Pushkin. Welcome to Judging Sam the trial of Sam Bankman Freed. I'm Michael Lewis. We're recording this on Tuesday, November seventh, five days after Sam was found guilty on all seven counts. I'm here with lawyer and former SDNY prosecutor Rebecca Mermelsty now of Omelvini and Myers, and our intrepid reporter Lydia Jean Cott.
Hello, Rebecca, Hey Michael, nice to be back with you.
Good to see you and l J. Glad we're at the end of this. Why don't you take it away since you were there for the last day and the verdict.
Michael, I wanted to start by asking you a question. So you know you've spent a year and a half writing about Sam Bankman Freed. We spent a month working closely together covering this trial. What did you think when the verdict came out?
My mind reeled back to a conversation I had with Sam when he was under house arrest, when I asked him what he thought the odds were that he could come out of this with anything but a conviction, and he said he thought it was about ten percent. And I remember thinking I wouldn't put it there, I'd put it had a three to five is what I thought, Roughly the odds that the New York Jets win the Super Bowl after Aaron Rodgers is hurt kind of thing.
And so going in it was an odd event, right, because even Rebecca was saying weeks ago, like one hundred out of one hundred prosecutors, she knows what'd say, this thing is going to end with a conviction. There was this should have been a total absence of suspense, like, of course, this is what's going to happen. And yet even so this still a little suspense. And this suspense comes from you never know what people are going to do. There are twelve people on this jury. You never know
what's going through their heads. They've heard a kind of weird slice of a story and you don't know how they react. So even now it seemed to me a certain thing that he was going to be convicted. And even though if I'd been on the jury, I'd devoted to convict, I felt a little shock when he was convicted. It's an odd contradiction. What did you think?
It felt like that in the courtroom too. We all were expecting it, But then when it happened, it felt a little shocking. And also I think what stood up to us is it felt so grave. And I'm curious, Rebecca, as a prosecutor, you must have been in the courtroom when convictions like this have happened. What's it feel like for the prosecutor that moment.
Yeah, I think it does feel very grave. And I think that even when you have every confidence in the outcome, Michael's right, that there's a strange suspense as you watched
the drama unfold. And I imagine I wasn't in the courtroom, litty Gene, but I imagine it unfolded as it always does, which is, there's a report that the verdict is in, and the jury files in right, and they and they pass the envelope to the judge and the judge looks at it and everyone's watching the judge's face read it, and the judge passes it back and it's kind of dramatic. And so I think that is how prosecutors feel too, just like everyone else.
And I'm curious, you know, moving to the sentencing, you know it's not scheduled until the end of March, which feels very far away. What's happening right now, like what's going to happen between now and March.
Yeah, so it does feel far away, but I think not at all unusual. The typical schedule is probably one hundred and twenty plus days, and the biggest reason for that is that the probation department has to prepare what's called a pre sentence report. It's a big document. It's kind of have all kinds of information in it for the judge to consider it sentencing, and it's going to have information about this offense and what happened here, even though, of course in this case the judge presided over the
trial and heard it. But it's also going to have all kinds of information about the defendant. The defendant will be interviewed, Sam Bankmin Freed, family and friends may be interviewed. It often has very personal information about the circumstances of
someone's life. I'm not sure that's going to be the case here, but often people who find themselves in mess with the criminal justice system have been victims of all kinds of things in life, of circumstance, of family issues, of medical issues, and so all that information gets compiled and put into this document, and that's just time consuming, and that's the biggest reason I think that there's so
much of a delay. And then, of course the parties will submit written submissions to the judge, both the government and Sam Bankmin Freed's lawyers. His may be accompanied by letters of support from family and friends and people who have something positive to say about him that's not about this case, right, that no one is all good or all bad, and he was a person and he, you know, I'm sure has people who care about him and want to talk about aspects of him as a person that's not just this.
Rebecca, I'm curious if you would make a guess at what his sentence is going to be.
This is a dangerous game, I think in terms of predicting, because I just I don't think it's possible to know. I would be very surprised to see something less than ten years, and pretty surprised to see something north of thirty.
I tell you why, I asked, because I've been polling his lawyers, people close to the case, and the numbers are all over the map. How do you think about it?
