Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: We have said that the burden that you're assuming of
Speaker 1: disentangling race and politics in a situation like this is very,
Speaker 1: very difficult.
Speaker 2: The Chief Justice aptly described the problem in the case
Speaker 2: before the Supreme Court the limits of parties in jerrymandering
Speaker 2: when it intersects with race. It's a case that could
Speaker 2: help determine which party controls the House after next year's election.
Speaker 2: A panel of three federal judges, after an eight day trial,
Speaker 2: concluded that Republican lawmakers had engaged in unconstitutional racial gerrymandering
Speaker 2: in drawing South Carolina's first congressional district, but at oral arguments.
Speaker 2: The conservative justice has expressed skepticism about that panel's decision
Speaker 2: and suggested they will reinstate the Republican drawn map. Here's
Speaker 2: Chief Justice John Roberts, but.
Speaker 1: We've never had a case where there's been no direct evidence,
Speaker 1: no map, no strangely configured districts, a very large amount
Speaker 1: of political evidence, whether the district court chose to credit
Speaker 1: it or not, and instead it all resting on circumstantial evidence.
Speaker 2: While the three liberal justices suggested the lower court had
Speaker 2: adequate evidence to conclude that South Carolina lawmakers improperly relied
Speaker 2: on race to get to its established target of seventeen
Speaker 2: percent black voters in the district by shifting thirty thousand
Speaker 2: black voters out of the district to hit that goal.
Speaker 2: Here's Justice Elena Kagan.
Speaker 3: You have two experts here, Reguso and Lou who answered
Speaker 3: the exact question that is supposed to be answered in
Speaker 3: such a case. In other words, is this gerrymander based
Speaker 3: on politics or is it a way to get to
Speaker 3: an ultimate goal? An ultimate political goal? But the gerrymanderin
Speaker 3: is based on race. And what the two of them
Speaker 3: do is that they show that black Democrats are excluded
Speaker 3: from District one at a far greater percentage than white
Speaker 3: Democrats are joining.
Speaker 2: Me is elections law expert Richard Brefald, a professor at
Speaker 2: Columbia Law School. So Rich tell us about the case
Speaker 2: and the main issue here.
Speaker 4: So, this case is about a challenge to the redistricting
Speaker 4: of South Carolina's congressional plan in twenty twenty two following
Speaker 4: the twenty twenty census. The major development affected District one,
Speaker 4: which is basically around Charleston, and it made the district
Speaker 4: more Republican by moving out of a significant number of
Speaker 4: black voters into an adjacent black majority district. District one
Speaker 4: had been a Republican district, but in recent years had
Speaker 4: been more closely contested, and in twenty eighteen the Democrats
Speaker 4: actually won it for one term. Twenty twenty the Republicans
Speaker 4: wanted that very narrowly. So one of the things the
Speaker 4: legislature did in twenty twenty two was changed the composition
Speaker 4: to make it more Republican, and it's so doing It
Speaker 4: basically moved about thirty thousand black voters from Charleston out
Speaker 4: of the district into an adjacent district. By the way,
Speaker 4: District one is the district that elects Nancy Mace, who
Speaker 4: had been previously considered a moderate that since her district
Speaker 4: was change, seems to become more conservative. But she's one
Speaker 4: of the eight who voted to depose Kevin McCarthy. So
Speaker 4: the question before the court, it's a tough question, is
Speaker 4: whether the legislature was motivated by race or by party.
Speaker 4: You might say that in a state where race and
Speaker 4: party are so intertwined, that's an impossible question answers. It's
Speaker 4: the same thing, but It's crucial because the Supreme Court
Speaker 4: has said that racial gerrymandering, that is to say, the
Speaker 4: intentional movement of voters because of their race from one
Speaker 4: district into another is unconstitutional. But partisan jerry mandering, as
Speaker 4: we all know since the RUCO decision in twenty nineteen,
Speaker 4: is non justiciable. So it's okay for the state to
Speaker 4: engage in partisan gerrymandering, it's not okay for the state
Speaker 4: to engage in racial gerrymandering. South Carolina says it was
Speaker 4: both the following traditional district lines but also had a
Speaker 4: partisan political purpose. What the lower court found was that
Speaker 4: actually the movements of voters did exhibit racial predominance, that
Speaker 4: given away the voters, which voters were targeted, and relying
Speaker 4: on the testimony of experts, they basically said that a
Speaker 4: disproportionate number of black Democrats relative to white Democrats were
Speaker 4: the ones who were moved, and therefore the district court
Speaker 4: was able to conclude that this was a racial gerrymander.
