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Sam Bankman freed sentencing is coming out. He has sent us to twenty five years in prison after being convicted of fraud over the ft X collapse. Again, he's been send us to twenty five years in prison after being convicted of fraud over the ft X collapse. Not the Bernie made off Nope situation, but then not the ten eleven years of sort of the lower white collar crime.
Yeah, they're the defense was asking for, you know, six and a half to seven years. And again the defense the prosecution was looking for something in a forty to fifty percent range and maybe splitting the difference. Hey, Barry, just let you know, we got about a minute left here. Just put into context if he can, in the context of Bankman freed his sentencing here for twenty five years.
Yeah, what's your reaction?
What's your reaction?
So, you know, I'm more in the Michael Lewis camp than than in I love Zeke Fox's book, but the you know, when you look at everybody having recovered all of their assets, the story perfect example of narrative fallacy. The story of this guy is a genius who has figured out how to make crypto modernized, and then oh, it turns out that they're foamingling funds. Yep, and they're kind of running everything on the fly. It's amazing how one narrative story failed and was replaced by another. This
is very similar to Fairhose and what happens there. We love these stories and they often deceive us.
Yep. Absolutely, Hey, Parry, thank you so much for joining us. Barry Rodholts, host of Master's in Business on Bloomberg Radio and the founder of Rodholts Wealth Management. Again the key data point here, as Alex just mentioned, Sam Banking Freed sentenced to twenty five years in prison, ordered to four foot more than eleven billion dollars. Let's bring in June Grosso, Bloomberg's legal analy She joins us here on Bloomberg Interactive Broker Studio. Initial reactions juram Well.
I think it's a very tough sentence, but it was expected to Judge Kaplan before the trial said that he increased the sentence in guideline range because he found that Sam Bankminfried had perjured himself at his trial. He found
that he committed witness tampering. If you remember, he put him into prison before trial, despite this huge bail package, because he felt that he was campering with a witness, and he said there was a loss to investors of one point seven billion dollars, despite the fact that people have said that the investors are going to get paid back most of them. He said something that I thought was kind of it was chilling. So the defense was saying, look,
let him out early. He could be like a Michael Milket. He can come back because he wants to do good in the world. He has this ability. And the judge said that there's a risk that this man will be in a position to do something very bad in the future, and it's not a trivial risk. Part of my sentence will be for the purpose of disabling him to the extent that it can be appropriately done to him for
a significant period of time. So the judge just didn't buy his good in tensions, he said his intentions were to gain power.
But on the flip side, I mean, he wasn't sentenced one hundred and fifty years, so like he will still have a life when he gets out right. Just if you're just joining us now, Sam bankmund free to send us twenty five years in prison he will also be ordered to forfeit more than eleven billion dollars. So presumably, like do you serve that whole twenty five years?
You serve eighty five percent of the time, and no one know the request from the Bureau of Probation for one hundred years was ludicrous. No one would be sentenced to that. I mean, think about Bernie Madoff. That's like a worst scam that you can think of. So he was like, he's like the high end of the scale. The government was asking for forty to fifty years. That's also very high. I mean, you know, think about what
happened here. But I think the judge is also trying to send a message to you know, this has been called the greatest financial fraud in the US history by the US Attorney for the Southern District of New York. So the judge is trying to send a message. But this judge has been so tough through the entire trial. If you remember, before bankmin Free testified, he had him on the stand for three hours outside the presence of
the jury. He denied almost all of the requests that the defense made for motions to introduce different defenses that he wanted to present to the jury different expert witnesses. So he's been tough on him since the very beginning. But I you know, I thought he should get ten years, so maybe he'll get twenty years. In point of fact, he got twenty five years.
Interesting, do we know what type of facility he will serve this time in? Is this a you know, minimum maximum?
What did they say?
I mean, really he's a white collar criminal. There's all kinds of evidence that in when he's been in prison, and he's been in rikers, that he's been helping to teach some of the inmates to help with their gged diplomas, and that his one of his roommates show he said his salemates is a former police officer, and he said that, you know, he really is getting along well in prison and he's trying to make you do the best he can. I don't this will be up to the Bureau of Prisons.
It's not gonna be up to the judge where he goes. So they're going to do a report after this and determine. And also I think he might go to a facility in California so he could be near his family.
