Weekend Law: Election Cases, Musk Sweepstakes & SBF Cooperator - podcast episode cover

Weekend Law: Election Cases, Musk Sweepstakes & SBF Cooperator

Nov 01, 202435 min
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Episode description

June Grasso talks to legal experts about the top stories of the week.

See omnystudio.com/listener for privacy information.

Transcript

Speaker 1

This is Bloomberg Law with June Brusso from Bloomberg Radio. The Supreme Court stepped into the twenty twenty four election this week, allowing Virginia to carry out a purge of residents from its voter rolls on the eve of the election without any explanation. The Court's conservative justices overrode the decision of a federal court and a unanimous appeals court, which had found that the state's purge of about sixteen

hundred voters violated federal law. The National Voter Registration Act prohibits systematic removals of voters in the ninety days before an election. Republican Virginia Governor Glenn Younkin defended his order for the purge, which was issued on August seventh, the ninetieth day before the November fifth election here on CNN.

Speaker 2

Because it is done on an individualized basis by person, and because that person has in fact self identified as a non citizen, this is not subject to the ninety day blackout period in my view.

Speaker 1

The three liberal justices dissented, joining me is Elections law expert Richard brough Fault, a professor at Columbia Law School. Were you surprised that the Supreme Court intervened to reverse the Fourth Circuit and the District Court.

Speaker 3

Judge, Yes, maybe I shouldn't have been, but yes I was. So the case involves a state effort to purge people from the roles on the claim that they're non citizens. Non citizens are not entitled to vote. It's illegal, and states are allowed to remove any non citizens that are on the ballot. But there is a provision in federal law National Voter Registration Act, that prohibits mass purchase so called systematic purchase within ninety days before the election, because

it makes it two difficult. People may be purged by mistake, and if it's a mass purge, it's actually difficult for people to be aware of that and to respond. And so that is illegal. But Virginia a conscious they adopted such a program. The governor you shouldn't executive words to that effect literally on the day that this so called quiet or non virtually was supposed to begin, and basically used some mix of DMV data and other databases to

conclude that people were not citizens DMV. When you get a driver's license, you may be asked whether or not you were a citizens. Some people checked non citizen by mistake, some people check not aisms because they are not a citizen when they get their driver's license, but some years later become naturalized as citizens. So the state, using that data and other data, went ahead and concluded that something like sixteen hundred people were not citizens and needed to

be purged from the roles. And that was challenged on the theory that violated the federal law. And also there was evidence a number of these people who were bridge were in fact citizens and were challenging th as individuals.

Speaker 1

So that challenge went up the chain, so to speak, to the federal district court and the appellate court tell us what happened there.

Speaker 3

The Federal District Court in Virginia concluded that this was a pretty straightforward violation the federal law, that it was going on in this so called quiet period, that it was a systematic removal effort, not based on individualized information about individual voters, but basically a massive database information that they were loading from one database to another. And the Fourth Circuit Court of Appeals agreed rather refused to overturn

the District Court's injunction. The Court of Appeals basically said yes on the fact, it appears to us that this is a violation of federal law and it should be stopped. The Supreme Court rather quickly by well, I'm coming to say six three, but you know that three liberal justices dissented because it was just an order. It's not clear that all six of the others agreed, but looks like by pretty much a party line vote without an opinion, basically reversed a fourth circuit and allowed this purge to

go forth. The purchase actually stopped, but the sixteen hundred voters who were removed remain removed unless they can as individuals go in and Virginia allows same day registration, go in and prove that they are citizens and re register and then vote.

Speaker 1

Virginia made several arguments, and one was that the quiet period doesn't apply to non citizens. Another was that courts shouldn't get involved because of what's known as the personal principle right, so taking.

Speaker 3

Them in reverse order. The problem with the per cl principle in this case is, I mean, the only basis for judicial intervention is that the state has violated the ninety day rule, So any effort to enforce the ninety day rule would occur within ninety days before the election, so it makes no sense to invoke the for cell

principle here. The only real question is did the plaintiffs and the US government, which also participated, move quickly once they became aware of what was going on, and the lower courts degree that they did that there was no delay once it became clear what the state was doing. The lawsuit was brought in terms of whether or not the quiet period applies to removal and non citizens. Nothing

in it any case that it doesn't. In other words, the law is simply there to say that there should be no removals based on a system and no systematic removals, and it doesn't say no removal only for non residency. It just has no removals that period. So there's nothing in the law that limits the grounds of ineligibility to something or other, such as to moving, and it does

permit removals for death. So it's not quite clear what this law would be doing if it doesn't also apply to removals on a theory that the individual is not a citizen.