Speaker 4: That's what's being tested in the Supreme Court right now,
Speaker 4: whether this is a racial or a partisan gerrymander. Did
Speaker 4: the district court do it right? To what extent is
Speaker 4: the Supreme Court required to defer to the findings of
Speaker 4: the district Court, and the district Court's findings are really
Speaker 4: sort of factual. They basically made a determination based on
Speaker 4: the testimony of a person who wrote the South Carolina
Speaker 4: Plan and of other experts that this was racially motivated.
Speaker 4: So one of the big issues before the court is
Speaker 4: what difference the district court finding was supposed to gets. Normally,
Speaker 4: the standard that applies to something called clearly erroneous, which
Speaker 4: means the district court gets a lot of difference. But
Speaker 4: you saw some of the more conservative justices pushing back
Speaker 4: on that here, saying that given the fact that the
Speaker 4: district Court doesn't appear to have given trusted in the
Speaker 4: good faith of the legislature, and given some of the
Speaker 4: other challenges to the evidence in front of the district Court,
Speaker 4: maybe the district Court doesn't get the kind of difference
Speaker 4: that the clearly erroneous standard normally would give them.
Speaker 2: Okay, so let's take those That's a lot of issues,
Speaker 2: one one by one. So the three judge federal panel
Speaker 2: referred to the revised map as effective bleaching of African
Speaker 2: American voters out of the Charleston County portion of the
Speaker 2: district and they came to that conclusion after an extensive
Speaker 2: eight day trial featuring forty two witnesses and six hundred
Speaker 2: and fifty two exhibits. So doesn't the court usually defer
Speaker 2: to the factual findings of lower court judges?
Speaker 4: Yes, I mean, indeed, that is the standard they're supposed
Speaker 4: to apply, with col the clearly erroneous standard, not just
Speaker 4: with the district court right on balance, but as long
Speaker 4: as the district court did was plausible, long as they
Speaker 4: didn't do something which was clearly wrong as opposed to
Speaker 4: debatably wrong, they're supposed to defer. And you definitely heard
Speaker 4: the liberal justices emphasizing the importance of adhering to the
Speaker 4: clearly erroneous standard that there was evidence to support with
Speaker 4: the district court found, and indeed the United States came
Speaker 4: in the United States had not been a party to
Speaker 4: the case originally, but this listener General's Office came if
Speaker 4: the United States had actually emphasized the importance of following
Speaker 4: the clearly erroneous standard.
Speaker 2: Chief Justice John Roberts said that the challengers of the
Speaker 2: map had no direct evidence that race had predominated in
Speaker 2: the decision making process, just circumstantial evidence. This would be
Speaker 2: breaking new ground in our voting rights jurisprudence. Is that true?
Speaker 2: I mean, isn't circumstantial evidence enough?
Speaker 4: Right? They've often found circums relied on circumstantial evidence. But
Speaker 4: his full statement was there were there's no direct evidence.
Speaker 4: He also said it was not an oddly shaped district,
Speaker 4: and the number of the early other cases in which
Speaker 4: the Court has found racial gerrymandering, the district was oddly shaped.
Speaker 4: On this one, there was a big change in the district.
Speaker 4: People were moved around a lot, but the district itself
Speaker 4: didn't flunk any kind of test of odd shape, which
Speaker 4: is somethings the Court has sometimes used. And the other
Speaker 4: issue that came up before the court was the fact
Speaker 4: that the plaintiffs had not presented an alternative map. Basically,
Speaker 4: the question was could the state have gotten its partisan
Speaker 4: goals without moving as many black voters around? And the
Speaker 4: question came up, should the plaintiffs have been required to
Speaker 4: present an alternative map showing that the state could have
Speaker 4: made the district just as republican without moving as many
Speaker 4: black voters. And there was a debate in the court
Speaker 4: as to whether the plaintiffs had to do that, and
Speaker 4: the president is that they don't have to. Indeed, Justice
Speaker 4: Kagan was quite strong on that, because she'd actually written
Speaker 4: the case that said that, a case called Cooper about
Speaker 4: five years ago. But nonetheless, the other justices sort of
Speaker 4: came back and said, well, maybe you didn't have to,
Speaker 4: but why didn't you Why wouldn't that have helped your
Speaker 4: case if you could have shown that they could obtained
Speaker 4: their partisan goals without using race quite as much. I mean,
Speaker 4: it really went into the question this difficulty of separating
Speaker 4: out race and party an effect the conservative justices were
Speaker 4: sort of creating it, even though the prior case Cooper
Speaker 4: had said there's no such requirement. You saw some of
Speaker 4: them basically kind of suggesting that either that there is,
Speaker 4: or that there should be, or that it's a problem
Speaker 4: when there isn't.
