USA v. Samuel Bankman-Fried Court Filing, retrieved on March 15, 2024 is part of . You can jump to any part in this filing . This part is 25 of 33. HackerNoon’s Legal PDF Series here II. A Sentence of 40 to 50 Years Is Necessary to Protect the Public and for Specific Deterrence Under Section 3553(a), the need for the sentence to “protect the public from further crimes of the defendant” and “afford adequate deterrence to criminal conduct” must be considered. 18 U.S.C. § 3553(a)(2)(B), (C). Here, a sentence in the range of 40 to 50 years, but short of a life sentence, is necessary to serve this purpose. As this Court has observed previously in sentencing a defendant, “[i]t’s very easy sometimes … to say, well, look at all the trouble the defendant has gotten himself into, look at the harm that’s been done to his family, look at the loss he suffered himself, there is no way he’ll ever do something like this again.” United States v. Laguardia, No. 19 Cr. 893 (LAK) (S.D.N.Y. Aug. 31, 2021) (Sent. Tr. at 45). But “in the case of someone who, at least when they got into it, thought everything was going to work out fine,” there is the possibility that “the next time temptation comes along, you’ll think it will work out fine, too, and the bad outcome the first time was a mistake,” and so the sentence must “reflect[] some of that risk.” (Id.) Indeed, the fact that a past fraud does not necessarily deter a future one is evidenced by the number of first-time fraudsters in this district who have become recidivists. See, e.g., United States v. Jonathan Ghertler, No. 23 Cr. 100 (ER) (investment fraud scheme following over a dozen prior convictions); United States v. Franklin Ray, No. 22 Cr. 228 (AT) (orchestrating a Ponzi scheme after having served a prior twoyear sentence for bank and wire fraud); United States v. Vitaly Borker, No. 22 Cr. 273 (JSR) (defendant convicted of wire fraud for operation of fraudulent eyeglasses website after two prior federal convictions for the same conduct); United States v. Joseph Meli, No. 19 Cr. 480 (RA) (defendant convicted of participating in a Broadway ticket resale investment fraud scheme after previously serving a 78 month sentence for the same scheme); United States v. Edward Durante, No. 15 Cr. 171 (ALC) (beginning a new investment fraud scheme while serving a 121 month sentence for fraud); United States v. John Galanis, No. 15 Cr. 643 (PKC) (defendant convicted of securities fraud after 1973 and 1988 convictions for mail fraud and securities fraud). The risk of recidivism here is real, and little of the defendant’s sentencing submission addresses it. It is necessary that the sentence imposed disable the defendant from being in a position in the future where he could perpetrate a fraud. A sentence that resulted in the release of the defendant while he is at a working age would leave open the very real possibility that he perpetrates again. That is the case for several reasons. First, the defendant’s criminal conduct to date demonstrates that the defendant is undeterred from criminal conduct based on the potential to damage to others, the possibility of incarceration, or respect for the law or the common ethical and moral understandings that members of society observe in every-day life. Bankman-Fried not only engaged in one of the largest frauds in history, but he demonstrated a willingness to engage in other criminal conduct with impunity. He committed what is believed to be the largest campaign finance offense of all time. He authorized the payment of a foreign bribe in excess of $100 million. He broke the federal laws around licensing, and lied to a bank. That track record makes clear that this defendant is uninhibited when it comes to engaging in additional criminal conduct. Second, the defendant’s time on pretrial supervision shows that even when the defendant is confronted with the imminent prospect of a substantial restraint on his liberty, he is not deterred from engaging in criminal conduct. As the Court knows well, prior to being detained, the defendant had several infractions during his period of home incarceration. Those repeatedly resulted in further restrictions and admonitions from the Court. Nonetheless, believing he would get away with it, the defendant engaged in witness tampering. While the severity of that conduct pales in comparison to what he did to FTX’s customers and investors, it is evidence of the fact that a restriction on the defendant’s liberty alone is not a deterrent to future misconduct. Third, the defendant’s sentencing submission asserts “[h]e will never again be in the position of running a financial company, or accepting customers’ funds.” (Def. Mem. at 69). But the defendant’s say so does not make it true. There is a significant likelihood that if the defendant is released back into society at a young enough age he will have the opportunity to engage in another fraud. Con artists who turn back to crime after being caught take advantage of humanity’s willingness to extend a second chance, the shortness of society’s memory, and recidivists’ ability to persuade people that things are not what they seem to be. The defendant has already proven adept at crafting a self-serving public image, and his sentencing submission itself shows that he is already attempting to reframe his crimes as mere mistakes or misunderstandings. And so it is conceivable that someday, if he is released from prison, the defendant will start anew, launch a new cryptocurrency exchange or another business, which he will say has been done the right way because he has learned his lesson. And people may hand over their money again, and history could repeat itself. That is not just speculation. In the days following FTX’s bankruptcy, and even after the defendant had been indicted, he mused about launching “Archangel LTD,” which would be an alternative to FTX’s bankruptcy and would result in the re-launching of an exchange. (Ex. B, Google Document by Samuel Bankman-Fried). He mused about ideas for restoring his image, like “focus on the fact that the Chapter 11 team has no idea how to run FTX” and is “run by a cartel of lawyers,” “come out as extremely pro