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Welcome to judging Sam. I'm Liddy Jean Kott. The trial of Sam Makemon Freed is now over and our coverage is winding down, but there are a few things that are still in my mind. While I was at reporting, family and friends would often send me articles, and a lot of these articles were by one particular writer, Elizabeth Lopato.
She's a reporter at The Verge.
Her stories about Sam Magmon Freed were sometimes funny, sometimes empathetic, and they were always full of razor sharp insights. I am so excited that she's joining me. Liz, thanks for being here.
Let's get into it.
It's really nice to talk to you inside at a normal hour instead of at one am or two am in front of the courthouse.
No, it's amazing that we're not in the dark. I think that's fantastic.
Yeah, what was this whole experience like for you?
I was kind of like getting shot out of a cannon.
You know.
I live in California most of the time, and so I was living in New York for a month in this sort of terrible bachelor pad with like modular everything that came out of cupboards and a kitchen the size of a postage stamp, and the trial was about all I was doing. You know, I have some friends in New York that I got to see on the weekends, but really like I would stand outside the courthouse and then I would sit through the trial, and then I would go home and write, and then I would immediately
go to bed. So that was like an entire month of just really being in it.
Did you have like a moment of extreme low, like my lowest of the low when I was trying to sleep on top of my computer on a poncho in the rain at three am by the courthouse. That's when I was like, how is this my life?
Did you have like that?
Did I have a moment like that? I don't think I did. I kind of knew what I was getting into because this is not my first time doing like a pretty hardcore trial outing that that is going to
necessitate a certain amount of like standing outside. But I will say there was a moment when it started raining and I was like fully in rain gear and had already been standing outside for hours when the rain started, where I was like, Okay, well it's a good thing I'm outdoorsy, because otherwise I think I would be pretty upset by this.
I'm pretty sure you beat me pretty much every single day, and most of the days you did make it into the courtroom. There was one day where I asked another reporter how much I would have to pay him to get a spot, and he told me his price was two thousand dollars. What what would have your price been?
So the entire reason and that I was getting into the courtroom and I did get in every day, was that for me and covering the trial, it was important to give people a sense of what it was like
in the courtroom. You know. There were moments. I think the most obvious one was when Sam was having that sort of weird evidentiary hearing and there had been an objection to the question about whether embezzlement was keeping customer money safe, and he answered it anyway, and his lawyer was like, Sam, you've been here for weeks now, you didn't have to answer that question, and say I was like, I know, but I felt like it was important. And that was like a very light moment in the courtroom.
It was really really funny. And then I came out of the courtroom and I realized that people were taking it as like a rebuke, like his lawyer was mad at him. And so there are moments like that where actually physically being in the room is important for reading the tone and you want to see what sort of the jury is seeing. Although the jury wasn't there for this. So I guess this is a long winded way of saying, like the assignment was for me to get into the courtrooms.
The answer is you could not have paid me un Thus you were going to give me, like, you know, enough to cover the my salary.
Like, yeah, that's so true. I do.
I remember that moment that you're talking about, and if you looked at the transcripts, it could have been interpreted one way, and if you're actually there, it seemed really different. One of my favorite articles that you wrote early on was about the millennial vocabulary that came up during Sam Aemunfried's trial. What are some examples of the millennial words that were used that you still remember?
Everything was stuff and things and those are the two things that really stood out to me. You know, I was looking at these charts, these Excel spreadsheets that Caroline Ellison had made, and it would be like she's referring to what was she says was a bribe paid to Chinese officials, and she was like, you know, several million for the thing. And it's like, I am so embarrassed from my entire generation right now. This is humiliating. This is not even a good code. And also this is
like such specific internet speak. You know, if you've looked at like the Enron documents or any of the other sort of documents associated with financial frauds, they're usually a little more sophisticated than this, you know, I mean, in fairness to Caroline Elison, I think that the sort of language she was using was truer to how she spoke and was truer to like her personality. So in that sense, you know, it's it's it's less embarrassing than some of
the corporate speak that we've heard. Like, you know, if you've ever read a press release where a company is kind of trying to hide the fact that they're doing layoffs and they're talking about like headcount reductions or like strategic restructurings or whatever, there's like a certain kind of like goofy bloodlessness to it. And so it's just like, I guess a question of which sort of goofy euphemism. You want do you want the one that's that Internet speaker.