Speaker 2: Justice Kagan argued that the map makers wouldn't just have
Speaker 2: relied on the twenty twenty election results. She said this
Speaker 2: to the lawyer arguing for South Carolina. Your defense was
Speaker 2: we didn't look at the racial data for this purpose,
Speaker 2: and what the lower court said was I don't believe that.
Speaker 2: And she also said they had not only the opportunity,
Speaker 2: it was sit they're on their computers, but the clear
Speaker 2: incentive to be looking at this race data. So explain
Speaker 2: what you was getting at there and did you find
Speaker 2: it persuasive.
Speaker 4: So the couple questions here are one is why would
Speaker 4: they Why would the state bother using race when they
Speaker 4: could just use party? And if their goal was to
Speaker 4: make the district more Republican, why not just use the
Speaker 4: party voting? Why use race as approxy when you actually
Speaker 4: have the party data. One response to that is, actually,
Speaker 4: they had much more information on race than on party.
Speaker 4: They only had because of the way in which votes
Speaker 4: were counted in South Carolina. They only had one election
Speaker 4: in which they had good party data, and that was
Speaker 4: the twenty twenty presidential election, and the least the argument
Speaker 4: was that wasn't a good predictor because there had been
Speaker 4: more kind of a white crossover voting for Biden over
Speaker 4: Trump in that election. So the plaintiffs argued, and Justice
Speaker 4: Kagan suggested she agreed that in this case, actually the
Speaker 4: state used the race data because race data was more reliable,
Speaker 4: better predicted value than the more limited party data. The
Speaker 4: next question was, well, again this goes to Justice roberts
Speaker 4: point about there's no direct evidence, nobody got up in
Speaker 4: the state legislature and said, let's move the black voters.
Speaker 4: Her point was that it was on their computers, that
Speaker 4: was in their data, was in their face, and they
Speaker 4: couldn't have been unaware of it. And indeed, at one
Speaker 4: point in the trial, the lead witness for South Carolina,
Speaker 4: the principal map maker, basically said, well, we weren't doing
Speaker 4: this for race, but yes, of course we were aware
Speaker 4: of the racial data. And this is where the lower
Speaker 4: court basically concluded they really didn't believe him on that.
Speaker 4: They said that given the omnipresence of the race data
Speaker 4: as they were joining the maps, that they simply didn't
Speaker 4: believe his statement that the state was not rowing on
Speaker 4: the race data when it drew the maps.
Speaker 2: Coming up next, we'll take a look at how the
Speaker 2: court might rule.
Speaker 3: This is Bloomberg.
Speaker 2: I've been talking to Columbia Law School professor Richard Brefalt
Speaker 2: about Supreme Court arguments this week over whether it will
Speaker 2: reinstate a Republican drawn congressional map in South Carolina after
Speaker 2: a lower court concluded that Republican lawmakers engaged in unconstitutional
Speaker 2: racial gerrymandering in drawing what is now a Republican held district.
Speaker 2: Justice Samuel Alito was the most aggressive questioner of the
Speaker 2: validity of the lower court's decision. He posed nearly forty
Speaker 2: questions to the NAACP's attorney. What was the thrust of
Speaker 2: his questions or problems?
Speaker 4: I think he basically said that this is politics and
Speaker 4: that the burden was heavy on the plaintiffs to show
Speaker 4: that it wasn't politics and that it was race. Much
Speaker 4: of this went into some of the details about what
Speaker 4: some of the experts testify to or their failure to
Speaker 4: address every point that the state raised. Some of the
Speaker 4: experts testify to whether or not the district complied with
Speaker 4: traditional districting criteria, but not whether or not it was
Speaker 4: Others focused on whether it was partisan or racial, but
Speaker 4: not in the district criteria. So he felt that the
Speaker 4: expert testimony was inadequate to support the trial court's find
Speaker 4: He repeatedly raised the question about the alternative map, even
Speaker 4: as he acknowledged that an alternative map was not required.
Speaker 4: He sort of found that the absence of an alternative
Speaker 4: map undermined the plaintiff's case, and again he basically said
Speaker 4: that in some sense suggests that there was a heavier
Speaker 4: burden on the District Court to prove that it was
Speaker 4: race and not party, given the way that the two
Speaker 4: were so tightly intertwined.
