By Matthew Russell Lee, Patreon Substack
SDNY COURTHOUSE, Aug 11 – 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, 2022 and extradition to the US on December 21, 2022.
On August 11, 2023 he was remanded to jail, Inner City Press thread here and below.
On July 26, the SDNY prosecutors informed Judge Lewis A. Kaplan they are dropping the campaign finance charges against SBF, at the request of the Bahamas.
On July 27, SBF's lawyers cursorily asked Judge Kaplan for "leave to file under seal" documents SBF already gave to the New York Times.
Inner City Press immediately filed opposition to sealing in full. Filed letter on DocumentCloud here.
On August 3, the US replied about SBF planting the documents and stories in the NYT, without addressing that they are still sealed, full letter on Patreon here.
On August 4, Judge Kaplan docketed: "ORDER as to Samuel Bankman-Fried. The Court will hear further argument on the government's application to revoke defendant's bail or for alternative at 2 p.m. on August 11, 2023. The defendant shall be present."
Inner City Press was there on August 11 for the remand and live tweeted it, thread here:
OK - now US v. Bankman-Fried hearing on possible remand of SBF to jail for intimidating witnesses, including leaking Caroline Ellison's Google Docs (still sealed) to the NYT. Inner City Press moved to unseal here & will live tweet, thread below
All rise! Judge Kaplan: I thank you for coming in. Ms. Sassoon? Assistant US Attorney Danielle Sassoon: We've hone in on the undisputed facts: the Signal message to the FTX US general counsel, the use of a VPN that concealed his Internet activity --
Judge Kaplan: How was that a violation of his bail conditions? AUSA Sassoon: He was been informed of his improper contact.... Then you have the sharing of Caroline Ellison's information. This activity was part of an ongoing media strategy.
Judge Kaplan: He has a right, up to a point, no? AUSA Sassoon: We don't view this as a First Amendment issues. Judge Kaplan: The line is the intent to intimidation? AUSA Sassoon: The content of the communication too. To deny charges, fine. But harassment, no.
AUSA Sassoon: The defense has not really engaged with what the least restrictive conditions could be. We have spoken to a number of facilities. Putnam County Correctional Facility tells us they would let the defendant have a laptop
AUSA Sassoon: It might take time to prepare the laptop. Judge Kaplan: How long? AUSA Sassoon: About a week. Existing conditions are not adequate, after extensive negotiations. The order is not sufficient. It is difficult to enforce.
AUSA Sassoon: Defendant requested access to Google Drive, he said for discovery. Then he used it to give Ms. Ellison's documents to the New York Times. We asked the defense to give us non-PDF versions with meta data, they have not been provided.
Judge Kaplan: He invited the reporter to visit him, right? Where was he coming from, and going to? AUSA Sassoon: I don't know the answer to that. We took pains to design conditions for Palo Alto. But he is continually traveling to New York for trial preparation AUSA Sassoon: So we would propose home detention and no Internet except for Zoom meetings with counsel. No access to Google Drive... I'm happy to address any further questions.
Judge Kaplan: Mr. Cohen? Where did the reporter come from? SBF's lawyer Mark Cohen: From California. Judge Kaplan: Where in California? Cohen: I don't know. But I think we have representatives of his employer [NYT] here in the courtroom. Let's turn to the standard
Cohen: In one of the cases, the defendant offered a bag of cash to the witness. We don't have that here. Witness-1 , they are repurposing it as a pattern. The email was the end of a sequence --
Judge Kaplan: I question that. The January email came after arrest
Cohen: It was the general counsel of a company that was reporting to the government. It was not tampering under 3148 or 3142. You asked a very good question about the VPN. It is not inherently deceptive. It is used by companies and the government.
Cohen: We only know about the contact with the reporter because my client was complying with conditions. The reporter was logged in. [Still no ruling on the bid for visitors without log in, and Inner City Press' filing
Judge Kaplan: If two guys walk into a store and say, it would be a shame if this burned down, be nice with us. Are they civic minded people? But if the intent is to intimidate, it's a crime. Though through words. Cohen: It depends on the intent.