Do you want the one that's you know, MBA speak because it's going to be Charkin either way.
Yeah, exactly.
And the word the thing as a millennial To defend it for a second, it's a super versatile word. You can say I did a thing, which maybe means you bought a house, got engaged. It can also be a word used apparently to cover up a massive fraud. The thing could be possibly allegedly a bribe.
It's a word.
Not many words can cover such a vast array of possible meanings.
And I also have to say when I wrote that, I sent it to one of my editors and he was like, you have just blown up my entire spot. All of my edits sound like this. And I was like, I know, Richard, like I'm aware I also talk like this. I was hyper aware of every time I said thing or stuff I think for the next two weeks where I was like, oh my god, I sound just like this. This is what I sound like to judging.
Sam will be back in a minute, we're back. I'm also curious, so you know, before you covered the trial of Sam Kmunfried. You covered the Elizabeth Holmes trial, and I'm curious what similarities and differences you saw between both of them. Starting with let's say the similarities, I'm going to.
Start by saying this is specifically my opinion, but I think that there is a similar level of delusion involved with both Sam Beckmunfried and Elizabeth Holmes. And the reason I say that is that if you go and look at the statistics for going to trial against the federal government, people don't succeed, you know, in the Southern District of
New York. Those odds are are terrible. And if you just plead guilty and you sort of throw yourself on the judge's and you say I've done I've done something terrible, I feel bad about it. I want to repay my debt to society. One of the things that you can possibly do is shorten your sentence because you seem like you have accepted that you've done wrong, and you are, you know, contrite.
And you're saving the government a lot of money exactly.
And so if you are going to trial, it's because you think you have a chance of acquittal. I think, and both Elizabeth Holmes and Sam Bankman freed were obviously very good at talking to people before their fall. They were very good at convincing people to give them money, and so I think there was some level of, oh, well, if I just tell my side of the story, everybody will immediately understand, because everybody always understands when I tell my side of the story. So that was the big
similarity I saw. I think Elizabeth Holmes was better at that than Sam was. She was certainly better at engendering sympathy. It didn't, you know, wind up mattering that much because she was still found guilty on most of the counts.
But you mean, do you mean when she took the stand, because they both also took the stand, right.
Yeah, So when Elizabeth Holmes got on the stand, I think she did a much better job of seeming sympathetic, and I think in some ways she ameliorated some of the damage that had been done by the prosecution, because up to that point, every time we had heard her voice, it had been a recording of her lying and you know, establishing that she was a person, establishing that you know, she had a background that you know, there were specific things in the company that she was really invested in
or really believed in. I think that worked to her advantage. I think that the evidence in her case was pretty overwhelming, but she did They did manage to knock down a couple of the charges, specifically the ones related to patients.
She was found not guilty of defrauding patients, and I think that, again, given the overwhelming statistics, when it comes to a government prosecution, is actually a pretty big whim So in that sense, I think she was much more convincing than Sam, partially because she was basically the same person on the direct and on the cross. There were to certainly times where she seemed uncomfortable, or she seemed nervous, or even angry or frustrated, but she was visibly and audibly the same.
I have to ask us did she use the voice?
Oh my god? So I have a lot of thoughts about this. I can't believe I'm about to go to bat for Elizabeth Holmes. I think we're the same age. There was an idea that the reason women weren't being taken seriously in the workplace was just that we didn't talk right. We talked to girly, we up talked. It was vocal fry and like if you ever heard Matt Levine speak, he does all of those things, but nobody cares.
And so there were women who change the way that they spoke and the hopes of being taken more seriously. And I think that Elizabeth Holmes probably did that too, And so the thing that people think of as being quote unquote the voice is actually a response to the idea that if she spoke the way that women naturally speak, she wasn't.
Going to be taken seriously by anybody, right, And it's like, you can't win, right because if you change the way you speak, people are like wondering why you sound different. And then if you sound like a woman, people don't like that you sound like a woman. So maybe that's not a fair thing to hold against her, and maybe the fraud is, but maybe the voice is actually a bit of a red herring here.