And just to reiterate if you're just joining us FTX CO finder Sam Beckmanfried has now been sentenced so twenty five years in prison for stealing billions of dollars from customers, marking the final chapter in this case that has just captivated pretty much everybody. He also has been ordered to forfeit eleven billion dollars. What happens now? Is there any other thing? Appeal convo? What happens next?
There is an appeal? I mean the defense is going to appeal this. Appeals are very hard in criminal cases and a lot of the decisions that the judge made are considered within a trial judge's discretion, so it's a difficult appeal. But yes, they were an appeal. He's hired new lawyers. He changed his lawyers from the trial, so he has representing him now more Ark muc Casey, who's
a very well known criminal defense attorney. He represented Trevor Milton and got him a sentence of four years when the prosecution wanted eleven years, so he.
Didn't So would he be appealing the verdict or just the sentence?
The verdict? He will be appealing the verdict. What happened at trial? You know the charges, the different for example, what I just said, the judge didn't allow him all these different expert witnesses that he wanted to testify to present defenses, and the judge cut all that off. So that will be I think the basis of the appeal and you know, whatever the defense can can drag up.
I've also seen things like people are getting their money back, the recovery rate is going to be Okay, he has autism, he can't like that should be reduced, like does that hold water? Like what is that?
Well, that's what the defense argued. The judge said, he is a hot, very high achieving, autistic person, which means he's capable of huge accomplishments. But then he turned that around and said, wait, we have to be careful of those accomplishments. He's a dangerous person. So that was almost used against him by the judge. But yeah, there was there were There was letters to the judge about his
autism and how that makes him socially awkward. They had experts testifying about it, but the judge didn't buy it. The defense also brought up the fact that most of the investors, it looks like, are going to be made whole.
The judge didn't buy that either.
Despite the judge said that, he said that he's really let me see, just that he found that the loss to investors was one point seven billion and that the fact that they'll be paid in full is misleading, it's logically flawed.
And it's speculative. So everything that the defense put out there, the judge just rejected.
So next steps here think he goes back to this this peditentiary, I guess the detention center in Brooklyn.
I think he will go back there for a bit until they decide, you know, where he is going to be in prison and where he's going to serve his sentence. And in the meantime, you know, it takes a while for an appeal to go through. You have to get all the documents and the trial transcripts and everything, so that's going to be a while. Then the next thing we'll hear about probably is where he's going to spend his sentence and also you know what the appeal is
going to be about. That'll probably be you know, months and months, maybe a year down the road.
Hey joining us also in our Bloomberg interarctor broker Stugo Peter Jeffrey joined us Bloomberg Legal editor Jeffrey, what's your takeaway from the sentence of twenty five years?
Well, you could tell, as the judge prepared delivered his remarks before pronouncing the sentence, that it was going to be very stiff, nothing like the six and a half that the defense asked for, but not at the range of the forty to fifty the government wanted. It was sort of right in the middle. The judge hit him with three hundred months. We did some quick calculations. It was twenty five years, and it is just what the
judge and had to do. It's a stiff deterrent to anybody who plays outside the lines in a sensitive area like crypto. And as you were saying, the judge just had no patience for the nonetheless excellent defense. A sentencing statement that his lawyer mckayzy made it was it was one of the best we'd heard. And yet the judge thought this won't fly. Look at what he did, and he didn't believe.
He said that he was sorry, but the judge said, he has no apparent remorse, so he didn't believe the words that were coming out of SBF's mouth that this, I mean he made a statement, a twenty minute statement in which he said that, you know, he was sorry for what happened. I'm sorry about what happened. It haunts me every day. I made a series of bad decisions. They weren't selfish decisions, they weren't selfless decisions. They were
bad decisions. And the judge just, yeah, didn't believe anything.
And maybe most strikingly to me, the judge said, I've got to give you a sentence that is going to make sure you are not out on the street doing this again anytime soon. So we were all sitting around thinking, well, he's thirty two. That means he's getting at least twenty and you know, it's not a violent crime, but the judge was talking in terms almost in terms of the violence bankman Free did to investors, customers, employees. Yeah.