Speaker 1

So, as you mentioned, we don't know why the justices voted as they did, but the three liberal justices made their public dissent clear. What does it tell you that this was down ideological lines.

Speaker 3

It's very troubling. It's very troubling. The lower court decision was well reasoned. The Court of Appeals agreed with it, and there is irreparable injury to those voters who might be eligible to vote, who have been denied the right to vote. Now, some of them will be able to re establish their eligibility because they can re register in the coming day. So it's possible some of them will be back in, but you know, it takes time, it takes efforts. Quite possible some of them will not.

Speaker 1

Although Virginia is not a battleground state. This was based on an order by the Republican governor and was backed at the Supreme Court by the country's twenty six other Republican state attorneys general, the Republican National Committee, and several conservative groups. And it revolves around a flashpoint in Donald Trump's campaign, yes, which is that you know, there's widespread voting by non citizens.

Speaker 3

Right, And for years he's been making that argument, even when he won in twenty sixteen, although he lost the popular vote, he says, well, I really won the popular vote because Hillary Clinton's numbers were inflated by all the non citizens. There is absolutely no evidence of more than a minuscule number of non citizens voting, and you received by mistake. It's illegal for non citizens to vote. There are severe penalties. The number of non citizens who are

registered vote, who or actually vote is absolutely minusculine. It is a non fact, but it's been used so heavily by Republicans to try and undermine the legitimacy if there was just no evidence that it occurs.

Speaker 1

So do you think this lawsuit is to set the stage or the groundwork for contesting election results?

Speaker 3

Yes, I think anything that raises the issue of non citizens. Now. Of course Republicans won this lawsuit, so they won't be able to make this argument in Virginia now, but you know, it is an issue they've been raising all over the country. There was a similar student Alabama where the federal District Court ordered the governor to stop the PERGE program in Alabama and undo it there. I think about three thousand people have been removed from the roles, and there was

evidence that it's often by a mistake. Again, they're using old databases. Sometimes it's the wrong person. There may be that the DMV numbers may indicate this person with a certain name is a non citizen. Somebody with the same name, but a different person might be removed from the roles because their matching is pretty basic. Basically, if you have the same first and last name as the person at least been identified as a non citizen, you can be removed.

And that's not so uncommon. And it also again using DMV data, since your driver's license can be good for four years or more. In that time, you could have naturalized from being a non citizen to a citizen, but that naturalized person will be removed from the roles. And so I think it's very much a way of keeping the issue alive and in front of people all the time. And indeed people will think, oh, there were sixteen hundred non citizens voting in Virginia, but it's not clear that

any of them were non citizens. Certain names popped up on databases, and certainly there are been individual cases in the newspapers and people showing that they were not non citizens, that they were citizens, some citizens from birth and some naturalized citizens.

Speaker 1

A lot of election experts have been saying that this year's election won't be a repeat of Bush vy Gore, the Supreme Court is unlikely to play a pivotal role. But does this decision indicate differently that the Justices may get involved.

Speaker 3

Yes, I don't know why you would think that the Justices will be uninvolved. It will turn on what the issues are. And you know, I think Bush versus Gore was unusual and that the issue the Supreme Court dealt with was effect a post election issue. In other words, how to take care of a recount to ord how do take care of the counting of ballots in Florida where it wasn't completely clear how people had voted, and so that was an issue that could not have come

up before the election this time. I mean, I think they're deciding issues that could be relevant to the election beforehand, like this one. As for things after the election, there may still be things that come up, so it's hard to know. In some ways, you could argue that this earlier this year on Trump's immunity in some sense plays into the election, or he's getting on the ballot in

the first place. So I don't understand the argument as to why anyone thinks that they would be more or less engaged than in twenty or in twenty twenty, where they did a bunch of things before the election, but not so much after the election.

Speaker 1

Well, some people are pointing to those cases as an indication that the Supreme Court won't get involved, saying Donald Trump and his allies brought around sixty cases challenging the election in different ways, and the Supreme Court didn't take up any appeals right right.

Speaker 3

And including the original jurisdiction case that Texas brought against Pennsylvania, it's not count Pennsylvania's vote sexist, joined by twenty other Republican states. They didn't hear that. No, they stayed pretty much out of it after the election in twenty twenty. But you know, the result in twenty twenty was pretty clear. It's hard to speculate about the Supreme Court, but this decision is not a great sign about the courts wanting

to stay out of the election. This was an unnecessary decision. The law was pretty strongly on the side of the plaintiffs, the ones trying to stop the purge.