Though, I think it's somewhat of a gut instinct, having just been at a lot of sentencing, so it's hard to put in towards exactly how we get there. I think here, and we've talked about this a little bit before, the sentencing guidelines are basically useless because the recommended sentence, because the dollar amounts are so high, is going to be life and that's just not like a meaningful, helpful
data point. There's also no mandatory minimum, so in some cases you would have a floor, we don't have one. I spent years in the securities fraud unit in the Southern District of New York that did a lot of white collar sentencings, and I think for the average white collar defendant, it's really unusual. It's really unusual to get over fifteen, just anecdotally, like, not for any particular reason.
It just you don't see it that much. And I think part of the reason you don't see it that much is that for the most part, and these are broad generalizations, to be clear, but I think judges are much less worried about incapacitation in a white collar case than they are in a violence case. Right, So I'm thinking about the purposes of sentencing, and there's statutory guidance on this. It has a number of purposes. Right, it's
supposed to provide just punishment. It's supposed to deter not just the defendant who's being sentenced from committing future crimes, but offer something that's called general deterrence. The public should know this is serious and they shouldn't do it. And sometimes you have someone who's so violent and so dangerous that the court feels that the only way to keep the public safe from them is to get them off the streets, you know, permanently or until they're very old. Right,
That's mostly not true. In a white collar case. The chances that Sam Bankman freed, whatever amount of time he serves in prison, will be in a position to commit a enormous financial fraud again is almost zero. So that's not a concern. And that's generally true, I think. And that's why you rarely see sentences super super super super high in the white collar space because judges don't think
it's necessary. Why do I think it's got to be more than ten because you see white collar defendants get ten, eleven, twelve years big huge frauds, you know, and this is a big, huge fraud, right, And so I just think anything less than that would seem kind of not enough
to a judge. And then I think you think about general deterrence, and I predict that Judge Caplin's going to talk about general deterrence at sentencing because this case had a lot of publicity and crypto is still kind of an emerging area, and so a lot of judges will say they don't believe in the concept of general deterrence. They don't really believe that the sentence imposed on one person affects the behavior of the public. But here there's
a strong argument that it really might. So I think you're going to see that be a driving force.
Does he get punished for testifying on his own behalf?
Yes?
How much?
I think the answer to these things is definitely yes, But how much is hard to say. There are systemic frameworks that mean that the answer is yes, and then there's the practical reality. So, as a systemic framework issue, if he had pled guilty to everything, no negotiated benefit with the government, just pled what we would call open without any particular agreement, necessarily, he would have gotten a three point reduction under the guidelines for what's called acceptance
of responsibility. And so I think we've talked about the guidelines before. But it's essentially a big algorithm for sentences, and it spits out a recommended sentence. There's pluses and minuses, and acceptance of responsibility is a three level reduction, So that's going to correspond to some reduction in a recommended sentence now here, because the guidelines are so so so high, they're actually literally off the charts, it doesn't actually change
the number it spits out. But holistically, the judge recognizes this person made a mistake and then they admitted it, and they took responsibility, and they didn't force anyone to prove it, and they didn't dispute it, and they saved everyone in the time and energy, and that has value. So there's that three points. People also, prosecutors and defense layers talk about a trial penalty, and there they're not
talking about a numerical algorithm. They're talking about holistically, not just that the judge punishes you for having not accepted responsibility, but that the level of detail and understanding the judge has about what you did is very, very different. If that judge sits for days or weeks listening to the evidence, then if they read a submission from the government that gives him the details, right, and so some judges kind of really that changes the way they view a defendant.
It's hard to measure, but you have the sense that it's changing the sentence. And then I think testifying fits into both of those in the same way, which is there is in those same guidelines a two point enhancement for obstructing justice, which includes testifying in a perjurious way. Lying.
Yeah.
Again, here it doesn't actually move the math because the math is going to be life. But also the judge feels like, you know, what is wrong with you? Why did you do this? And my experience as a prosecutor is that judges are much much much more offended when defendants lie to them or in their courtroom then about the defendants lies that preceded it and brought them to the court room. So you know, it comes with I think it comes with the risk of a heavy consequence.
Probably we won't know what would it have been and what it is. We won't get that kind of clarity from the ultimate sentence.
You read the transcripts of Sam's testimony under cross Yeah, what's the first lie that jumped out at you? And what was the kind of biggest lie that jumped out you.