Speaker 2: Justice Katanji Brown Jackson kept stressing that the court relies
Speaker 2: on the factual findings of lower courts, and she said
Speaker 2: it would be a dramatic shift to precedent if they
Speaker 2: overturned the trial court's findings. Is that true or if
Speaker 2: they find clear error, which Justice Clarence Thomas brought up
Speaker 2: right at the beginning, would it not be violative of precedent?
Speaker 4: Well, if they found clear error, it wouldn't be because
Speaker 4: the standard is clearly ironing. Is the district Court's findings
Speaker 4: are not immune from review to be clear error, as
Speaker 4: opposed to whether or not it was debatable in some sense.
Speaker 4: The US government, as I said, they came in on
Speaker 4: the side of the plaintiffs, on the side of the NAACP,
Speaker 4: and said, in effect, we think that the three judge
Speaker 4: court could have gone either way. There was evidence to
Speaker 4: support either position, but the position that the District Court
Speaker 4: found was reasonable given the evidence they had, and so
Speaker 4: that's why you should defer to them. I mean, one
Speaker 4: question that Justice Barrett raised to just maybe whether the
Speaker 4: standard should be higher in a case involving a state legislature.
Speaker 4: Maybe there should be more burden on the district court
Speaker 4: to show that the legislature wasn't acting in good faith.
Speaker 4: There's a kind of presumption that legislators state legislatures act
Speaker 4: in good faith, so maybe there should be a higher
Speaker 4: legal burden on the district court. And you're right. Justice
Speaker 4: Jackson was very heavy on it, sort of sticking to
Speaker 4: the traditional role of the district court in finding the
Speaker 4: facts and the duty of appellate court so that the
Speaker 4: first year had been at district court judge. It was
Speaker 4: kind of a civil procedure argument as much as anything else,
Speaker 4: that the traditional role of the court is to see
Speaker 4: whether the lower court applied the law properly, but to
Speaker 4: defer to their factual finding. The liberals were the strongest
Speaker 4: on this about the importance of following this traditional judicial
Speaker 4: role of deferring to lower courts on their factual findings.
Speaker 2: Most legal commentators concluded after hearing the arguments that the
Speaker 2: conservative majority is going to uphold the Republican drawn map.
Speaker 2: Do you agree with that?
Speaker 4: There were certainly a lot of negative questioning, even from
Speaker 4: some of the so called more moderate conservative justices. Remember
Speaker 4: the most recent case involving race and voting, Allen versus
Speaker 4: Milligan went off five to four, with two of the conservatives,
Speaker 4: Roberts and Kavanaugh, joining the liberals. Roberts was clearly pretty
Speaker 4: skeptical about the lower courts finding in this case. He
Speaker 4: seemed less likely. Kavanaugh's questions were a little bit harder
Speaker 4: to read. I mean, some of it was again about
Speaker 4: the evidence, but some of it also seemed to be
Speaker 4: indicated he was thinking about, what's the burden on the
Speaker 4: defendants in this case? Who are the appellants to show
Speaker 4: that the district court was clearly wrong? I think it
Speaker 4: was only a tough argument for the NAACP defending the
Speaker 4: lower court's finding. I think if they have any chance,
Speaker 4: it's going to be to the extent that the Court
Speaker 4: decides to rally around the idea that unless it's clearly erroneous,
Speaker 4: there should be difference in lower courts finding. On the
Speaker 4: other hand, this is the court's first sort of race
Speaker 4: party intertwined case since Rucho four years ago, when the
Speaker 4: Court said that partisan gerrymandering is not on conceiutional, it's
Speaker 4: non justiciable so it's the first time that they will
Speaker 4: speak to the how do you separate out race and party?
Speaker 4: And one could imagine they may want to shut down
Speaker 4: the idea that you could get around Rucho by reframing
Speaker 4: things around race. Now, the Court in the past has said,
Speaker 4: even if there's a partisan factor, that the state can't
Speaker 4: use the race as approxy for party when it draws
Speaker 4: lines to favor a party. But one could imagine this
Speaker 4: is a case where the Court might want to address
Speaker 4: the how do you disentangle race and party in a
Speaker 4: world in which racial jerry mannering is unconstitutional but partisan
Speaker 4: jerry mannering is not.
Speaker 2: Explain why this case is different from the case you
Speaker 2: referred to, the Alabama case, where it was surprising that
Speaker 2: the Chief and Justice Kavanaugh sided with the liberals there.