Yeah, the fraud is totally fair. The voice thing I think is, I think that that's sort of a distraction. You know, it's people wanting to say that she's so fake, that even her voice is fake, that everything about her is fake, and I just don't think that's true. But you know, I certainly understand how when somebody carries off a fraud of that scale comes possible to think, you know, all of these quirks are these real too? And I think there was some of that with Sam as well,
you know. And so in Sam's case, it's like the wild hair and like he's kind of unkempt and a little shaggy because he doesn't care about what he looks like, because he's not shallow like the.
Rest of us thinking of that deeper things.
Right, And you know, I do think that that was an image thing, but I also suspect it's an image thing that came from something real. I do think that on some level he probably doesn't care that much about what he looks like, and that you know, underneath any kind of image making, if it's going to be successful,
there is like a stratum of something real. Like we were looking at the photos of him from his frat days, Like there was that photo of him with Gary Wong, and he's dressed the same way, and like, certainly like branding is an important part of business, but the branding does come from the way this guy actually did dress. So you know, it's one of those things whereas like there's not the sharp delineation between what's real and what's not that I think a lot of people would.
Like, Yeah, it's interesting.
But they also are both parallel in the sense that, and I think you wrote about this, they both did make themselves into characters, and that's part of what made them so compelling to write about, right, Yeah, or became characters. I guess it's arguable how much they did it on purpose, but to some degree it feels like they both must have a little bit been making themselves into characters.
I think it was more than a little bit. They both had hired very powerful pr people, and so you know, I do think that they had these images that were shaped for them, but I think the images came from
something underneath that that was real. Because again, like if you're thinking about marketing, you're thinking about advertising, the most powerful stuff you can use is the truth, you know, So there is some sort of stratum under there where there is a thing that's real and it's just been you know, presented in a certain way or polished to a certain sheen that makes it into a character or even a caricature that's then easier for people to digest
and easier for people to write about, and easier for people to think about and that sort of sticks in the mind.
I remember, I think, I remember you telling me that you felt a little bit differently about Elizabeth Holmes after she took the stand.
I felt again, I felt more sympathetic to her. I still felt that she had probably done what she was accused of, but she was successfully humanized herself, and so in that sense, I think her testimony was successful in making me sympathetic in a way that Sam's was not.
Yeah, that was my question.
What impact did Sam Mankman Free taking the stand have on how you thought about the case?
You know, there are a couple of things, and one of the big ones is the obvious lying. Just the
obvious lying that took place on the cross examination. And there were places where I think Elizabeth Holmes was obviously obfus skating to but she wasn't being presented with something she'd obviously said and then going oh, I don't remember that, you know, especially because we had all of this detailed recollection of his glory days at Jane Street on the direct where he was remembering stuff that had happened five ten years before, and then we get to the cross
and he can't remember what he said last week come on, So there was That was something that really I think changed how I felt about him, because coming off of the direct, he did manage to present what I think was probably something like the old Sam mcmunfried. He was occasionally charming, He managed to tell a story pretty well.
There were moments in which you sort of where he was funny, I think, and where I think he could be convincing, even though there were definitely moments where he was definitely answering a question that was not the question that was put to him, and that seemed to get on the judge's nerves quite a bit because it was a recurring phenomenon and it's not how court works. You can do that with journalists, but you can't do that
under oath. They'll ask the same question again. You're on their time, so the you know, I think that the direct mostly worked for him, except that he was providing an alternative explanation for something that we had heard several witnesses corroborating each other's stories on and he was the only person providing that explanation and he had no documentation to come with it, and like that was one of the things that I think the prosecution really had going
for them is that even though a lot of you know, text messages, slack messages, all of those things had been destroyed, they still had some emails, and they had some spreadsheets, and they had some memos, and that provided sort of an undergirding for the testimony. So that was a big
part of it. And the other piece of it was that he seemed to be trying to thread the needle in a way that he was not exactly lying, but he wasn't exactly telling the truth, and that read both as arrogant and untrustworthy, I think, at least to me, where he would start, you know, these sort of word salad answers with to my recollection, as I recall at the time, whatever jargon, jargon, jargon, jargon, jargon, and then the judge would say something like, so you're saying you
could do whatever you wanted, essentially, and then Sam would have to say yes, because that was what he meant. And that was like about the document retention policy, you may recall. So there were these moments where he just he made himself read as much more untrustworthy than I think he needed to, and so that made me a lot less sympathetic to him, even though I think maybe a lot of the circumstances around THERENOS and FTX were similar.