To me, the thing that jumped out the most about his testimony was actually not what's what's a lie and what's true? It's how different he was on direct than he was on Cross. And it's interesting to me because prosecutors always talk about in closing and defense lawyers do too, what a witness's demeanor was, how you should evaluate if
they were telling the truth. And one thing that all lawyers point to when arguing about whether or not a witness should or shouldn't be believed is that difference, right, Were they different when asked questions by one side than the other. And so you expect and I'm sure this did happen that Sam's lawyers talk to him about not just what his demeanor would be like when they ask questions, but what it should be like with the government and hard to know sort of how we got where we are.
But he really did not take that advice to heart, and so he was giving long explanations and kind of chatty and engaged on direct and I'm cross he was very short. I don't remember, I don't remember. I'm not sure. He must know his lawyers must know that these clips exist of him saying things to the contrary, and it's not a good look.
Yeah, you know where I shot up in my seat in the courtroom. It was such a trivial moment. But where I just went, oh my god, why are you doing this? Was when they asked him if he had taken a private plane to the super Bowl, and he didn't remember. I was on that plane with him, and it's very easy to remember. Why bother to even do that? It was a bizarre It was a bizarre sort of performance, and I didn't understand it. On the last question on this because I don't want to lose this. How unusual
is it? You and I both thought you thought I think more strongly than I did. But I still kind of agreed with you that he was going to change his mind and not testify. I was persuaded it was such a bad idea that he just wouldn't do it. It was a bad idea, and he did it. How often do you see someone who is in his situation take the stand.
There are consequences to testifying and being convicted, and so even if you expect that you're going to be convicted, you're paying a heavy price for using your hail. Mary pass, it's probably not going to work, and so I don't know that most people make the decision, which is why I did not think that Sam was going to testify.
For sure, people generally speaking don't testify that much, I think, no matter how severe the evidence, you sometimes see it from someone who has some kind of message they want to share, Right, So it's not really about being acquitted, it's about using the platform. You see it sometimes in terrorism cases, right, someone who gets on the stand and says death to America. It's not helping their cause, but
that's really not their purpose. And sometimes you see it from people who can't accept the consequence and want to try to give their explanation. But it's uncommon relatively speaking.
Right, what other things can they can cap and consider when he's deciding on the sense?
Yeah, so almost anything is the answer. I mean, obviously there's some impermissible things, but there are statutory factors like the nature and circumstances of the offense, the need for just punishment, the need to avoid unwanted sentencing disparities, which is lawyers speak for it should be fair relative to other people who are similarly situated. Now here who's similarly situated, is of course a question what's the right benchmark to
compare it to. I think a lot of people have made the point that the closest analogy is maybe made Off in terms of you know, size and loss and that kind of thing.
You know.
On the other hand, you know, Sam is relatively speaking, a younger person and made Off it's spent a essentially a lifetime doing it. Here it's a narrower contained time. It doesn't seem like the right analogy to me to think about how much time Sam Bankman Freed should get. Right, if Madeoff had gotten twenty five years, that probably would have been a life sentence too, didn't It was kind of academic. But I think the judge can consider almost
anything right. The judge can consider a person's medical conditions. The judge can consider childhood trauma. I'm not suggesting that exists here. I have no idea, but difficult life circumstances, family members. You know, you sometimes see arguments that a defendant has a child or a parent who needs care and the defendant sort of needs to be there. So almost anything.
The jury wasn't allowed to hear it. But do you think it would matter to Kaplan to learn that the customers were going to get their money back.
It's a great question, and I think we'll find out right certainly, that will be something that happens at sentencing. There's going to be this discussion on balance. I don't think so, because I think what kaplain will say is
that was just dumb luck, right, It wasn't that. For example, you did this then of your own volition, you paid everybody back before you got caught, and so, yes, you still committed the crime, but you've demonstrated that you're sorry and you learned your lesson and you wanted to do the right thing here. Just by sheer luck of some other investment. It looks like there's enough money to pay everyone back. It doesn't really change what his culpability is.
And so maybe on the balance, if you had some little old ladies, you know, submitting letters at sentencing talking about how they lost their life savings and now they couldn't afford you know, milk and eggs, maybe that would move the judge. But I don't think it's going to matter here.