Speaker 1

I do want to point out that on Tuesday, the Supreme Court did refuse to order the removal of Robert F. Kennedy Junior's name from presidential election ballots in Michigan and Wisconsin. The officials there said his request came too late under the laws of the two states where voting has already begun, and the Supreme Court didn't get involved.

Speaker 3

Yeah, I mean again, it's hard to figure out. It could be that maybe they want to be deferring to the states both ways. I mean, refusing to order the removal is consistent with deferring to the state and in this case, allowing them to go forward with the purchase consistent with the differing of the state. Maybe that's part of it, but I'm not even trying to tempt it to say that there's a consistent logic.

Speaker 1

It's hard to see it. A lot more election disputes to be resolved in the courts before the election, and I'm sure after the election as well. I'm glad I have you on speed Die rich Thanks so much. That's Professor Richard Brefault of Columbia Law School. Coming up next

on The Bloomberg Law Show. The Philadelphia District Attorney sues Elon Musk over his one million dollar a day giveaway to registered voters, but a judge in the battleground state ends a hearing without ruling on the request to block it. We'll tell you why. I'm June Grosso and this is Bloomberg.

Speaker 4

Every day, every day from now and so the election. We're giving out a million dollar prize, that is, and all you have to do is sign a petition in support of a constitution. It's very straightforward. You don't even have to vote.

Speaker 3

You don't have to vote.

Speaker 4

You just have to sign a petition saying you believe in the Constitution, which if you already believe in the Constitution, you're just signing something you already believe. And you can ruin a million dollars.

Speaker 5

That's awesome.

Speaker 1

But Elon Musk's one million dollars a day voter sweepstakes doesn't seem to be the very straightforward proposition he's made it out to be. In order to enter, you must be registered to vote in one of seven swing states. The Department of Justice has already worn Musk and his pro Trump America pack that his sweepstakes might violate federal law, and this week Philadelphia District Attorney Larry Krasner sued Musk to stop the sweepstakes, saying it violates state lottery and

consumer protection laws. Joining me is election law expert Douglas Spencer, a professor of law at the University of Colorado. Doug tell us about the concerns about this sweepstakes.

Speaker 6

The concern is that Elon Musk is using this lottery to encourage voter registration and voting, which on its face doesn't sound bad. We want more people to be registered and to vote. It does promote democracy, but there are federal laws that prevent people from paying or buying votes, or paying people to register, and so there's been allegations that this scheme that he has created is doing just that, rewarding people for registering and then turning out to vote.

The da in Philadelphia is challenging this not just as a violation of these federal laws, but there's also some state laws about consumer protection and some other issues related to fraud. There is some sense of seriousness about the allegations that these federal laws are being violated with why

the Department's Justice itself has commenced an investigation. They haven't charged him with any clime, but they see some of the concerns about the way this program is being run and they're investigating it.

Speaker 1

So the DNA in Philadelphia is going on a different kind of track. He's saying that this is a lot and as such, it's illegal in Pennsylvania because all lotteries have to be operated and administered by the state. So he's trying to get around the questions about federal law.

Speaker 6

That sounds right. There's been a concern about operating a lottery, you know, and whether it's been regulated or registered or as you said, as operated by the state itself. And then also, at least in the statement that I read, says that the lottery is being used to kind of lull or dupe Philadelphians and Pennsylvanians into giving away their personal data in exchange for money, which could be a violation of you know, a state false advertising or consumer protection law.

Speaker 1

I mean, it would put it into a whole different sphere because now he would have to follow all the rules for sweep stakes in Pennsylvania and the other swing states.

Speaker 6

That's right, And what I don't know is in the state how to define a sweet steak or a lottery. Because nobody's buying a ticket or giving musk any cash in order to enter the lottery. They're entering the lottery by signing a political petition, and so one, there could be an argument that the active signing a petition is different than buying a lottery ticket, which would distinguish this.

And secondly, the active signing a petition is a First Amendment protected act that buying a lottery ticket is not. And so you'd have to see the interaction of this regulation of lotteries to the First Amendment. But if the state defines sweepstakes as you know, entering yourself for a chance to win a large sum of money based on chance or random draw, then this lottery is in violation of that state laws. He has not properly registered or operating under those state regulations.

Speaker 1

What's also interesting is that Musk said this is a random draw, but the Philadelphia DA says that appears false because multiple winners are people who have shown up at Trump rallies in Pennsylvania.