Yeah, if you're just joining us, we just want to update you on the news. FTX co founder Sam bank And Freed has been sentenced to twenty five years in prison for stealing billions of dollars from customers. He's also been ordered to remit about eleven billion dollars. As we just did some quick math there, he'll be fifty seven now, when he gets out of prison. Joining us here is Peter Jeffrey, Bloomberg Legal editor joins us in June Grasso,
a Bloomberg legal analyst. Peter, can you give us some just perspective and background here on this kind of sentencing, these kind of cases and kind of how we get here?
Well, just thinking about it, Elizabeth Holmes got a little over eleven years for the Pharaohnose froue.
Peter, gonna need you talking to them mind, Oh, I'm.
Sorry, Elizabeth Holmes got it. That would help, right, got more than eleven years for the Pharohnise fraud. Bernie made off one hundred and fifty. And so this one is a stiff sentence that, as the judge suggested, I mean, you know, we did the math, like like you said, he'll be fifty seven when he gets out.
And yeah, yeah, Paul is a prefect.
But right, if you're looking for a sentence that will stop somebody from pursuing this kind of fraud again, a quarter of a century will do it, all.
Right, So Juna, give us a sense of timing. Just as to the.
Appeal, it's hard to it's hard to say how long the appeal will take. Because they have to. It's up to the defense to prepare the papers and to But I mean, I think it'll be months, maybe, I mean even a.
Year, Peter.
I think it could be.
It would be a year. Of course, they'll be trying to put it in faster, but and then the prosecution gets a chance to respond. It's a long, long process. He'll have served years before we hear about what the appeal result is. And I mean, I don't think I mean, I think it's going to be a hard appeal to make.
Well, I mean to the eleven billion dollars. Also, June, like, where is that?
Like, I don't know where that is.
I don't think he has eleven billion.
He's not supposed to have eleven billion at this point.
All Right, we're going to continue this conversation, but we're going to hand that off to our good friend Joe Matthew Balance of power. Joe's down in Washington, DC, and we're going to keep June in Peter as well. So Joe, big news here coming out of Lower Manhattan.
That's for sure, Paul.
Thanks.
Of course, the story that's resonated here in Washington for a lot of different reasons and continues to when we talk about crypto on Capitol Hill, the idea of regulating this, the stand that lawmakers take on this issue. I'm glad to have Kaylee Lines at my side today. Kaylee has actually been covering this SBF story from the very beginning, remembering she was hosting our Crypto Show when that began, and has since come down to Washington to cover financial
regulations and of course crypto. Kaylee, this this is a Washington's in a lot of ways that people might not see on the surface, knowing millions of dollars were donated to candidates in the way that SBF tried to influence a lot of races.
Yeah, Sam Bankminfreed was incredibly politically active. He made donations on a bipartisan basis, but as you say, it was a significant amount of money, and he spent a lot of time physically here in Washington actually lobbying, not just on behalf of FTX, but he really became kind of a poster child and spokesperson for the industry, really advocating for crypto as a whole legislatively on the Hill, and a lot of lawmakers were quite burned ultimately when it
turned out that FTX ultimately collapsed, and that has certainly continued to resonate as we talk about the difficulty of actually getting crypto legislation through the industry has had to work a lot harder on their lobbying efforts to try to delineate FTX from everything else in the industry, considering FTX was in many ways a centralized exchange, not necessarily the same decentralized model has a lot of this, but obviously this to a certain point will bring some closure
to this. Sam Bankman freed specific case, keeping in mind that he was initially charged with violating campaign finance laws. They ultimately dropped the charge, so of the seven charges he was actually convicted of back in November, including conspiracy to commit fraud, et cetera, campaign finance violations were not in there. So this sentencing has nothing to do with his political activity, even if it's still had it.
That's a really important point though, certainly for the people who are interested in politics and are used to what we talk about on this program. Had that charge stayed in place, that could have outed a lot of people in Washington.
And certainly, yeah, it could have brought great politically political difficulty for many individuals, not just for Sam Bankman Free, because theoretically, had that been added, you could be talking about a sentence beyond twenty five years today. That said, still, this twenty five year sentence is significantly lower than what
prosecutors were asking for. Obviously, they were pitching for forty to fifty years because of the scale of this fraud that they were describing, one of the largest and modern American financial history, with over a million victims, obviously ten billion dollars ultimately in terms of the size of the fraud.