So I have a question. There's this other trial I write that scheduled early in March, where there's a whole set of other charges that are being brought against Sam Macmonfreed. What are the chances you think that that trial is going to happen.
I don't know. On balance, I don't think it should happen. But it's a little complicated because some of the charges that are in round two are essentially the same charges has actually existed in round one. The first trial involved the substantive count, but it didn't include the conspiracy or vice versa, and so it's all the same conduct. It's all the same core wrongdoing. There are a few things like the FCPA charge, the foreign bribery the Foreign Corrupt
Practices Act, which prohibits bribery of foreign officials. So there was an allegation that SBF paid a bribe to free up money right in a foreign country, and that was not made a part of this trial. In terms of the criminal conduct, you know, arguing against there being another trial he's facing. You know, if he got the maximum sentence, it's functionally a life sentence probably right, he's thirty years old.
I don't think the ultimate sentence is going to be changed by this Judge Kaplan can consider the conduct at the first sentencing, So just Kapain could say, I am making a finding as a judge by a preponderance of an evidence that you did do these other things, and I'm considering that when I sentence you. So in that sense, there's really no reason to have another trial. I think the problem for the Ustorney's office is they brought those charges.
They said it was important to bring those charges. They didn't drop them. They said they weren't going to have a second trial. It's a little hard for them to drop them now and just say never mind. And he's not gonna But there's only two ways to resolve them. Three there's a trial, he pleads guilty, or they say forget it. And he's not gonna plead guilty because he wants to appeal presumably this conviction. There's not much point in appealing it if you're going to jail for something
else anyway. So I think they're a little bit stuck in terms of how to move forward. I'm optimistic they'll find a way to resolve it in some way and not to waste the time and effort, But I it could go either way.
So after all of these proceedings are over, Sam makemanfreed will go to prison. How is it determined what prison he goes to.
So I am definitely not an expert on this, I should say it's not something for the most part prosecutors are involved in. There is a designation process that's run by the Bureau of Prisons and one of the things that feeds into that is that PSRI I was talking about. So information from that will affect the designation. There's an assessment. Some of that, you know, is going to be stuff that's probably not applicable. Here are you in a gang, do you have a violent criminal history? Have you had
infractions while waiting to be designated? You know, did you do they find a weapon in your cell? And that kind of thing. Some has to do with what your needs are. So for example, you know, if you had a very serious medical issue and you were going to need chemotherapy in prison, that would limit where you could go. There's not that many facilities that provide that. If you need drug treatment, right, that's going to factor in. So there are all these kind of components to it. And
then there's geography. So you'll see at sentencing almost always that defense counsel will say at the end of the judge you know, will you recommend to the Bureau of Prisons that he'd be designated close to this city or to this particular facility, and the judge cannot. It's up to the Bureau of Prisons at the end of the day, but BOP considers that recommendation, and judges by and large make the recommendation, and then the Buer of Prisons will decide.
And then because he's already in custody, he will then be transferred from where he's being held now at MDC in Brooklyn to that more permanent facility.
Judging Sam will be right back. Welcome back to Judging Sam. The trial of Sam Bankman Freed.
Michael, I'm wondering if you've spoken to any family members of Sam Bankman freed, or maybe employees at FTX. You know, it's been a couple of days since the verdict came out, and I'm curious what people close to him and around him, how they are feeling about it.
So very oddly, apart from Caroline, Nishad and Gary, I stayed in touch with all of these people, all the people who might have been witnesses, some of the people who were witnesses, and I've heard from a bunch of them, the FTX people. And it's interesting because in the list of victims, these people are at the top because they lost not only all their money, but they know their reputations went with it, and they thought they were part of one enterprise and it turned out to be something
entirely different. Of all the people on the planet who deserve who might be angry at Sam Vangrafey, you would think they would be it, and that isn't there the general feeling. The general feeling is kind of sadness. Natalie Pim, his scheduler and the head of public relations, who sat through most of this trial, was weeping when it was over. She just thought. I think she had the feeling that she didn't see the Sam she knew in the courtroom.