Speaker 4: That case was really about whether or not the Alabama
Speaker 4: violated the Voting Rights Act. This one is whether or
Speaker 4: not South Carolina violated the Constitution. Although the result in
Speaker 4: Alabama will have a partisan consequence, there wasn't an argument
Speaker 4: that the state was doing it to help the Republicans.
Speaker 4: It wasn't really an argument about the intent of the
Speaker 4: state at all. That case, under the Voting Rights Act.
Speaker 4: The plaintiffs can win if they show disparate impact, if
Speaker 4: they show that the state drew lines in a way
Speaker 4: that had the effect of minimizing minority voting power. I mean,
Speaker 4: the thing is, in South Carolina, the district that was changed,
Speaker 4: District one, was not going to be a majority minority district.
Speaker 4: It was going to be a white majority district either way,
Speaker 4: although for the larger black share of the voting population
Speaker 4: it might have been a democratic district, probably a white
Speaker 4: Democratic district. And that's sort of one of the differences
Speaker 4: here is that the court is somewhat sensitive to state
Speaker 4: actions that dilute minority voting power, but they don't care
Speaker 4: about state actions that chap on one party over another.
Speaker 4: And so the Alabama case was argued entirely around minority
Speaker 4: voting rights, although it turns out if you increase minority
Speaker 4: voting power in that state you were likely to get
Speaker 4: it was all I could have a partisan consequence here.
Speaker 4: Wasn't really a claim the minority votes were being diluted,
Speaker 4: just that voters were being moved around from one district
Speaker 4: to another. And so the case was broad as a
Speaker 4: case about intentional racial discrimination. But there was no claim
Speaker 4: that if the voters had all been just left alone,
Speaker 4: that district one would have been black majority district. It
Speaker 4: would have been a white majority district, although one that
Speaker 4: might have tilted more democratic.
Speaker 2: This case is the third time in two years that
Speaker 2: the Court has heard arguments about state's congressional lines, and
Speaker 2: two other cases are advancing in the lower courts in
Speaker 2: Georgia and Louisiana that challenge maps under the Voting Rights Act.
Speaker 2: Is it that the Court's precedent is not clear or
Speaker 2: are these kinds of cases always challenged?
Speaker 4: Well, I think anything evolving redistricting is going to be challenged.
Speaker 4: This case is different from the old ones. The other
Speaker 4: two cases, the one you mentioned our Voting Rights Act
Speaker 4: challenges where the plaintiffs are arguing that the way the
Speaker 4: lines are drawn reduces the ability of black voters to
Speaker 4: elect the candidates of their choice in districts which might
Speaker 4: generate more minority representation. Louisiana clearly so. And this one again,
Speaker 4: there wasn't a claim that you would have created another
Speaker 4: black majority district. Interestingly, the Court has tend to look
Speaker 4: at these things as to whether the going to be
Speaker 4: a sort of a majority minority or district where minority
Speaker 4: voters are likely to prevail at least have the opportunity prevail.
Speaker 4: They've been less sympathetic to arguments about, well, maybe minority
Speaker 4: voters must be more influential if they're a bigger share,
Speaker 4: but not nearly a majority, and so they haven't bought
Speaker 4: that argument. And so the voting rights arguments are always
Speaker 4: difficult because the plaintiffs have to show that there could
Speaker 4: have been another minority district, that there is racially polarized voting,
Speaker 4: and that under the totality of the circumstances, the setup
Speaker 4: is unfaired minority voters, and that's a tough standard to meet.
Speaker 4: And many people thought that the court just didn't seem
Speaker 4: that interested. The Allen case kind of maybe not revived
Speaker 4: that standard, but confirm that that is still the standard.
Speaker 4: And so I think it's what's given to wind at
Speaker 4: the backs of the people bringing the challenges. Nonetheless, there's
Speaker 4: a slow slog through the courts, even if the district
Speaker 4: courts are favorable. What's happening in Louisiana is the appellate court,
Speaker 4: the Fifth Circuit, is slowing everything down. So so it's
Speaker 4: not clear we're going to get any decisive changes in
Speaker 4: those two states before the twenty four election.
Speaker 2: Lately, it always seems to be the fifth circuit that's
Speaker 2: a hang up. Thanks so much, rich that's Professor Richard
Speaker 2: Brafalt of Columbia Law School. Coming up next, we'll talk
Speaker 2: about the star witness in Sam Bankman Freed's trial, his
Speaker 2: former girlfriend. I'm June Grossow and you're listening to Bloomberg.