Speaker 6

Correct. So that's an allegation that in order to prove it, if a judge is willing to take the case, then one element of a lawsuit is what's called discovery, and Elon Musk would have to provide some evidence of the selection mechanism to prove that the decisions were being made randomly. He'd have to have a record of the random number generation or a video of him pulling a ping pong ball out. And if he's not, then he's not actually running a lottery, in which case he's falsely advertising what

he's actually doing. But at the same time, if he's not randomly choosing people, then what he's doing may not be a lottery, and that could cut in favor of Elon Musk because then he can say, I'm not actually violating the state's prohibition because I'm just giving money away to the people that I want to give money away to.

Speaker 1

Elon Musk obviously ignored the letter from the Justice Department. I mean, what's the import of that letter if it didn't stop the sweepstakes.

Speaker 6

I think the letter from the Department of Justice does two things. Once, it's to a public statement that lets everyone in the public know that what Elon Musk is doing may be a violation of the law, but under the federal life of violation is punishable by a fine up to ten thousand dollars unless you are knowingly and willingly violating the law, in which case then you can

serve jail time up to five years. So I think this letter from the DOJ puts the pack on notice that you are doing something willfully and knowingly, even though we've told you that what you're doing risks of violation, so that the potential penalties which will come after the election in any case, could be much more serious. Trying to get them to change. I will note that the lottery has changed a little bit since the DJ Center

its letter. It used to expire. Eligibility used to expire on midnight October twenty first, which was the deadline for voter registration in Pennsylvania, which was a really strong signal that the motivation for this lottery was to pay people

to register, not something else. That deadline has now changed until election day, so there was some recognition that that was a problem for them, and they have changed their tactics a little bit so they are aware in their reading these letters, and the question will be after the facts, if there's any accountability.

Speaker 1

I mean, they also changed it a little bit, and that he said at one of the giveaways, one of the early ones, that all you have to do is now be a spokesperson for us, so sort of making it into a job offer.

Speaker 6

I guess correct. He's trying lots of different ways. A judge will have to determine whether or not they think that's his true intent or not. If I pay you to register to vote, but I also say that you have to walk outside and breathe fresh air and then you get the money, a judge will say, I know you told me that you're paying these people for breathing fresh air, but they also have to register. I just

think that's a scam. So the question is for somebody signing a petition that doesn't ask for anything, just says I think the First and Second Amendment are important. Is that something that's a legitimate petition, or do we think that the Musk has been using it as a way to insulate himself from just out and out buying people to register to vote. To make look somewhat differently, and that will be a fact determination by a judge if it gets to this litigation. They can look at emails

between Musk and his pack and other communications. They can make determinations based on public statements where America Pack says we want to get a million people registered to vote in the Swing States, and they'll make a determination whether or not that was the intent of this lottery, even though there are facts that cut in different directions.

Speaker 1

A lot of people are going to say this is a move by a Democratic da against Musk who's spending millions to get Trump elected.

Speaker 6

I will say I think the political side of this is as important as the legal side. So the Department of Justice sending this letter does send a signal for voters, whether or not there's an actual violation, that what they're doing is a close violation of the law. And it could be the same for a district attorney who wants to make sure that this issue is framed in the press and in the political sphere as a legal mumbo

jumbo as opposed to a really exciting money giveaway. So there's a political aspect where bringing these charges changes the news coverage, changes the dynamics, and that may be just as important as any finding of guilt or innocence. And so that's not something that the lawyers like me can really comment on whether that's the right way to go about it. But there's definitely a political angle to this.

Speaker 1

Do you remember anything else like this in our history, any kind of giveaways like this.

Speaker 6

Not in our modern history. Way back in the seventeen and eighteen hundreds, So this was before the ballot was secrets. You'd have parties who would basically give away free booze to people. You'd vote for their party, you'd get whiskey, and it's very well known, and in part to avoid that kind of bribery, we adopted the secret ballot and since then nothing so open with payments. The parties, of course, are always trying to incentivize and motivate people to get

out to vote. No lottery like this, specifically from a wealthy buildaire either.

Speaker 1

Thanks so much for joining me, Doug. That's Douglas Spencer, a professor of law at the University of Colorado. In just a few days, the case has bounced between state and federal court and back again. On Thursday, there was a hearing before a state court judge over Musk's motion to move the case to federal court. Bloomberg Legal reporter Chris Dolmesh was at the hearing, So Chris, the state judge did send the case over to federal court for

a determination. Was there any discussion about the merits of the DA's lawsuit at the hearing?

Speaker 7

Not specifically, Essentially, the DA's lawyer kind of launched into a bit of a soliloquy at some point on why you know this shouldn't be removed to federal court. But the judge clearly from the beginning was not going to discuss the merits, just given it's kind of an automatic move when they removed the federal court to at least have the federal judge determined as a threshold matter whether it's a matter of federal law.

Speaker 1

So explain what their grounds are for removing this to federal court.