I think his parents have been living with both dread and grief for the last year, and the dread is now gone. It's happened, and they've just got the grief, and that's an easier emotion to cope with. I think that it's like, Okay, this has happened, and now we move on. So you know, the image if you asked me, like what I would remember from this trial, like top five images apart from the quality of the cafeteria. Number one would be his mother in profile, with her jaw
trembling the whole time. She manifested the shock of what she was going through. I mean, it was just all there on her face. And I hope the world doesn't go after them. They deserve to be kind of left.
And I'm wondering about you know, speaking of Sam Bankman Fritz close associates, Rebecca, what do you think is going to happen to the cooperating witnesses? To Caroline Allison, Gary long Nishad saying, I'm.
Very curious about this too. What do you think in.
Any other case, with any other judge, I would have said, with almost one hundred percent confidence probation, the default sdn Y sentence for a first time offending white collar defendant who's a cooperator is not to go to jail. And typically where you saw cooperators do jail time despite the fact that they were cooperating, was in cases where there's really serious violence. You know, someone who participates in a murder and is going to get a big reduction, but they're
not going to get off scott free. I think that probably is still true here. These guys are are also like SBF, they're relatively young. There's no indication that they have any other wrongdoing in their past. And I think that is still probably right that the judge will say, look, on the one hand, this was very serious and you participated anew And on the other hand, these guys, these guys started cooperating really fast. They clearly owned up to
it immediately. They didn't wait to see which way the wind was blowing. They really came in. And I think that's probably where it lands. And Kaplan's a hard, harsh sentencer, and is there a world where he says this was too serious and too big and you have to go to jail. I think it could happen. I still think it's unlikely. And if that happened, I would strongly suspect sentences of a year and a day, which is a
weird sentence. But in the federal system, they abolished parole in the eighties and after that they have a system of fifteen percent for good time get credit for time off. You can only get fifteen percent time credit for sentences that are longer than a year. So a person who gets a year serves a full year. A person who that's a year and a day serves, you know, ten and a half months, and so you almost never see its ends of exactly here.
It's funny, you know, when the right after the verdict, I found myself engaged in my own little undoing project. When something bad happens, your imagination sort of like tries to undo it, like how would this have been prevented? And let me do a question for you, LJA, listening to the whole thing, I put that question to you, how does this get? How is this? This whole thing most likely prevented? What pops to mind.
If that wonder who had to catch a plane had been replaced by a different er instead of trying to move everything along to finish the trial before that j're got on that plane. You can't help but wonder if things would have gone differently? Right, It's hard to imagine, but that just seems one simple, like sliding doors moment that happened. What do you think is the one moment that would have made everything different?
I mean, there are an infinite number of ways it might not have happened, but I bet Nishad and Caroline and maybe even Gary, Gary, unless sure of when it all fell apart. Their minds reeled back to early twenty eighteen when Alimeter Research was in free fall. Half the firm thought Sam was a criminal or just criminally negligent and left, and they, with some reluctant stayed and then it all recovered and it got better, and they had this firm in which Sam was now sort of unquestionable.
He'd been questioned and proven right, and they were both Nashad and Caroline at that moment were all kind of on the fence whether to stay with them or whether to go. I think that's the moment where like if they had just left, none of this would have happened. Then it had just the whole place had just ended.
You don't think Sam Bnkman Freed would have found other people, No, if.
You had nobody now, I think that they had the power to just end his career as a as a crypto trader there. But there are a million of ways this money. But you replay his life. If you had met Sam Bankmin Freed when he was twenty years old, you would never imagine this is where he would end up. Kind of thing. I know. I met a lot of people on Wall Street when they were twenty two years old, and some of them went on to commit financial fraud. And it was pretty predictable, you know, Yeah, it doesn't
surprise me that guy did that. This is a strange case.
In the end, Caroline gary Nishad, they all turned on Sam, and a lot of people who are close to Sam turned on him. But I guess what I'm curious about is what drew them to him. Why did Caroline Ellison and others, you know, you were there for this. Why did they love Sam?