But we do have to keep in mind here that Sam bankman Fried is thirty two years old, as Alex and Paul and June were just discussing, So this is going to take him well into late middle age ultimately. If this sentence stands, obviously there will be an appeal process, but who knows how that will shake down.
It's just amazing when you think about just the way human nature is at play in stories like these, Considering the paradise he was living in, he had it made. He was in the Bahamas living the life he dreamt of. He's been since living in Riker's Island.
Yeah, I mean, he was a billionaire many times over, and now of course is part of this. He also has not just been sentenced to twenty five years in prison, but forfeiting eleven billion dollars and unclear where that eleven billion dollars comes from. All of his wealth was tied up in FTX, which is now a bankrupt and of course everything that can be salvage from that bankruptcy proje that process is going to be distributed to the customers and users who had money lost in this that, if
any thing, might be. One of the more redeeming aspects of the argument that he and his legal team were able to make to Judge Kaplan was that a lot of these people will ultimately get most of their money back throughout that bankruptcy prodcast process, and so that may
have helped him here. But yeah, the journey of Sam Bankman freed from this meteoric rise to one of the most well known individuals hanging out with Jaseel Bunchin and Tom Brady and yeah, right, incredibly popular, certainly a well known presence here in Washington, to now someone who is going to be in prison for a very large chunk of his life. It's a remarkable.
Story spending time with Kaylee Lyons here a little earlier than usual on balance of power. If you're just joining a sentencing day for SBF and it is twenty five years in prison, I think June Grosso was suggesting that that could be knocked down. But that's the headline right now. And of course, to Kaylee's point, they were asking for forty to fifty years. So just for a little bit of perspective on this, you've been saying, of course asking questions, Kaylee,
of lawmakers and regulators about cryptos. You moved to Washington. This is colored that debate in a lot of ways, where lawmakers feel free to say, you know what, this is a home for criminal activity, this is not a serious investment. Before this happened, there was more momentum, it seemed, on some of these issues. Where's any of this going now?
Well, it's a great question. Where it's going in the House is probably very different than ultimately the question of whether it will pass the Senate or become law, because in the House you do have much more advocacy for the crypto industry in some of those lawmakers, including the chair, at least for now, with the Financial Services Committee, Patrick McHenry, and that committee has advanced multiple pieces of legislation that would in some ways perhaps legitimize the industry more by
giving them the regulatory clarity they've been asking for, delineating what the CFTC or the SEC would have control over, including things to stable coins. Not all of this, of course, related to the business that FTX was conducting, but it has been used as an example for the counter arguments. Those who are more cryptoskeptical aren't in the majority in
the House, but they are in the Senate. Shared Brown Is, obviously the head of the Senate Banking Committee, has been very reluctant to talk about any of this kind of legislation in any way that isn't more critical and skeptical of the industry. And he is facing a challenger of a pro crypto advocate in his Senate race in Ohio in November, Bernie Marino. So you're still seeing the politics around this industry playing out, and that goes well beyond just the legacy of zam Bankman.
Freed got you. June Grosso is standing by a host of Bloomberg law in New York. Before we moved to a conversation with Governor Glegg ned Lamont of Connecticut. I just want to bring June in on this specific to the sentence. June, what options does he have now you've referred to an appeal. What happens next?
Well, he'll have to serve eighty five percent of that sentence unless he wins on appeal, and of course the defense is going to appeal. He has changed his lawyers since the trial. He's hired Mark Mukasey, very famous, well known former pro federal prosecutor in New York. He represented Trevor Milton and did much better on the sentence. Treveror Milton got four years as opposed to the eleven that
the prosecution wanted. So the next thing is an appeal and they'll go back through the trial there and find what they consider to be legal errors, and probably a lot of that will be some of the decisions that the judge made prior to trial. Even that limited sharply limited the defenses that Sam bankmin Freed could assert a trial, limited the expert witnesses he wanted to call. He really limited his case to a great extent. So I think
that will be the basis of the appeal. It will be probably years before we know what you know how that appeal turns out, because it takes quite a bit of time to file the papers and have the responses. That's where we stand.