Speaker 2: Prosecutors have built their case against Sam Bankman Freed by
Speaker 2: tapping into his inner circle and reaching cooperation deals with
Speaker 2: some of his closest confidants. And this week, the government's
Speaker 2: star witness, Caroline Ellison, the former CEO of Alameda Research,
Speaker 2: testified against her former boss and boyfriend. From her first
Speaker 2: minutes on the witness stand, Ellison pointed to Bankman Freed
Speaker 2: as the man responsible for the loss of billions in
Speaker 2: customer funds and the collapse of the cryptocurrency platform FTX.
Speaker 2: My guest is former federal prosecutor Jordan Estez, a partner
Speaker 2: at Kramer Leans. It seems like the government here has
Speaker 2: an overwhelming amount of evidence against Bankman Freed. Witnesses who
Speaker 2: were in on the alleged fraud code that was altered
Speaker 2: balance sheets, texts, internal documents. As a defense attorney, how
Speaker 2: do you defend against that kind of a case.
Speaker 5: It's certainly very challenging in these circumstances. The one thing
Speaker 5: I think the defense is doing, and they're trying to do,
Speaker 5: is create a record that this was actually legitimate business.
Speaker 5: Nobody thought they were doing anything wrong, So they're going
Speaker 5: to try to do that through the cross examination of
Speaker 5: the witnesses of the company. I do think it's a
Speaker 5: real challenge in a case where witnesses like Caroline Ellison
Speaker 5: seem to have fully embraced that the conduct was wrongful.
Speaker 5: So if you have a witness like that, they're really
Speaker 5: going to have to attack her credibility through cross examination.
Speaker 5: And there seemed to be some angles for given her
Speaker 5: prior relationship with the defendant. You know, perhaps they have
Speaker 5: some documents up their sleeve that nobody knows about. That
Speaker 5: is a benefit of being a defense attorney is that
Speaker 5: you can hold some things back that can be surprising
Speaker 5: during cross examination. But I do think from my read
Speaker 5: of her testimony it was very overwhelming. It's in very
Speaker 5: dramatic and compelling, So they're going to have to do
Speaker 5: a lot of work in discrediting her, which will be hard.
Speaker 2: I mean, she is the state star witness. How much
Speaker 2: depends on the jury believing her.
Speaker 5: So I think in a cooperator case, the government really
Speaker 5: does need the jury to believe the cooperators. They need
Speaker 5: them to believe not necessarily every cooperator, but at least
Speaker 5: one of the principal wands, like Caroline Ellison. They're certainly
Speaker 5: going to have to believe her. But you can imagine
Speaker 5: the government has documents lined up that support her testimony.
Speaker 5: I have not seen the full trial transcript, but often
Speaker 5: as the cooperator testifies, you then introduce exhibits that confirm
Speaker 5: what the cooperating witness is saying, or perhaps another witness
Speaker 5: from FTX who testifies later may say something that's consistent
Speaker 5: with Caroline Ellison's testimony. So there are a number of
Speaker 5: ways to try to get the jury to believe the witness,
Speaker 5: but that is ultimately it's very critical to the case.
Speaker 2: The first four witnesses, one is his former girlfriend, another
Speaker 2: is one of his oldest friends, another an mit friend.
Speaker 2: Does that help or hurt their credibility that they were
Speaker 2: friends who turned on him when things fell apart?
Speaker 5: I think for the government's view is typically that that
Speaker 5: helps their credibility. These were the people who were closest
Speaker 5: to the defendant. They were inside the conspiracy, and they're
Speaker 5: the ones who can tell you every detail of what happened.
Speaker 5: If you have an outsider, it's easier to distance them
Speaker 5: from the defendant and suggest how would they actually know
Speaker 5: what he intended or what was really going on. But
Speaker 5: because they have people that were right on the inside,
Speaker 5: that worked side by side with him, that have admitted
Speaker 5: their guilt, that's really tough for the defense, and I
Speaker 5: think the government probably views that very favorably.
Speaker 2: Do you think there could be an element of looking
Speaker 2: for during nullification in that you have these people who
Speaker 2: were also responsible to his three top lieutenants, and they're
Speaker 2: all getting a deal and hanging it on him.
Speaker 5: Maybe I don't know that that's the way to go.
