FTX founder Sam Bankman- Fried’s trial is about to start
Sam Bankman-Fried and his Father, Robert Gordon, are Important Trustees of the Stanford Law School Alumni Association. A Conversation with Gordon, Gordon, and Bankman
As disgraced FTX founder Sam Bankman-Fried gears up for the start of his trial on Tuesday, two people close to him are now facing legal trouble of their own: his parents.
Sam Bankman- Fried’s father hosted a talk show on the radio called “STANFORD Legal”, with his friend Pam Karlan, who also attended Yale Law School.
Lawyers are trying to recover millions of dollars in cash and gifts, including a $16.4 million villa in The Bahamas, that were given to them before FTX filed for Chapter 11.
The suit states that the parents of Sam Bankman-Fried helped run their son’s business and that they were rewarded handsomely for their work.
Bankman started offering strategic advice to other executives early in the year. Bankman helped with hiring decisions. He looked at outside counsel. And he made decisions about where FTX should spend substantial amounts of money.
Having spent more than three decades on the Stanford faculty, Bankman and Fried have become institutions in their own right — important figures and beloved members of a close-knit community. Many of their colleagues consider them dear friends because they have won numerous awards for their scholarship and teaching.
In an email, Robert Gordon, who has known the couple since the 1980s, said, “Anyone who knows Barbara Fried and Joe Bankman well will believe it absurd to think that they were engaged in self-dealing — since for many years they have given generously of their time and money to good causes.”
He received a psychology doctorate late in his career and is also a practicing therapist. He continues to have an affiliation with a practice called the Pacific Anxiety Group in Northern California, which says Bankman specializes “in the treatment of anxiety, depression, and adjustments in both teens and adults.”
“I never intended to quit my day job,” he told the Stanford Lawyer, a magazine for Stanford Law School alumni, in 2015. “But my scholarship and policy were trying to understand human behavior, and I wanted to know more about it.”
Joseph Bankman and Barbara Fried: Spending a Million Dollars on Politics and Campaigns During the First Three Years of Running a Philanthropic Organization
Bankman was a guest on NPR in 2017, and he was incredibly passionate about tax reform. During the interview, Bankman cracked a joke about his clothes. He pointed out his pants were stained, and his cuffs were frayed.
“I really love explaining things,” he told Stanford Law School graduates in a 2008 speech, after he received the John Bingham Hurlbut Award for Excellence in Teaching — an honor Fried has won several times. “I love taking something opaque and make it seem a little less opaque.”
Fried studied philosophy at Harvard University during the 1970s and 1980s when influential philosophers John Rawls and Robert Nozick were on the faculty.
She has also written about how society treats criminals. She wrote an article titled “Beyond Blame” in 2013 and she argued everyone is compromised.
“The reality is that we are all at best compromised agents, whether by biology, social circumstance, or brute luck,” Fried wrote in the Boston Review. The information people have about the context of the crime and who committed it can have an impact on their views of moral responsibility.
She notes that writing fiction has offered her a chance to escape from herself and rethink the world through other’s eyes.
Politics became another passion project, and in recent years, she co-founded a nonprofit organization called Mind the Gap, which was described in a Vox article as “a secretive group led by Stanford University academics” that “has unleashed millions of dollars in political spending from Silicon Valley.”
FTX’s lawyers said Bankman was “a de facto officer, director, and/or manager” in Bankman-Fried’s crypto empire before he joined it in an official capacity as a senior advisor to the FTX Foundation, its philanthropic arm.
One of the most powerful donors in the US was Bankman- Fried, who gave tens of millions of dollars to candidates, committees, campaigns and causes ahead of the upcoming mid-term elections.
Since then, federal prosecutors have alleged Bankman-Fried violated campaign finance laws, using straw donors — other individuals — to make some of his political contributions.
Joseph Bankman and Barbara Fried live in what has been widely described as a modest house on the Stanford University campus, but their lives changed as FTX grew, along with their son’s wealth, according to FTX’s lawyers.
“We are so touched by this gift,” Bankman wrote his son, in an e-mail message quoted in the lawsuit. “Mom is announcing retirement, which she would not have done otherwise.”