crypto, pro freedom,” “go on Tucker Carlsen, come out as a republican,” “have Michael Lewis interview me,” “radical honesty on Twitter,” or some other narrative like “SBF died for our sins.” (Exs. C and D, Google Documents by Samuel BankmanFried). The point is that the defendant is motivated to launch his redemption narrative and has already been thinking about how to spin it. It is realistic that he will settle on a narrative, lean into it, and convince other people to part with their money based on lies and the promise of false hope. And, of course, one does not need to run a large company to instill confidence in others and then abuse that confidence for personal gain. Fourth, the defendant may feel compelled to do this fraud again, or a version of it, based on his use of idiosyncratic, and ultimately for him pernicious, beliefs around altruism, utilitarianism, and expected value to place himself outside of the bounds of the law that apply to others, and to justify unlawful, selfish, and harmful conduct. Time and time again the defendant has expressed that his preferred path is the one that maximizes his version of societal value, even if imposes substantial short term harm or carries substantial risks to others. During trial, Ellison told a story about the defendant’s willingness to take risks: “He talked about being willing to take large coin flips, like a coin flip where—if it comes up tails, you might lose $10 million, but if it comes up heads, you might make slightly more than $10 million,” and he “talked about this in the context of thinking about what was good for the world, saying that he would be happy to flip a coin, if it came up tails and the world was destroyed, as long as if it came up heads the world would be like more than twice as good.” (Tr. 694-95). The defendant talked about this concept on Twitter, saying that “[i]f you look at the scale of funds spent on disease, global warming, emerging technological risk, animal welfare, nuclear warfare safety, etc., you get numbers reaching into the trillions,” and “when the backdrop is trillions of dollars, there’s essentially no risk aversion on the scale of thousands or millions.” (Ex. E, Twitter thread by Samuel Bankman-Fried). He added that that “mean[s] you should be willing to accept a significant chance of failing to do much good sometimes…. And that’s ok. If it was the right play in EV [expected value], sometimes you win and sometimes you lose.” (Id.) And in the days after FTX’s collapse, the defendant told the journalist Kelsey Piper in a conversation he believed was off the record that while he had previously said a person should not “do unethical shit for the greater good,” that was “not true,” just a “PR” answer, and the ethics stuff was mostly a “front.”[12] Of course, the criminal law does not select among personal philosophies or punish particular moral codes. But it does punish equally someone who claims that their unlawful conduct was justified by some personal moral system, and the goals of sentencing require consideration of the way in which the defendant’s manipulation of intellectual and moral philosophy to justify his illegal and harmful conduct makes it likely that he will reoffend. In this case, the defendant’s professed philosophy has served to rationalize a dangerous brand of megalomania—one where the defendant is convinced that he is above the law and the rules of the road that apply to everyone else, who he necessarily deems inferior in brainpower, skill, and analytical reasoning. The trial evidence made clear that the defendant justified enriching and aggrandizing himself, burnishing his own image, and putting billions of dollars of other people’s money at his own disposal, because he believed in the virtue of his own power, decision-making, superiority, and spending. By that same token, the defendant believed and appears still to believe that it is rational and necessary for him to take great risks including imposing those risks on others, if he determines that it will serve what he personally deems a worthy project or goal, even if the risks he takes are unethical, illegal, and likely to result in a “loss.” Under this philosophy, if the defendant is released from prison, and has the opportunity to advance his own distorted version of what is best for him and society, even if it requires breaking the law and harming others, he should do that again. Indeed, according to his sentencing submission, by his own “calculations” the “expected value of his life” is presently in the “negative territory.” (Def. Mem. at 68). Such a calculus will inevitably lead him to trying again. And, evidently, the possibility of further incarceration would not alter that value calculus. Thus, the defendant’s sentence needs to be of a sufficient enough length that it will not just deter a white collar defendant, but that it will disable this defendant from committing crimes again. See, e.g., United States v. Valente, 915 F.3d 916, 925 (2d Cir. 2019) (Lynch, J., concurring) (noting that the purposes of sentencing in Section 3553(a)(2) include “protecting the public from future crimes the defendant might commit (incapacitation)”). The defendant argues in his sentencing submission that the collateral consequences of his conviction, and the loss of his personal assets are sufficient punishment. (Def. Mem. at 64-65). But everything about the defendant’s history suggests such damage and discomfort will not deter him. While the Government does not believe the defendant needs to spend the rest of his life in prison to protect the public, a sentence of 40 to 50 years is necessary to ensure that the defendant cannot be released from prison and given the opportunity to commit fraud again. Continue Reading . Here [12] Kelsey Piper, Sam Bankman-Fried Tries to Explain Himself, Vox (Nov. 16, 2022), https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effectivealtruism-crypto-bahamas-philanthropy. About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings. This court case retrieved on March 15, 2024, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. storage.courtlistener

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