Why was she in love? Why was she in love with him? Why was it Sam that broke up with her in May of last year? Why wasn't she fleeing in the other direction? So I think this, why did everybody like him? You know, it's a multi part answer. But in their little world, their rationalist, effective, altruist world, he seemed mesmerizingly smart to me, like they just thought they were intimidated by his intellect. They just thought he was the smartest person in the room. He made being
a nerd a little feel strong. He gave him all kind of courage. And I think it was also true that with a lot of the people, and several people in the book say this who were drawn to him. He had this ability to make people feel like they had a purpose and when it all fell apart, that was one of the things. Many of these people's voice was what am I going to do now? Without a purpose? He was able to create that feeling, So that was part of it. For the wider society that sort of
embraced him. Oddly, I think a lot of his appeal was his seeming artlessness and openness. That he seemed like he had nothing to hide. He was just all out there. And in fact, there was a very funny way that I didn't write and this didn't make its way into my store. But April of last year, at Sam's Crypto Bahama's conference, I bumped into someone who would help me with The Big Short. He could have been a character
in The Big Short. He was one of the people who made that trade and was, you know, really smart, unbelievably cynical Wall Street person who saw through the veneer of Wall Street to see that these firms were doing all this bad stuff. And he just adored Sam. And I remember asking, you know why you like this guy so much? And he said, this is a loose quote. He said, how often do you meet someone with twenty billion dollars who's not a douchebag, who has nothing to hide,
and that's how he felt the people. He felt like he had nothing to hide, and so it's incredible that his defining trade is what he hid. So anyway, it was you won't believe this, LJ, because you see Sam and you see the know it all at the lunch table who won't shut up. It is that ass to him. But I promise you that if you had met Sam Bankminfreed a year and a half ago, you'd have thought it was odd, but you would you would have liked him, And right now you'd be punishing yourself for liking judging.
Sam will be right back. We're back with one last thing, LJ. What do you got for me?
So, Michael, throughout this trial you've talked about how you've also been learning about how the legal system works.
You look so skeptical.
No, no, no, it's it's true. I mean Rebecca is the one who should look skeptical. I mean, yes, it's the first time I've really paid that close attention to a criminal trial.
And what do you feel like you learned?
It's frightening, it's frightening your toast. If the federal government charges you with a crime, you're just done. And in this case, I don't think the outcome was unjust, but it feels like the system has a capacity for credible injustice. It made me think, if there's this whole rawlsy and thing about the veil of interest, that if you I allow you, I allow you to design the system, but I don't allow you to choose what your role in
the system will be. And if I said to you, you get to design the system of justice, but you might end up a defendant. You might not end up a prosecutor or a defense lawyer, or a judge or a member of the jury. You're going to be in there somewhere. You might be a defendant. I don't think anybody would design the system the design a system that was that was fairer and showed a little more mercy towards the defendant.
I think, Rebecca, it's funny. I was thinking of something much more practical and less philosophical. Which is my last day of criminal law, my first year of law school. At the professor said, at the end of the day, look, most of you will never need the substance of this in your professional lives. Most of you will not be lawyers involved in the criminal justice system. Indeed, more of you are likely to be arrested than to need this professionally.
And if you remember one thing from this class, it's don't talk to the police. And he was I think mostly being tongue in cheek about the chances that a bunch of IVY leaders were going to get arrested. But I do think that that is important life advice. Actually, if you get at the knock at your door and it's the FBI or a police officer offers you the
opportunity to explain something, you should call a lawyer. It is not a good idea to try to navigate the system without professional advice, and you should make calling a lawyer the first thing you do. So it's not about roles, but a pitch for a practical approach to finding yourself the defendant.
That was, as usual, Rebecca, much more useful than what I had to say.
Michael Lewis and Rebecca Mermelstein, thank you so much. This was really great.
By bye bye. This episode of Judging Sam was hosted by Lydia jen Kott. Judging Sam is a production of Pushkin Industries and hosted by me Michael Lewis, with special assists this season from Jacob Weisberg and Jacob Goldstein. Our associate producer is Nisha Venken. Our executive producer is Catherine Gerdeaux. Our reporter is Lydia jen Kott. Our editor is Sophie Crane.
Our music is by stell Wagon Simpinet at Pushkin Thanks also to Greta Cone, Sarah Nix, Eric Sandler, Jason Gambrel, Nicole opten Bosch, Bryan stre Brenneck, Christina Sullivan, and Malcolm Gladwell. To find more Pushkin podcasts, listen on the iHeartRadio app, Apple Podcasts, or wherever you listen to your podcasts. If you'd like to access bonus episodes and listen ad free, don't forget to sign up for a Pushkin Plus subscript at pushkin dot Fm, slash Plus, or on our Apple show page.