FTX allegedly paid for the decoration and upkeep of the home in The Bahamas and according to the lawsuit, Bankman allegedly flew on privately-chartered jets, “expensed $1,200 per night hotel stays to the FTX Group, and even appeared in a Super Bowl commercial with Seinfeld writer Larry David months before the FTX Group imploded.”
Since their son was arrested in January, Bankman and Fried have kept a low public profile. Fried now has emerita status at Stanford Law School; she has stepped back from teaching. Bankman is away on leave. They are still on the faculty, according to a spokesman for the school.
Michael Klausner, who was Bankman’s classmate at Yale Law School, and is now a colleague at Stanford, said he regularly sees Bankman on campus. They continue to have friends over for dinner despite what has happened over the last year.
He said that he hoped Sam got a fair hearing, as the case has been talked about among him and his colleagues. I think that many of us disagree with the way the case has been handled.
Fried told The New Yorker, the only media outlet to whom she has spoken since Bankman-Fried’s arrest that “saving Sam is the major project of our lives.”
Bankman-Fried’s trial will start on Tuesday. Federal prosecutors have accused him of defrauding customers and investors, and charged him with money laundering. If he is found guilty on all seven counts, he will be sentenced to over 100 years in prison.
The trial marks the end of the road for a mogul who befriended celebrities, including model Gisele Bndchen and former President Bill Clinton.
After reporters raised questions about FTX’s business practices, everything fell apart. Billions of dollars went missing, and Damian Williams claims Bankman Fried is responsible for “one of the biggest financial frauds in American history.”
The US Securities and Exchange Commission and Commodity Futures Trading Commission both brought suits against Bankman-Fried.
Bankman-Fried violated the terms of his bail, so Kaplan sent the former FTX CEO there. Bankman-Fried used a virtual private network without the court’s permission, and contacted a former colleague with an electronic messaging app to show The New York Times private writings by his ex-girlfriend.
Michael Lewis wrote a book called “going Infinite: The Rise and Fall of a New Tycoon” and shadowed Bankman-Fried for more than a year.
If he doesn’t have internet for a long time, Lewis thinks the disgraced mogul will go crazy.
“If you gave Sam Bankman-Fried a choice of living in a $39 million penthouse in The Bahamas without the internet, or the Metropolitan Detention Center in Brooklyn with the internet, there’s no question in my mind he’d take the jail,” Lewis said.
Sam Bankman-Fried’s trial is about to start: What you need to know about FTX and why you shouldn’t think about it
There is a motto among federal prosecutors, says a lawyer who spent more than a decade at the Department of Justice.
This case is novel because it involves a company that did business in the new world of crypto. According to Helou, the prosecutors will want to stress that this case is just a financial fraud case.
“The justice department is not going to speak about the subject of cryptocurrencies,” he predicts. “They’re going to simplify it, and say that it’s just a case about lying and stealing.”
“I didn’t ever try to commit fraud on anyone,” Bankman-Fried told The New York Times days before he was arrested. “Clearly, I made a lot of mistakes that are things I would give anything to be able to do over again.”
FTX employees and executives lived in a $30 million penthouse in The Bahamas, which is where the company was founded.
She pleaded guilty to several fraud counts shortly after Bankman-Fried was arrested last December, and three other executives have also pleaded guilty: Nishad Singh, Gary Wang, and Ryan Salame.
Both sides have asked to call experts and prosecutors will put FTX customers on the stand.
A conversation with Bankman-Fried before he was convicted of obstruction of a federal bail application in a case before Kaplan
He began a newsletter on Substack and used X, which was then known as an acronym for short form communication. Bankman-Fried invited journalists to visit him at his parents’ house where he had been placed initially after posting bail, and prosecutors say he had around 1,000 phone calls with reporters.
It was a source of growing frustration for prosecutors and the judge, who decided to have Bankman-Fried’s bail revoked in August, due to him talking openly about his case.
Joshua Naftalis, an attorney with the law firm Pallas, tried a case before Kaplan when he was a federal prosecutor. He is no-nonsense and controls both the parties. And he runs an efficient courtroom.”