Yeah, do you think what you're saying is kind of making me think that maybe, at the end of the day, Elizabeth Holmes was just better at people than say, makemen freed.
Oh, that's definitely true. Elizabeth Holmes's big skill was people. And I was thinking about it because with a lot of these folks where you're told someone is charming, like I'm thinking of like Adam Newman at WEE Work, even though he hasn't done anything fraudulent. He just enriched himself and told everybody what he was doing. But the skills don't always translate on screen, so you might see a clip of this person and just being like, why why
were people following him? I don't get it. But with Elizabeth Holmes, the thing that she was really good at, I think, and we got this in a lot of the testimony was making other people feel heard and feel important. And that was the thing that we would hear over and over again, was that you'd bring her a concern and it sounded like she was taking it seriously and really listening to you. And then Sunny Balani and be like, we're not doing that, and also you suck and obviously
the two of them were coordinating. But her skill set was really making people feel important, and that was part of you know, that's that's a fairly important people skill. Like that is a really good people skill, like being able to make someone feel listened to, and Sam is not good at that.
So what do you think you know from watching the trial following the case, at some point he did build this company that was very successful. What was his skill set?
I think Sam was uniquely suited to crypto because he made people feel like if they didn't understand him, it was because they were too stupid to understand him. Just real talk thinking about like the way that he answered questions when they were put to him, and also Nishad Singh's testimony that he found Sam really intimidating. I think probably a lot of people found Sam really intimidating, and so I think there was a certain element of being able to make other people feel stupid and feel that
he was smart and they were dumb. That was part of what built that empire, because you know, there is a it's a strategy you can do that you can bowldlose your way through people if you want. It's not a strategy I personally would recommend, particularly because it tends to leave a lot of really pissed off people behind you. But it can work. And so if you think about, you know, going into a VC meeting and playing a video game during it while you're answering these questions, which
is a very famous anecdote. Right, he did that several times. To me, that reads as arrogant and insulting. That's not somebody I want to work with. That's not somebody who I think is going to be receptive to my ideas or who I want to trust with my money. But to other people, I can certainly see that reading as like, this guy is so smart he doesn't actually have to pay attention to me in order to answer my questions.
This guy is so far beyond what I'm doing that our conversation isn't enough to stimulate him, and so he can simultaneously do two or three other things and not miss abeit. Ge whiz. He's so smart, right.
And it's perfect for an industry that's kind of built on people maybe not fully understanding it, but feeling a bit dumb about not fully understanding it.
Yeah, that's right. I mean I have explained NFTs to a number of people, and every time I explain it to a normal person, they say, wait, is that it is? That all? And I'm like, yes, that's it. That's all. There's no other extra, like there's you're not stupid, Like
that's what it is. And so I think this is an industry where being able to use jargon in that way can really convince people that they want to be in on this like cool new technology that they don't totally understand, but you know, if they don't get them on the ground level, they're going to miss out. And that fear of missing out is huge in crypto. I think it's one of the main motivating forces actually for a lot of sort of crypto shenanigans that we see.
And simultaneously, during that period where Sam was seeking investment, that fear of missing out was a huge part of the VC industry because all of this money had come slashing into VC due to the low interest rates, and so there wasn't you know, there weren't as many other places you could park your money and make a decent return, and so they had to find companies that looked like they were going to be like powerhouses that would pay
off for this investment. And so you see the sort of like the speed at which people were investing suggests that almost no due diligence was being done. And we saw that with Theranose too, Like there was a long discussion of the due diligence that the vcs had done on theraphose, and in many cases it was pretty minimal,
if there was any. So there was that kind of environment where being able to make a strong first impression, even without any kind of documentation or whatever, really really mattered. And so making other people feel that he was super smart and super on top of things and in this hot new industry and he understood it and you didn't, like, I think that that was a fairly powerful.
Thing, right, That makes sense. They're kind of like opposites. Elizabeth Holmes made you feel special, you know, and therefore you should give her your money. And Sam Magmunfried, I guess made you feel like he was special, and therefore you should give him your money.
Yeah. I think that's right. That's a good way of putting.
It, judging. Sam will be back in a minute. We're back.
I'm curious about you know, you write about tech a lot, and it feels like there's been all these tech CEOs, you've had these falls from grace.
