By Matthew Russell Lee, Patreon Substack
SDNY COURTHOUSE, June 15 – Sam Bankman-Fried of FTX was indicted in the U.S. District Court for the Southern District of New York, leading to his arrest in the Bahamas on December 12, and extradition to the US on December 21.
On February 28, with Bankman-Fried free on bond, FTX's Nishad Singh pleaded guilty to six criminal charges. Inner City Press put the charging document on its DocumentCloud here.
On March 10, Judge Kaplan held a proceeding. Inner City Press was there and live tweeted, thread here.
On March 27, Bankman-Fried's lawyers filed a sealed version of conditions it said DOJ agreed to - adding that "the Government does not object to the sealing request." Full letter on Patreon here.
On May 8, SBF's lawyers wrote in to Judge Kaplan, "Samuel Bankman-Fried hereby moves through his counsel as follows -" Full letter on Patreon here.
On May 23, Judge Kaplan set June 15 for the argument: "Reset Hearing Time as to Samuel Bankman-Fried: Oral Argument regarding DI 136 set for 6/15/2023 at 10:30 AM in Courtroom 21B, 500 Pearl Street, New York, NY 10007 before Judge Lewis A. Kaplan."
Near midnight on June 15, the US Attorney's Office responded to SBF's motions about Bahamas - by agreeing to sever and delay charges: " the Government is prepared to proceed to trial as scheduled on the counts contained in the original Indictment, and to consent to discretionary severance under Federal Rule of Criminal Procedure 14 of the additional counts contained in the S5 Indictment. 1 The Government respectfully requests that the Court schedule trial on these counts for the first quarter of 2024, or the nearest time thereafter convenient to the Court, pending resolution of the Government’s request for a specialty waiver." Full filing on Patreon here
On June 15 before Judge Kaplan, the arguments began with this issue. Inner City Press was there and live tweeted, thread here:
Bankman-Fried is sitting between his lawyers, waiting for Judge Kaplan to come in. A Court Security Officer goes forward, as one of the prosecutors (Nick Roos) turns around to scan the courtroom gallery. Drum roll!
All rise! Judge Kaplan: I would like to begin with the government's letter of last night, the closing hours of Flag Day. I have some questions about it. If I were to agree the defendant has no standing on the rule of specialty, why would US want or need a waiver?
AUSA Thane Rehn: We have diplomatic obligations to the Bahamas. We have an interest in observing diplomatic relationships. Judge Kaplan: So you wouldn't proceed, even if the Bahamas takes no position?
[Would DOJ adopt this position on any extradition, from anywhere? For example in the OneCoin or Jho Low cases?] Judge Kaplan: And if I don't sever, will you be ready for trial in October?
AUSA Rehn: As long as the Bahamas agrees
Judge Kaplan: Mr. Cohen, anything? SBF's lawyer Cohen: In light of the government's letter, things have changed. The new charges should be dismissed - there is no consent. Judge Kaplan: What consent are you referring to? Cohen: From the Bahamas.
Cohen: On the campaign finance counts --
Judge Kaplan: Let's take that later. I'm not going to rule on that now, I want to give it more thought. For purposes of today's festivities, let's hear about what we expect two days ago. I don't have infinite time
Judge Kaplan: 45 minutes all in, each side, with a short rebuttal.
SBF's lawyer Mark Cohen: The Bahamas US Treaty applies, Article 14, the rule of specialty. Judge Kaplan: Their act doesn't bind the US
Cohen: The request was not even made until May, 3 months until after the S-5 indictment. So the new charges should be dismissed, or in the alternative, to sever them.
Judge Kaplan: You have a major problem on standing.
Cohen: The US won't proceed w/o consent. We have a case from the 1800s. We have a protest...
Judge Kaplan: A protest from where?
Cohen: The Bahamas. They must expressly consent. And so they are objecting.
Judge Kaplan: I don't get that at all. Look at the treaty with the Dominican Republic
Judge Kaplan: The 2d Circuit found that the US never intended these treaties to be enforceability by individuals.
Cohen: The individual's rights derive from the state --
Judge Kaplan: Rights such as they may be.
Cohen: The operative document coming out of the Bahamas is the warrant of surrender. It has a page called Schedule of Charges. All our client consented to was "Simplified Extradition."
Judge Kaplan: Did you consent to the minister extraditing him on Court 12?
Cohen: He only consented to what was in the Schedule of Charges. We shouldn't be getting into what the minister intended. There's a presumption of regularity of the proceeding. If your Honor severs, we suggest you should sever the campaign finance charges too
SBF's 2d lawyer Everdell: Consider Ciminelli [recent Supreme Court decision on fraud] The Court should not allow the government to retroactively amend the indictment.