Cohen: What if a journalist calls a defendant and asks, what do you have to say? And he says, Someone else did it - that's permitted, under the Gentile decision [Gentile v. State Bar of Nevada, 501 U.S. 1030 (1991)]
Cohen: IT's 2 months before trial, we need to prepare. [Note: there are many defendants in the MDC and other Federal prisons awaiting trial] Judge Kaplan: Nothing you submitted was on speech with criminal intend, a major omission, given from whence it came [Tribe]
AUSA Sassoon: Just because the defendant was more subtle than a mobster doesn't mean it's OK. It's consistent with his M.O. as CEO of FTX. The reporter, he had contact with by phone, but this was in person. A fair inference is that it was to deceive.
AUSA Sassoon: We're citing Section 3148, it's enough for the court to conclude detention is appropriate if he's unlikely to abide by his bail conditions. He is intent on interfering with the integrity of the trial. Cohen: We get allegations, no proffer of truth
Judge Kaplan: Didn't he instruct others to use the delete function? Cohen: Not for any improper purpose. Judge Kaplan: I guess I'm not going to get a straight answer. I admire your work. But please, an answer. Cohen: He would set some of his setting to delete
Judge Kaplan: He would tells others to? Cohen: He disputes that. He has abided by complex conditions. Judge Kaplan: Ms. Sassoon, am I correct the defendant said legal cases are built on documents & that's why you should delete? AUSA: It was the defendant's policy
AUSA Sassoon: Only yesterday we were meeting with another witness who told us the defendant said not deleting, there was only downside. It was a policy instituted by the defendant.
Judge Kaplan: Mr. Cohen, does your client dispute that? Cohen: He said, Don't write things that can be taken out of context. The policy was reviewed by an outside and an inside firm. This is a question for trial. Judge Kaplan: I'm prepared to rule on this now.
Judge Kaplan: This may take more than 5 minutes. He was arrested in Bahamas in December and extradited to the US on December 21. He was released on bond. The US announced that Caroline Ellison and Gary Wang had pleaded and were cooperating Judge Kaplan: The conditions of release have been tightened at least twice. Only July 20, government again moved to limit extrajudicial statements, focused on alleged leak of private materials of Ms Ellison to the NYT.
On July 26 the US orally moved to revoke bail Inner City Press @innercitypress · 1h Judge Kaplan: I have received filings including by a Constitutional scholar, strangely in the form of an affidavit, not an amicus brief. Under 18 USC 3148(b) the government alleges witness tampering and/or obstruction of justice. 18 USC 1512(b), it'd be a felony
Judge Kaplan: On January 15 the defendant sent the FTX US General Counsel by encrypted Signal, "I would really love to see if there's a way for us to have a constructive relations, use each other as resources." The defense has offered a benign explanation, but...
Judge Kaplan: I didn't share the defense's view at the beginning, and I don't share it now. Mr. Bankman-Fried wrote that they hadn't been in contact for quite some time - that is, in a colloquial way, before it all hit the fan
Judge Kaplan: I described this as an attempt to have them sing from the same hymn book. Witness-1 may have worried he'd be indicted. Mr. Cohen says the full context shows it's benign. I don't agree with that. The Jan 15 overture, I didn't take it out of context
Judge Kaplan: Mr. Bankman-Fried communicated with John Ray and with a partner at Sullivan & Cromwell, representing the debtors. These are different from Witness-1, who was a witness to the charged crime. With Mr. Ray, Mr. Bankman-Fried copied his attorneys
Judge Kaplan: I come to the more recent event, the NYT July 20 article, Inside the Private Writings of Caroline Ellison. Her insecurities are described and her personal relationship with the defendant. The article doesn't state the source of the materials
Judge Kaplan: Mr. Bankman-Fried entertained the reporter at his parents' home in Palo Alto and showed some portion of Ms. Ellison's private writings. The US said it was to intimidate her and others. The defense says it's about a First Amendment right
Judge Kaplan: The Supreme Court in Giboney v. Empire Storage & Ice Co. 336 U.S. 490 (1949) - it repeated it [in June] in United States v. Hansen, 22-179 (06/23/2023). That was my example of the two thugs in a store. Mixed motives are enough
Judge Kaplan: Was he motivated in part by a desire to intimidate? The defense says he's gotten bad press and has a right to try to repair his reputation. Fair enough. But I find that there is a practical possibility it was intended to have them back off
Judge Kaplan: The defendant had the reporter come to his home and didn't give him copies but rather see it and take notes. There are quotes in the NYT identical to the language in those documents [which are still sealed despite this
Judge Kaplan: The documents are in part personal and intimate. They are personally oriented, not business oriented. There's something that someone who has been in a relationship would be unlikely to share with anyone except to hurt and frighten the subject
Judge Kaplan: In view of the evidence, my conclusion is that there is probable cause to believe that the defendant has attempted to tamper with witnesses at least twice under Section 1512(b) Judge Kaplan: Mr. Cohen argues that the presumption has been rebutted. I disagree. He has offered up a gag order on all communications with the press. But the problems are multiple with such a thing. I don't have the order - Andy can you put it on my screen?