Speaker 5: I think it's maybe not dury nullification, but I would
Speaker 5: use that to suggest they're lying. They threw him under
Speaker 5: the bus because they knew they were sort of caught
Speaker 5: red handed, and they knew there was only one way
Speaker 5: to save themselves, and that's that the government wanted the
Speaker 5: top guy, and so they had to give him up.
Speaker 2: Was there anything about Caroline Ellison's testimony that struck you.
Speaker 5: So I thought a lot of the anecdotes he provides
Speaker 5: are the kinds of things that really stick out to
Speaker 5: a juror. They may not be direct evidence of fraud,
Speaker 5: but they're dramatic moments, like when she said that he
Speaker 5: said there was a five percent chance that he would
Speaker 5: be president. I'm sure that's something that stands out and
Speaker 5: just I think raises questions about his judgment. But she
Speaker 5: seemed to have a lot of dramatic moments in her testimony.
Speaker 5: I think, in particular, given their relationship, there's this added
Speaker 5: drama on top of what you have in a fraud case.
Speaker 5: So it's very good for the government that when there
Speaker 5: is drama when you have a complicated case, jurors can
Speaker 5: go to sleep if you're talking about code and cryptocurrency
Speaker 5: and things like that. But when you have a witness
Speaker 5: who was in a romantic relationship when there was this
Speaker 5: power dynamic, that's something that certainly captures the jury's attention
Speaker 5: and I think creates this extra element there that her
Speaker 5: boss and her former boyfriend is also asking her to
Speaker 5: commit fraud or committing fraud with her. It's an interesting
Speaker 5: power dynamic that I think will stand out to a jury.
Speaker 2: Yeah. I think also what'll stand out is that she
Speaker 2: talked about things like his concerns with his public image
Speaker 2: and that he thought his long, unkempt hair was valuable
Speaker 2: in contributing to the narrative. And he swapped a luxury
Speaker 2: car for a Toyota Corolla because it was better for
Speaker 2: his public image, So that also paints a picture of him.
Speaker 1: Right.
Speaker 5: There are many things that are they're not directly relevant
Speaker 5: to fraud charges, and maybe in certain courts these may
Speaker 5: not be admissible. There could be sustained objections. There were
Speaker 5: things like his hair, But these are things that give
Speaker 5: the jurors an image of the defendant that's not necessarily favorable.
Speaker 5: So you can certainly see why the government would want
Speaker 5: to elicit them, and why why the defense might I'm
Speaker 5: not sure if they objected here, but why they might
Speaker 5: want to object to topics like that.
Speaker 2: Just like FTX co founder Gary Wang, who testified before her,
Speaker 2: Ellison was adamant that bankman Freed was the ultimate decision maker.
Speaker 2: Right at the start of her testimony, she said, he
Speaker 2: directed me to commit these crimes at every turn. She
Speaker 2: told jurors it was Bankman Freed calling the shots. Is
Speaker 2: that constant repetition important even though it makes it seem
Speaker 2: like she's not taking responsibility, just pointing at him.
Speaker 5: So I think the prosecutors certainly see that as important,
Speaker 5: and that's something you want the jury to take home.
Speaker 5: And that sort of goes back to this concept in
Speaker 5: the government that you often don't want somebody to cooperate down.
Speaker 5: You always want the cooperator to be a level lower,
Speaker 5: for instance, than the person going to trial. So this
Speaker 5: is something that the government hammer's home. In an array
Speaker 5: of cases, whether it's a drug case or a fraud case,
Speaker 5: they usually have a cooperator who will be talking about
Speaker 5: the person above them and the criminal conspiracy. So it
Speaker 5: is certainly important from the government's perspective now as to
Speaker 5: whether whether it undercuts that she's accepted responsibility. I think
Speaker 5: the defense may argue that, although it is a little
Speaker 5: hard when she has in other instances on the stand
Speaker 5: acknowledged her role in the scheme, and she is of
Speaker 5: course pled guilty.
Speaker 2: The defense landed some small victories so far. In its
Speaker 2: cross examination. She said there were periods of time when
Speaker 2: Bankman Freed wasn't paying attention to Alameda or interacting with
Speaker 2: the firm's executives, and she recalled telling prosecutors that it
Speaker 2: seemed like he might not know that Legacy FTX customers
Speaker 2: continued to wire money to Alameda bank accounts even after
Speaker 2: the exchange got its own account. So the defense is
Speaker 2: poking some holes in the idea that bankman Freed was
Speaker 2: always calling the shots at Alameda. But how many holes
Speaker 2: would they need to negate her testimony?
