Sam Bankman-Fried's lawyers avoid challenges to 'cartoon' villain image
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[October 23, 2023]
By Luc Cohen
NEW YORK (Reuters) - Sam Bankman-Fried's lawyers have complained that
prosecutors at his fraud trial are portraying the FTX cryptocurrency
exchange founder as a "cartoon of a villain," but have done little to
counter unflattering depictions of him offered to the jury by his former
colleagues.
In cross-examining former members of his inner circle who have pleaded
guilty and testified for the prosecution, defense lawyers generally has
avoided challenging their accounts of Bankman-Fried angrily snapping at
colleagues who questioned key company decisions. They also did not
challenge testimony by one of the witnesses that his quirky persona was
mostly an act.
Defense lawyers will have a chance to put forward a competing narrative
when they present their case, beginning as soon as Thursday. But the
testimony presented by the prosecution that has painted a negative
portrait of the defendant's character, if it remains unchallenged, could
make jurors more willing to convict Bankman-Fried, according to experts.
"Even though it doesn't go directly to guilt or innocence, it might
create a bad impression," said Jordan Estes, a former federal prosecutor
in Manhattan who is now a partner at law firm Kramer Levin. "It's easier
to convict someone that you might not like as much."
Federal prosecutors in Manhattan have said Bankman-Fried looted billions
of dollars in FTX customer funds to prop up his crypto-focused trading
firm Alameda Research, make speculative venture investments and donate
more than $100 million to U.S. political campaigns to burnish his image
in Washington.
Bankman-Fried has pleaded not guilty to two counts of fraud and five
counts of conspiracy. He could spend decades in prison if convicted.
In his Oct. 4 opening statement to the jury, defense lawyer Mark Cohen
said Bankman-Fried "overlooked" risk management while building FTX and
Alameda, which declared bankruptcy in November 2022 following a wave of
withdrawals by customers. But Cohen said Bankman-Fried did not intend to
steal the customers' money.
A STRATEGIC CHOICE
Allowing specific unfavorable accounts by prosecution witnesses to go
unchallenged on cross-examination could be a strategic choice by the
defense, according to experts. That is because challenging such
testimony could remind jurors of the negative anecdotes relayed by the
witnesses.
"If they ask a lot of questions about it on cross, it's giving more air
time to an issue that isn't necessarily helpful to them," said Rachel
Maimin, a former federal prosecutor in Manhattan who is now a partner at
law firm Lowenstein Sandler.
Bankman-Fried's best shot at establishing a positive impression of his
character may be to take the witness stand himself, some experts said.
His lawyers have said the defendant is considering doing so.
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Former FTX Chief Executive Sam Bankman-Fried, who faces fraud
charges over the collapse of the bankrupt cryptocurrency exchange,
leaves following a hearing at Manhattan federal court in New York
City, U.S. January 3, 2023. REUTERS/Andrew Kelly/File Photo
During opening statements, Cohen told jurors of the prosecutors:
"They'd have you think he was quite the villain, or, more precisely,
almost a cartoon of a villain. But the evidence will give you a very
different context. The evidence will show that Sam was someone who
worked very hard to try to build things, not harm them."
The descriptions of Bankman-Fried by the prosecution's three star
witnesses contradict the 31-year-old former billionaire's pre-arrest
reputation as a nerdy do-gooder who wanted to be a responsible actor
in the rough-and-tumble crypto space.
So far, two key prosecution witnesses have testified about instances
in which Bankman-Fried disparaged colleagues who disagreed with him,
particularly about financial issues at the heart of the criminal
charges.
Nishad Singh, FTX's former engineering chief, testified last week
that when he confronted Bankman-Fried about marketing and venture
spending that he found excessive, Bankman-Fried said it was "people
like me sowing seeds of doubt in the company's decisions that were
the real insidious problem here."
"It was pretty humiliating," said Singh, who has pleaded guilty to
fraud charges.
Caroline Ellison, Alameda's onetime chief executive officer and
Bankman-Fried's former girlfriend, testified that when one employee
raised objections to bribing Chinese officials to get Alameda funds
in the country unfrozen, Bankman-Fried used a profanity in telling
her to shut up.
Ellison, who has also pleaded guilty to fraud, said Bankman-Fried
told her that his signature sloppy dress and wild mop of curly locks
was an "important part of FTX's image."
Cohen has said outside the jury's presence that prosecutors were
presenting "cumulative evidence portraying our client as a very
dirty person."
Cohen also said prosecutors showed a document Bankman-Fried wrote to
try to resolve a dispute between two colleagues only to imply that
he is "some sort of crazy person." In the document, Bankman-Fried 10
times in a row wrote the phrase, "Being aligned and always doing
whatever you think is best for the company."
(Reporting by Luc Cohen in New York; Editing by Will Dunham and Amy
Stevens)
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