Speaker 7

They're saying it's essentially a quintessential matter of election law, even though the DA's claims are essentially state law claims under the Pennsylvania's lottery laws and consumer protection laws. So they say, look, this is an election dispute, it should be heard in federal court. They classify it as you know, he's trying to stage a show ahead of the election because he disagrees with Musk and trying to suppress his First Amendment rights.

Speaker 1

And what's the response of the Philadelphia DA.

Speaker 7

Now, the DA says it's a state law case. He argued that while it touches on elements of federal election law, he argues that there are plenty of disputes that are related to the election that are heard in state court.

Speaker 1

And Chris, we have seen this removal to federal court gambit before.

Speaker 7

Yes, in many cases, it's a typical move. That's one of the reasons a lot of times when you see civil litigation between state corporations, a lot of the time they have an automatic law that determines where the case will be heard if there is a dispute, you know, that kind of eliminates that problem from the beginning.

Speaker 1

This is a really serious issue, but from reading about it, it seemed to me like the hearing was pretty lighthearted.

Speaker 7

Yeah, there are a lot of laughs. It was when the DA noted that Elon wasn't there and looked around the room. His lawyer said, he can't just show up anywhere on you know, a moment's notice. And then the DA got up and said, well, as to that notion, he owned SpaceX. And then the judge kind of shot that down real quick. He's like, he can't land a rocket on top of the building. Let's be serious, And that got some laughs.

Speaker 3

You know.

Speaker 7

The judge was clearly in a kind of jovial mood, and one assumes because he knew he wasn't gonna have to do anything with it that day.

Speaker 1

But now the ball is back in his court since the federal judge ruled that there was no issue of federal law involved in the case. Well see what happens next. Thanks so much, Chris. That's Bloomberg Legal reporter Chris don Mesh. In other election news related to Pennsylvania, on Friday, the court refused to intervene in a clash over provisional ballots

in the state, rejecting a Republican emergency appeal. This leaves in place a state Supreme Court ruling that elections officials must count provisional ballots cast by voters whose mail in ballots were rejected. Coming up, Sam Bankman Fried's former lieutenant is the first to avoid prison in the FTX case. I'm June Grosso and you're listening to Bloomberg.

Speaker 7

I call it the wheel. I don't think so.

Speaker 3

What does it do the rules? Yeah, so does a bagel?

Speaker 7

Okay, a bengel.

Speaker 6

You can eat.

Speaker 3

One of the worst ideas I've ever heard.

Speaker 2

Like I was saying, it's FTX, it's a safe and easy way to get into crypto.

Speaker 7

I don't think so.

Speaker 4

And I'm never wrong about this stuff.

Speaker 1

Never remember back when FTX was the world's most popular cryptocurrency exchange with select britty endorsements and a Super Bowl ad. Of course, that was before a gaping hole in customer deposits was exposed and FTX collapsed into bankruptcy. Federal indictments followed a founder, Sam Bankman Freed, and his top executives, and it didn't take long for three of those executives to turn on Bankman Freed, accepting plea deals in return

for cooperating with prosecutors and testifying against him. Bankman Freed is serving twenty five years in prison after a jury found him guilty of the multi billion dollar fraud late last year, and now the three cooperators are learning what the consequences will be for them. In September, the prosecution's star witness, Caroline Ellison, a top executive and Bankman Freed's on again, off again girlfriend, was sentenced to two years

in prison. In October, Ryan Slome, one of Bankman Freed's top lieutenants FTX, who did not testify against him, was sentenced to seven and a half years in prison. But on Wednesday, former FTX chief engineer Nashad Singh walked out of Judge Lewis Kaplan's courtroom a free man. Why a get out of jail free card for Singh when Judge Caplan sentenced the others to prison time. Here to explain is Bloomberg Legal reporter Eva Benny Morrison, who covered bankman

Fried's trial as well as singh sentencing. Ava tell us a little about Singh.

Speaker 5

Nishad Singh was one of three top executives at FTX who turned on Sam Banks and Freed and signed up his corporating witnesses to the government. They all testified at Stateman Fred's broad trial and eventually helped land his conviction to statement. Freed's currently serving twenty five years in jail, and after his sentenced, it was time for the corporators to face their own punishment for their role in the

collapse and the years on board at FTX. Mad Scene turned up in court and we heard some pretty compelling arguments from his attorney about why he should avoid spending a day in prison. Only a couple of months ago, Caroline Ellison, the foremost CEO of Alimenta Research, was sentenced to two years in jail. This is unusual. Most cooperators end up avoiding any jail time whatsoever. But fortunately for

Nishad Singh, that was what happened. