26:48,880 --> 00:26:51,840
Speaker 5: So you can certainly see why the government would want

478
00:26:51,880 --> 00:26:55,320
Speaker 5: to elicit them, and why why the defense might I'm

479
00:26:55,359 --> 00:26:57,320
Speaker 5: not sure if they objected here, but why they might

480
00:26:57,359 --> 00:26:59,160
Speaker 5: want to object to topics like that.

481
00:27:00,160 --> 00:27:04,080
Speaker 2: Just like FTX co founder Gary Wang, who testified before her,

482
00:27:04,520 --> 00:27:08,960
Speaker 2: Ellison was adamant that bankman Freed was the ultimate decision maker.

483
00:27:09,480 --> 00:27:11,400
Speaker 2: Right at the start of her testimony, she said, he

484
00:27:11,560 --> 00:27:14,760
Speaker 2: directed me to commit these crimes at every turn. She

485
00:27:14,880 --> 00:27:19,600
Speaker 2: told jurors it was Bankman Freed calling the shots. Is

486
00:27:19,640 --> 00:27:24,000
Speaker 2: that constant repetition important even though it makes it seem

487
00:27:24,080 --> 00:27:27,880
Speaker 2: like she's not taking responsibility, just pointing at him.

488
00:27:28,200 --> 00:27:31,480
Speaker 5: So I think the prosecutors certainly see that as important,

489
00:27:31,480 --> 00:27:34,200
Speaker 5: and that's something you want the jury to take home.

490
00:27:34,480 --> 00:27:37,320
Speaker 5: And that sort of goes back to this concept in

491
00:27:37,359 --> 00:27:41,200
Speaker 5: the government that you often don't want somebody to cooperate down.

492
00:27:41,280 --> 00:27:44,800
Speaker 5: You always want the cooperator to be a level lower,

493
00:27:44,840 --> 00:27:47,560
Speaker 5: for instance, than the person going to trial. So this

494
00:27:47,680 --> 00:27:51,119
Speaker 5: is something that the government hammer's home. In an array

495
00:27:51,160 --> 00:27:54,359
Speaker 5: of cases, whether it's a drug case or a fraud case,

496
00:27:54,480 --> 00:27:57,359
Speaker 5: they usually have a cooperator who will be talking about

497
00:27:57,400 --> 00:28:00,720
Speaker 5: the person above them and the criminal conspiracy. So it

498
00:28:01,200 --> 00:28:04,919
Speaker 5: is certainly important from the government's perspective now as to

499
00:28:04,960 --> 00:28:10,680
Speaker 5: whether whether it undercuts that she's accepted responsibility. I think

500
00:28:10,720 --> 00:28:13,320
Speaker 5: the defense may argue that, although it is a little

501
00:28:13,400 --> 00:28:16,679
Speaker 5: hard when she has in other instances on the stand

502
00:28:16,760 --> 00:28:19,320
Speaker 5: acknowledged her role in the scheme, and she is of

503
00:28:19,359 --> 00:28:20,400
Speaker 5: course pled guilty.

504
00:28:21,119 --> 00:28:25,440
Speaker 2: The defense landed some small victories so far. In its

505
00:28:25,600 --> 00:28:29,400
Speaker 2: cross examination. She said there were periods of time when

506
00:28:29,720 --> 00:28:34,159
Speaker 2: Bankman Freed wasn't paying attention to Alameda or interacting with

507
00:28:34,240 --> 00:28:38,720
Speaker 2: the firm's executives, and she recalled telling prosecutors that it

508
00:28:38,800 --> 00:28:43,080
Speaker 2: seemed like he might not know that Legacy FTX customers

509
00:28:43,120 --> 00:28:47,560
Speaker 2: continued to wire money to Alameda bank accounts even after

510
00:28:48,040 --> 00:28:51,320
Speaker 2: the exchange got its own account. So the defense is

511
00:28:51,360 --> 00:28:55,239
Speaker 2: poking some holes in the idea that bankman Freed was

512
00:28:55,640 --> 00:28:59,040
Speaker 2: always calling the shots at Alameda. But how many holes

513
00:28:59,080 --> 00:29:02,240
Speaker 2: would they need to negate her testimony?

514
00:29:02,640 --> 00:29:04,800
Speaker 5: I think they are going to need a lot. But

515
00:29:05,000 --> 00:29:09,440
Speaker 5: one thing defense attorneys do is through the cross examination

516
00:29:09,560 --> 00:29:13,120
Speaker 5: of many witnesses, you try to establish these small, good

517
00:29:13,200 --> 00:29:17,880
Speaker 5: facts for your client, and then ultimately in summation at

518
00:29:17,880 --> 00:29:21,280
Speaker 5: the very end, you pull them together and sometimes you

519
00:29:21,320 --> 00:29:23,160
Speaker 5: can pull them together in a way in a closing

520
00:29:23,200 --> 00:29:27,040
Speaker 5: statement that is unexpected. Those little victories, as you say,

521
00:29:27,160 --> 00:29:30,680
Speaker 5: could be setting up their arguments and closing. So it's

522
00:29:30,720 --> 00:29:32,200
Speaker 5: important that they're getting them.

523
00:29:32,440 --> 00:29:37,080
Speaker 2: And so as prosecutors almost always do. They brought out

524
00:29:37,080 --> 00:29:41,280
Speaker 2: her cooperation agreement on direct but they said she faces

525
00:29:41,280 --> 00:29:44,040
Speaker 2: a maximum prison sentence of one hundred and ten years.

526
00:29:44,680 --> 00:29:47,800
Speaker 2: Is that disingenuous? I mean, no one's getting one hundred

527
00:29:47,840 --> 00:29:49,880
Speaker 2: and ten years here, Even Sam bankman freed.

528
00:29:50,320 --> 00:29:53,440
Speaker 5: It is contained in the cooperation agreement that the statutory

529
00:29:53,520 --> 00:29:56,760
Speaker 5: maximum sentence is in there, so that's why they tend

530
00:29:56,760 --> 00:29:59,920
Speaker 5: to elicit it. I mean, in practice, most cooperating when

531
00:30:00,280 --> 00:30:03,960
Speaker 5: is especially in fraud cases, do get time served. So

532
00:30:04,520 --> 00:30:08,560
Speaker 5: here it's very likely she could get no time at all.

533
00:30:08,600 --> 00:30:10,920
Speaker 5: But it is something that's ultimately up to a judge,

534
00:30:10,960 --> 00:30:14,680
Speaker 5: so a prosecutor cannot promise it, and even if they're

535
00:30:14,680 --> 00:30:17,240
Speaker 5: hoping to get that, it is hard to tell until

536
00:30:17,280 --> 00:30:19,400
Speaker 5: sentencing comes whether that will actually happen.

537
00:30:20,320 --> 00:30:26,240
Speaker 2: The prosecutors, in opening statements contended that Sam magmun Fried

538
00:30:26,600 --> 00:30:32,360
Speaker 2: orchestrated this fraud, engaged his top lieutenants in this conspiracy

539
00:30:32,720 --> 00:30:36,160
Speaker 2: to lie about their crimes, that he was this criminal mastermind.

540
00:30:36,640 --> 00:30:40,200
Speaker 2: And I'm wondering if that's a bridge too far saying

541
00:30:40,200 --> 00:30:43,719
Speaker 2: that he was the only one responsible when the prosecution

542
00:30:43,800 --> 00:30:47,400
Speaker 2: has given deals to three members of his inner circle.

543
00:30:48,080 --> 00:30:50,600
Speaker 5: There can certainly be arguments that that was a bridge

544
00:30:50,640 --> 00:30:53,800
Speaker 5: too far. They do seem to be painting him, though.

545
00:30:54,040 --> 00:30:57,280
Speaker 5: Is the leader of the scheme, the leader of this company,

546
00:30:57,440 --> 00:30:59,840
Speaker 5: the one that had most of the power. I don't

547
00:30:59,880 --> 00:31:02,160
Speaker 5: know the details of the evidence to the contrary but

548
00:31:02,200 --> 00:31:04,560
Speaker 5: from a lot of what I've read in the press

549
00:31:04,560 --> 00:31:07,160
Speaker 5: and the news, that also seems consistent, So it may

550
00:31:07,200 --> 00:31:11,400
Speaker 5: not be entirely inappropriate for them to do that. If

551
00:31:11,400 --> 00:31:13,600
Speaker 5: he is the one that is the most powerful person

552
00:31:13,600 --> 00:31:16,440
Speaker 5: in the company, it is a little easier to make

553
00:31:16,480 --> 00:31:19,400
Speaker 5: that leap and make that argument. The defense. Of course, though,

554
00:31:19,440 --> 00:31:22,360
Speaker 5: that gives them something to shoot at. When prosecutors do

555
00:31:23,160 --> 00:31:27,400
Speaker 5: say things that maybe overstating the case, that's an easy

556
00:31:27,440 --> 00:31:29,360
Speaker 5: thing to try to knock down insummation.

557
00:31:29,800 --> 00:31:34,000
Speaker 2: I ask everyone about whether they think that sam Begminfried

558
00:31:34,040 --> 00:31:35,440
Speaker 2: will take the stand.

559
00:31:35,840 --> 00:31:40,600
Speaker 5: Great question. My view is that, based on his relationship

560
00:31:40,600 --> 00:31:42,960
Speaker 5: with the press and the media, is that he will

561
00:31:43,000 --> 00:31:46,320
Speaker 5: take the stand. He's the sort of person that wants

562
00:31:46,400 --> 00:31:49,080
Speaker 5: to get his story out there. And I think at

563
00:31:49,120 --> 00:31:53,400
Speaker 5: some point when the prosecution's case appears very strong and

564
00:31:53,520 --> 00:31:55,880
Speaker 5: I haven't been in court, but from what I've read

565
00:31:56,080 --> 00:32:01,080
Speaker 5: it seems strong, than taking the stand is a hail Mary.

566
00:32:01,440 --> 00:32:03,480
Speaker 5: You may not have much to lose at that point.

567
00:32:04,000 --> 00:32:07,800
Speaker 5: It also gives the jurors a real alternative narrative, and

568
00:32:07,920 --> 00:32:10,400
Speaker 5: often when a defendant takes the stand, it becomes a

569
00:32:10,440 --> 00:32:13,960
Speaker 5: credibility question. Do the jurors believe him. If he's convinced

570
00:32:14,000 --> 00:32:17,280
Speaker 5: people before with his companies that they should believe in

571
00:32:17,320 --> 00:32:20,160
Speaker 5: his companies, maybe he believes he can convince the jurors

572
00:32:20,160 --> 00:32:22,720
Speaker 5: here or that he's innocent. It will be very interesting

573
00:32:22,760 --> 00:32:25,640
Speaker 5: to see what the defense is and whether he testifies.

574
00:32:25,680 --> 00:32:28,000
Speaker 5: You know, that's something you don't often get a window

575
00:32:28,080 --> 00:32:32,040
Speaker 5: in before a criminal trial begins. You may not know

576
00:32:32,280 --> 00:32:34,200
Speaker 5: if there are going to be defense witnesses who they

577
00:32:34,200 --> 00:32:36,479
Speaker 5: will be. So I think it'll be really interesting to

578
00:32:36,520 --> 00:32:39,600
Speaker 5: see what the defense case is and how they present

579
00:32:39,800 --> 00:32:40,920
Speaker 5: their narrative.

580
00:32:41,560 --> 00:32:44,440
Speaker 2: And jurors always want to hear from the defendant, even

581
00:32:44,440 --> 00:32:46,400
Speaker 2: though the judge will tell them that they don't have

582
00:32:46,440 --> 00:32:47,160
Speaker 2: to testify.

583
00:32:47,280 --> 00:32:49,960
Speaker 5: I mean I was talking about dramatic moments with Caroline Ellison.

584
00:32:50,680 --> 00:32:54,640
Speaker 5: That would be a hugely dramatic moment where all eyes

585
00:32:54,680 --> 00:32:57,240
Speaker 5: will be on him and they will be on the

586
00:32:57,400 --> 00:33:00,480
Speaker 5: edge of their seeds listening to his testimony. So that's

587
00:33:00,520 --> 00:33:03,720
Speaker 5: an opportunity for the defense to really change the game.

588
00:33:04,040 --> 00:33:07,240
Speaker 2: Thanks for being on the show. At Jordan, that's Jordan Estes,

589
00:33:07,600 --> 00:33:11,720
Speaker 2: a partner at Kramer Levin. And that's it for this

590
00:33:11,840 --> 00:33:14,560
Speaker 2: edition of The Bloomberg Law Show. Remember you can always

591
00:33:14,600 --> 00:33:17,520
Speaker 2: get the latest legal news on our Bloomberg Law Podcast.

592
00:33:17,800 --> 00:33:20,840
Speaker 2: You can find them on Apple Podcasts, Spotify, and at

593
00:33:21,000 --> 00:33:26,000
Speaker 2: www dot bloomberg dot com, slash podcast slash Law, and

594
00:33:26,080 --> 00:33:29,160
Speaker 2: remember to tune into The Bloomberg Law Show every weeknight

595
00:33:29,240 --> 00:33:32,680
Speaker 2: at ten pm Wall Street Time. I'm June Grosso and

596
00:33:32,760 --> 00:33:34,240
Speaker 2: you're listening to Bloomberg