Do you think that's going to have any impact on the industry.
I don't know. I think one of the things that's underappreciated about the tech industry is how much of it is about marketing. And if you look all the way back to Steve Jobs, a lot of the big Apple moments are actually about marketing. And Apple's marketing department is really integrated in terms of how they design products. It's not just you know, the tech people come up with something and then the marketing department sells it. The marketing
department is involved in the design. So I think in that sense that renders the tech industry vulnerable to people who are good at marketing in a way that maybe some other industries are not. I don't know that it's uniquely vulnerable. If you think about some of the scandals that we've had over the years in the pharmat industr,
for instance, they've also been marketing related. So you know, there was a big scandal boy about a decade ago where a lot of pharmaceutical industries were selling antipsychotics for indications they weren't approved for. Marketing is often the place where you start to see this stuff happening. It's where people promise stuff that they maybe aren't going to deliver. So if you think about, for instance, Fire Festival, another famous millennial fraud, the part that he was good at
was marketing. The part that people really got, you know, got down. The part that made Fire Festival looks something, looks so cool basically was all marketing. It was all marketing, and they just there was nothing underneath it to support the marketing. There there was no actual festival. And so I think any industry where marketing is that important can lead to sort of the cart pulling the horse right where the marketing department gets all the way out there
and there's nothing underneath. And I think that was part of what happened in FTX. And there was this sort of marketing powerhouse that Sam had going and that he was very good at. Obviously, like people knew what FTX was. There was a Super Bowl ad, there was the FTX arena, Like this was something that people were very aware of in a way that they maybe were not aware of other crypto companies. Like, for instance, Kraken or Coinbase, which had been around longer. So I think that that emphasis
on marketing is part of what can be dangerous. So yeah, I guess I don't know that the tech industry itself, that the tech piece of this is the problem. I think that the problem comes back to the thing that's a problem in every industry, which is usually the marketing department.
Right, there's just a lot of any for marketing in tech.
Yes, definitely.
Are there any.
Moments from covering the trial of sam akmn Freed that you think are really going to stick with you, or like one particular moment that you think might stick with you that you can see, you know, when you think about the trial years from now, that you might still think about that moment.
Yeah. I think one of the big ones actually was pretty early, and it was Adam you DiDia. I got out of his testimony and immediately texted my best friend, who I was also college roommates with and who I
still see on a very regular basis. I texted, her, if you ever testify against me, I am so fucked like just imagining how pissed off and betrayed Adam Youydidio would have to feel in order to agree to this really is striking to me, because you know, if you think about the people you're really loyal to and the people you really love and what you would be willing to do for them, you can serve imagine him being like, no, I'm going to plead the fifth to everything. It's going
to be the fifth the whole way. And that's not what he did. So that really stuck with me great.
And he didn't have to testify. It's not like he had been charged with anything.
He hadn't been charged with anything, he didn't have a cooperation agreement. So choosing to testify in that way suggested someone who is genuinely very angry, very angry, and maybe who felt very very betrayed by somebody he had once loved, and so that was really striking to me. The other big one was watching Sam's parents react to the verdict, which, you know, we saw some evidence that they were involved
in FTX. How involved, I don't know, and I'm not going to pretend that I have any good answers about that, but there is something if you've ever seen a parent in anguish, there's something about that that really sticks with you and watching them receive the verdict and not only receive the verdict and experience that anguish, but experience the anguish in a room full of reporters and having no
privacy in that moment that really stuck with me. Like, there was this moment where his father sort of doubled over and his mother had her hands over her face, and I watched the courtroom artist who was seated in the row in front of them, turn around and start sketching them, and you can see the sketch. It's out there if you look. And it was such a genuinely horrible moment, and it was also such a hugely public moment, and those combination of things, like, really, that really stuck with me.
Lizlie Patta, thank you so much for joining us.
Thank you, Lydia Jean, It's been great.
This episode of Judging Sam was hosted by Lydia Jean kot Our court reporter Catherine Girardeau and Nisha Venken produced this show. Sophie Crane is our editor. Our music was composed by Matthias Bossi and John Evans of stell Wagons Symphonet. Judging Sam is a production of Pushkin Industries. Got a question or comment for me, there's a website for that atr podcast dot com. That's atr podcast dot com. To find more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts,
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