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- An appeals court is set to hear whether Sam Bankman-Fried had a fair trial.SBF was sentenced to 25 years in prison after a jury found him guilty of an $11 billion fraud.His lawyers say he should get a new trial after he unfairly previewed his testimony for prosecutors.
When Sam Bankman-Fried prepared to testify in his own criminal trial, things didn't go according to plan.
Bankman-Fried wanted to tell jurors his side of the story. Part of that story, in his view, was that he received advice from company lawyers that made him think everything he did was OK.
US District Judge Lewis Kaplan, who oversaw Bankman-Fried's 2023 criminal trial, wasn't so sure. The judge had Bankman-Fried testify in court without a jury and allowed prosecutors to cross-examine him. Afterward, the judge ruled that the purported advice he got from lawyers was irrelevant to the case and would only confuse jurors.
On Tuesday, a panel of three judges is set to consider whether that hearing, which is at the heart of Bankman-Fried's appeal, is enough to overturn his guilty verdict.
Bankman-Fried still testified for the jury the following day, but he wasn't allowed to talk about everything he wanted to. Ultimately, the jurors convicted the former FTX CEO and cofounder of eight criminal counts, for several varieties of fraud and money laundering. Kaplan sentenced Bankman-Fried to 25 years in prison.
In an appeal brief, Bankman-Fried's attorney, Alexandra Shapiro, described the preview hearing as a "deposition" and said it was "unprecedented."
"The government had obtained a free preview of Bankman-Fried's testimony, and a free practice session to better cross him when he testified before the jury," she wrote.
SBF didn't get a fair trial, his lawyers say
According to prosecutors, Bankman-Fried orchestrated an $11 billion fraud scheme. He took money belonging to depositors of FTX, his cryptocurrency exchange, and commingled it with Alameda Research, his hedge fund.
Bankman-Fried and his co-conspirators used that money for advertising, investments, luxurious Bahamas real estate, and political donations — all while lying to investors and lenders about where the funds were going.
At the trial, Kaplan forbade Bankman-Fried's lawyers from making the argument that FTX was always solvent and that depositors would get all their money back. His lawyers couldn't tell jurors what they argued in court papers, which was that Bankman-Fried's investments were just that — investments, not theft. In particular, FTX made a $500 million investment in the now-red-hot artificial intelligence company Anthropic. That 8% stake would be worth more than $14.6 billion today. (FTX's bankruptcy attorneys sold the Anthropic holdings at lower valuations to repay creditors.)
Bankman-Fried failed at risk management, not because he was a criminal fraudster, his lawyers said.
Prosecutors said in their appeal brief that Bankman-Fried's trial was fair. While his preview hearing may have been unprecedented, "the absence of precedent cannot establish plain error," they wrote.
In fact, the practice might have even helped him, they said.
"It is equally plausible that Bankman-Fried benefited from first testifying outside the presence of the jury — in his trial testimony, he avoided the long-winded answers that had come across as evasive, and abandoned certain assertions that fell apart on the stand," they wrote in the brief.
Representing Bankman-Fried in Tuesday's appeal hearing will be Shapiro, an experienced white-collar appellate lawyer who clerked for former Supreme Court Justice Ruth Bader Ginsburg and who recently achieved legal superstar status after serving on Sean "Diddy" Combs' trial defense team. Shapiro has also represented other high-profile white-collar defendants on appeal, including Charlie Javice and Bill Hwang.
For the US Attorney's Office for the Southern District of New York, Nathan Rehn, also a former Ginsburg clerk, is expected to argue before the three-judge panel at the Second Circuit Court of Appeals.
In addition to arguing that Bankman-Fried didn't get a fair shot at defending himself, Shapiro has argued that Kaplan gave the jury incorrect instructions for deciding on Bankman-Fried's intent, and that the judge should have forced FTX's bankruptcy lawyers to turn over more discovery material to help him prepare for his defense.
Shapiro said the appellate court should order a new trial for Bankman-Fried, and with a different judge.
In the meantime, Bankman-Fried is serving his sentence in FCI Terminal Island, a low-security prison in the Los Angeles area, while fishing for a pardon from President Donald Trump. His co-conspirator, Caroline Ellison, who was the star witness at his trial, is serving a 2-year sentence.