Speaker 5: I think they are going to need a lot. But
Speaker 5: one thing defense attorneys do is through the cross examination
Speaker 5: of many witnesses, you try to establish these small, good
Speaker 5: facts for your client, and then ultimately in summation at
Speaker 5: the very end, you pull them together and sometimes you
Speaker 5: can pull them together in a way in a closing
Speaker 5: statement that is unexpected. Those little victories, as you say,
Speaker 5: could be setting up their arguments and closing. So it's
Speaker 5: important that they're getting them.
Speaker 2: And so as prosecutors almost always do. They brought out
Speaker 2: her cooperation agreement on direct but they said she faces
Speaker 2: a maximum prison sentence of one hundred and ten years.
Speaker 2: Is that disingenuous? I mean, no one's getting one hundred
Speaker 2: and ten years here, Even Sam bankman freed.
Speaker 5: It is contained in the cooperation agreement that the statutory
Speaker 5: maximum sentence is in there, so that's why they tend
Speaker 5: to elicit it. I mean, in practice, most cooperating when
Speaker 5: is especially in fraud cases, do get time served. So
Speaker 5: here it's very likely she could get no time at all.
Speaker 5: But it is something that's ultimately up to a judge,
Speaker 5: so a prosecutor cannot promise it, and even if they're
Speaker 5: hoping to get that, it is hard to tell until
Speaker 5: sentencing comes whether that will actually happen.
Speaker 2: The prosecutors, in opening statements contended that Sam magmun Fried
Speaker 2: orchestrated this fraud, engaged his top lieutenants in this conspiracy
Speaker 2: to lie about their crimes, that he was this criminal mastermind.
Speaker 2: And I'm wondering if that's a bridge too far saying
Speaker 2: that he was the only one responsible when the prosecution
Speaker 2: has given deals to three members of his inner circle.
Speaker 5: There can certainly be arguments that that was a bridge
Speaker 5: too far. They do seem to be painting him, though.
Speaker 5: Is the leader of the scheme, the leader of this company,
Speaker 5: the one that had most of the power. I don't
Speaker 5: know the details of the evidence to the contrary but
Speaker 5: from a lot of what I've read in the press
Speaker 5: and the news, that also seems consistent, So it may
Speaker 5: not be entirely inappropriate for them to do that. If
Speaker 5: he is the one that is the most powerful person
Speaker 5: in the company, it is a little easier to make
Speaker 5: that leap and make that argument. The defense. Of course, though,
Speaker 5: that gives them something to shoot at. When prosecutors do
Speaker 5: say things that maybe overstating the case, that's an easy
Speaker 5: thing to try to knock down insummation.
Speaker 2: I ask everyone about whether they think that sam Begminfried
Speaker 2: will take the stand.
Speaker 5: Great question. My view is that, based on his relationship
Speaker 5: with the press and the media, is that he will
Speaker 5: take the stand. He's the sort of person that wants
Speaker 5: to get his story out there. And I think at
Speaker 5: some point when the prosecution's case appears very strong and
Speaker 5: I haven't been in court, but from what I've read
Speaker 5: it seems strong, than taking the stand is a hail Mary.
Speaker 5: You may not have much to lose at that point.
Speaker 5: It also gives the jurors a real alternative narrative, and
Speaker 5: often when a defendant takes the stand, it becomes a
Speaker 5: credibility question. Do the jurors believe him. If he's convinced
Speaker 5: people before with his companies that they should believe in
Speaker 5: his companies, maybe he believes he can convince the jurors
Speaker 5: here or that he's innocent. It will be very interesting
Speaker 5: to see what the defense is and whether he testifies.
Speaker 5: You know, that's something you don't often get a window
Speaker 5: in before a criminal trial begins. You may not know
Speaker 5: if there are going to be defense witnesses who they
Speaker 5: will be. So I think it'll be really interesting to
Speaker 5: see what the defense case is and how they present
Speaker 5: their narrative.
Speaker 2: And jurors always want to hear from the defendant, even
Speaker 2: though the judge will tell them that they don't have
Speaker 2: to testify.
Speaker 5: I mean I was talking about dramatic moments with Caroline Ellison.
Speaker 5: That would be a hugely dramatic moment where all eyes
Speaker 5: will be on him and they will be on the
Speaker 5: edge of their seeds listening to his testimony. So that's
Speaker 5: an opportunity for the defense to really change the game.
Speaker 2: Thanks for being on the show. At Jordan, that's Jordan Estes,
Speaker 2: a partner at Kramer Levin. And that's it for this
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