Everdell: The bank fraud charges about brought under the right to control theory at issue in Ciminelli. Judge Kaplan: I think you take a narrow view of Count 9. I read it to allege they did it to set up a vehicle under the control of Alameda and your client
Everdell: You're talking about a fraud against FTX customers, not against the bank. Judge Kaplan: You can't parse it that closely. It doesn't hold water, at least in this Circuit.
Judge Kaplan: We all learned back in law school that property rights are a BUNDLE of rights. You can have the right to an easement over your neighbor's property to get to yours. It's no different here.
Everdell: I'm turn to the lender charges. This is exactly what the Supreme Court was cautioning against in Ciminelli, the criminalization of traditionally civil matters. So they try to fix it in the opposition brief, to get around Ciminelli
Everdell: The right to collect has not been deprived- they are vigorously asserting that right in the bankruptcy proceeding. Finally, what rights did the FTX customers have, when they deposited on the exchange? Mark Cohen: How much more time do we have? A: 5 min
Cohen: I want to address the Brady issues. Judge Kaplan: We'll do that later. Government? AUSA Thane Rehn: On the campaign finance count, the defendant does not have standing. Anyway it was in the extradition request; he consented to it
AUSA Danielle Sassoon: Since the Government has remaining time, if your Honor has any questions... Judge Kaplan: I don't think that is necessary. Let's turn to the discovery issues. Have you made all the Rule 16 disclosures?
AUSA Nick Roos: Sorry for the missing word, the late hour of the letter shows we should have re-read it. Judge Kaplan: At least you're not blaming it on one of these AI programs. I'd have to send you to Judge Kaplan [citing Avianca/ ChatGPT Quote Tweet
OK - now the Chat GPT case, Mata v. Avianca, sanctions against the lawyer(s) who filed a brief with non-existent or hallucinated cases. Inner City Press is covering the case AUSA Sassoon: We have a proposed schedule... Three weeks before charge, proposed charge, Daubert motions, voir dire. Two weeks before, opposition to motions in limine. Finally, a week before, a final pre-trial conference. Judge Kaplan: I fear extensive Daubert
Judge Kaplan: Back to the drawing board. I have 2 law clerks & 300 other cases. So, weeks earlier. Mark Cohen: We have no obligation to call an expert. Judge Kaplan: If you don't, I'll break out a bottle of champagne. Cohen: What kind? Judge Kaplan: Not the best
Judge Kaplan: I disfavor using a jury questionnaire. Remember the Maxwell case [juror Scotty David didn't disclosure his history, then publicly bragged about it] Everdell: I'm aware of that case Judge Kaplan: I imagine you are [Again, Everwell repped Maxwell]
Judge Kaplan: Then there was my most recent case, I imagine you've heard of it [Inner City Press book on it: Everdell: We need to know what loan agreements they are referring to. AUSA Sassoon: This is exactly the type of minutia courts have denied defendant's access to - as Judge Rakoff did in the Akhavan case [Inner City Press filed for exhibits
SBF's lawyer: We need the Code Base information, to show who made changes to the code. Here's the sequence: We asked the government for it. They said no. We asked FTX. They said no. We are now before your Honor. AUSA Sassoon: The power to act is not a duty to act
SBF's lawyer: The debtor has been enmeshed with the government.
Judge Kaplan: I'll probably write something brief about this. Substantially for the reasons US has advanced, the request for the US to go thru the debtor files is denied, as is bill of particulars
Judge Kaplan: So thank you for the papers, now it's my turn. Adjourned. All rise!
And, hour later: "ORDER as to Samuel Bankman-Fried. 1. The government has requested a specialty waiver from The Bahamas with respect to the prosecution of the defendant on charges first interposed after the date of defendant's extradition, specifically Counts Four, Six, Nine, Ten and Thirteen of the Fifth Superseding Indictment. In view of the uncertainty of when The Bahamas will render a decision on that request, the government has requested that those counts be severed and scheduled for separate trial from the trial of the pre-extradition charges. Accordingly, Counts Four, Six, Nine, Ten and Thirteen of the Fifth Superseding Indictment are severed and scheduled for trial, unless otherwise ordered, commencing on March 11, 2024. 2. For reasons, and subject to the qualifications, stated on the record in open court, defendant's Pretrial Motion Nos. 5 and 6 (set forth in Dkt 136) are denied. 3. Pretrial Motion No. 7 is denied as premature. SO ORDERED. (Signed by Judge Lewis A. Kaplan on 6/15/2023)."
The case is US v. Bankman-Fried, et al., 22-cr-673 (Kaplan)
More with analysis on Substack here
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