Judge Kaplan: The previous order would prohibit him from communicating with any public communications media - but these days what's that? Anyone commenting on "innagram"? Anyone who comments on the Washington Post. I think we'd be in for collateral litigation
Judge Kaplan: This defendant tries to go right up to the line - his use of the VPN to watch a football game over an account he wasn't authorized, there it is..
Judge Kaplan: He subscribed from the Bahamas and used a VPN as if he were in the Bahamas when he was in Palo Alto and could have watched it on public TV. It shows the mindset. All things considered I am going to revoke bail.
Judge Kaplan: I am focused on the possibility that he will be detained at the MDC, not on anyone's list of five star facilities. That said, I understand he could have a dedicated laptop at the MDC [Many have it - James Garlick, for example] 9, 10, 11 hours a day
Judge Kaplan: There is Section 3142(i), the judicial officer can release the defendant for preparation of defense. What that says to me is that on an appropriate showing, I could entertain an application for Mr. Bankman-Fried to spend time in counsel's office
Judge Kaplan: Ms. Sassoon? AUSA Sassoon: The government communicated with the MDC, you are correct they have desktops and situations with laptops. We propose Putnam because where we are in the case, it could take weeks to load a laptop. So we say Putnam with 'Net
AUSA Sassoon: The FBI would assist with transporting him to Putnam. During trial, in the MDC. The discovery issues will be more manageable then. On 3142(i), my understanding is there are obstacles arranging to bring a defendant to an attorney's office
Judge Kaplan: If Mr. Cohen feels he needs something like that, I'll do it, if I'm convinced it's safe. Mr. Cohen: We intend to appeal this. We need a written order. Judge Kaplan: You'll have the transcript overnight. I can do a short form order today
Cohen: We have an application to stay today's ruling pending appeal. AUSA Sassoon: We oppose that. Cohen: There are important issues here. We have an unusual situation factually. We think the Circuit will take it up quickly.
AUSA Sassoon: There is a reason for concern, who knows what mischief he could accomplish in the next few days. Judge Kaplan: Mr. Cohen, I deny your application because I disagree there's anything novel here other than the factual issue.
Judge Kaplan: The defendant is remanded. AUSA Sassoon: This should not change the trial date. We'll stick to all deadlines. [US Marshals move in - SBF takes off his jacket and tie, leans down to take off his shoelaces
Family exit video here; vlog here.
On August 8, the US wrote in: "to notify the Court and the defendant that it plans to seek a superseding indictment next week that will contain the seven counts that the Government intends to prove at trial in October, which were the first seven charges of the original Indictment FN1 The superseding indictment will make clear that Mr. Bankman-Fried remains charged with conducting an illegal campaign finance scheme as part of the fraud and money laundering schemes originally charged. The defendant’s use of customer deposits to conduct a political influence campaign was part of the wire fraud scheme charged in the original indictment. And as part of the originally charged money laundering scheme, the defendant also concealed the source of his fraudulent proceeds through political straw donations.
FN 1 As the Court is aware, the Government is prevented by its treaty obligations to the Bahamas from proceeding on Count Eight of the original Indictment, after the Bahamas stated that the defendant’s criminal campaign finance scheme was deliberately omitted from its extradition." Full letter on Patreon here
Prevented? No, a choice...
***
Your support means a lot. As little as $5 a month helps keep us going and grants you access to exclusive bonus material on our Patreon page. Click here to become a patron.
Feedback: Editorial [at] innercitypress.com
