SBF's Scheme to Curry Favor with Unlawful Political Contributions Worth Over $100 Millionby@legalpdf

SBF's Scheme to Curry Favor with Unlawful Political Contributions Worth Over $100 Million

Legal PDF6mMarch 19th, 2024
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Samuel Bankman-Fried is accused of conspiring to violate the Federal Election Campaign Act by orchestrating over $100 million in unlawful political contributions. The scheme involved using straw donors and corporate funds, spanning several years and aimed at amassing power and influence in Washington, D.C. Despite extradition challenges, evidence presented at trial supports the allegations, including coordinated donations through bank accounts of co-conspirators. The defense's arguments against the charges were not upheld by the court.
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USA v. Samuel Bankman-Fried Court Filing, retrieved on March 15, 2024 is part of HackerNoon’s Legal PDF Series. You can jump to any part in this filing here. This part is 6 of 33.

II. The Defendant’s Scheme to Make Unlawful Political Contributions

In addition to the offenses of conviction, Bankman-Fried was charged with conspiring to violate the Federal Election Campaign Act and defraud the Federal Election Commission. While Bankman-Fried consented to extradition on that count, the government of The Bahamas informed the United States after the extradition that Bankman-Fried had not been extradited on the campaign finance count. (Dkt. 181). For that reason alone, the Government was unable to proceed to trial on what was Count Eight of the original Indictment. Nonetheless, the Court ruled that the Government could present evidence of the campaign finance scheme as direct evidence of the other charged crimes, including to show motive and the relationship between co-conspirators. (Dkt. 289 at 3).

At trial, the Government proved Bankman-Fried’s involvement in a conspiracy to make over $100 million in political donations to federal and state officials from both parties, as well as political action committees, all funded with funds from Alameda (and ultimately customers). As the trial evidence established, the defendant passed these donations through accounts belonging to Ryan Salame and Singh (both of whom pled guilty to conspiracy to violate the campaign finance laws). (GX-1088, 1089, 1090). All of the contributions that were funded by Alameda or the defendant, but reported in the names of Salame or Singh, violated the campaign finance laws. Likewise, all of the contributions that were funded by Alameda, a corporation, and made to individual candidates violated the prohibition on corporate contributions to candidates.

The defendant’s scheme spanned several years and was plainly designed to permit the defendant to amass power and influence. Beginning in or around 2020, Bankman-Fried began donating large sums of funds to political candidates, at least in part to improve his personal standing in Washington, D.C., increase FTX’s profile, and curry favor with candidates that could help pass legislation favorable to FTX or Bankman-Fried’s personal agenda, including legislation concerning regulatory oversight over FTX and its industry. To accomplish these goals, BankmanFried caused substantial contributions to be made in support of candidates of both major political parties and across the political spectrum. Bankman-Fried, however, did not want to be known as a left-leaning partisan, or to have his name publicly attached to Republican candidates. (GX-477). In order to obscure his association with certain contributions, Bankman-Fried conspired with others including Salame and Singh, to make some of the contributions in the names of Salame and Singh, instead of in the names Bankman-Fried or Alameda. (Tr. 1420-23; 1427-36). As Salame explained in a private message to a confidant, the purpose of these bipartisan donations would be “to weed out anti crypto dems for pro crypto dems and anti crypto repubs for pro crypto repubs,” and that donations would likely be routed through Salame “to weed out that republican side.” (GX505).

Between in or about the fall of 2021 and the November 2022 election, Salame, BankmanFried, and Singh collectively made tens of millions of dollars in contributions, including in “hard money” contributions to federal candidates from both major political parties. (GX-28). The money used to make these political donations or to compensate for donations made by credit card originated from Alameda or FTX bank accounts and included funds that had been deposited by FTX customers. (GX-1088, 1089, 1090). Notwithstanding his awareness of the campaign finance laws, in order to conceal the true source of the funds, Bankman-Fried agreed with others that funds for contributions would be transferred from Alameda’s bank accounts to bank accounts in the name of the political donors, and then quickly transferred from those individuals’ bank accounts to political campaigns.

To further conceal the scheme, Bankman-Fried and his co-conspirators recorded the outgoing wire transfers from Alameda to individuals’ bank accounts for purposes of making contributions as Alameda “loans” or “expenses.” (GX-480A; Tr. 1458-61). But unlike other loans that were made to FTX executives, most of these outgoing wire payments were not documented in agreements or on term sheets, and there were no set interest rates, no interest payments, no collateral, and no evidence of repayment.

In total, Bankman-Fried and his co-conspirators made over 300 political contributions, totaling tens of millions of dollars, that were unlawful because they were made in the name of a straw donor or paid for with corporate funds. The proposed preliminary order of forfeiture lists the contributions identified by the Government. In dozens of instances, use of straw donors allowed Bankman-Fried to evade contribution limits on individual donations to candidates to whom Bankman-Fried had already donated. As a result of this fraudulent conduct, Bankman-Fried and his co-conspirators caused false information to be reported by campaigns and PACs to the FEC, which had the result of impairing and impeding the FEC’s reporting and enforcement functions.

The defendant argues that the Court should not consider the defendant’s unlawful political contributions for two reasons. (Def. Mem. at 27). First, he argues that the Government did not prove this conduct by a preponderance of the evidence at trial. But at trial Singh testified that funds were transferred from Alameda to his bank account and then Salame, as part of the conspiracy with the defendant, would transfer those funds to political campaigns as if those were donations from Singh. (Tr. 1420-38). The Government also introduced documentary evidence at trial of this scheme. Government Exhibit 475, the “Donation Processing” Signal chat, provides evidence that Bankman-Fried coordinated sending Alameda funds through the accounts of Singh, Salame, and Bankman-Fried. Government Exhibit 477, a Signal chat between Singh and another person working for the defendant, also shows that certain donations would be made in Singh’s name instead of the defendant’s name. Government Exhibit 28 is a spreadsheet that was maintained by the defendant to track contributions being made in his name, Singh’s name, and Salame’s name. The Government also traced funds from Alameda through bank accounts in the names of Singh, Salame, and Bankman-Fried, on to the accounts of political campaigns. Those tracing charts were admitted into evidence as Government Exhibits 1088, 1089, and 1090. Based on all of that evidence, there is sufficient proof for the Court to conclude by a preponderance of the evidence that the defendant committed violations of the campaign finance laws. To the extent the defendant’s willfulness is at issue, it was established by the inherent aspects of concealment involved in the crime, and the fact that, as several witnesses discussed, the defendant was sophisticated when it came to politics. Additionally, while it is not necessary here, the Court is not constrained by the trial record and may consider additional evidence in connection with sentencing, or hold a hearing, at which the Government would establish that the defendant acted willfully.

Second, the defendant complains that he was not permitted to call Bradley Smith as an expert witness at trial. But the testimony for which he was noticed is irrelevant for this proceeding. The defendant says that “Professor Smith would have offered expert testimony concerning ‘[c]ommon, established, and well-known practices for large-scale political giving campaigns,’ as well as testimony ‘to rebut evidence which may be offered by the Government concerning issues of campaign finance and political donations.’” (Def. Mem. at 28 (quoting Def.’s Expert Notice)). But such general testimony would not undermine the clear evidence that money was being laundered through straw donors’ accounts to make illegal contributions. And under the Rules of Evidence, Professor Smith would not be permitted to testify about the defendant’s mental state, Fed. R. Evid. 704(b), so it is not clear how his noticed testimony would have been probative of any of the sentencing issues. If it were, the defendant would have presumably offered some of Professor Smith’s opinions as part of his sentencing submission.

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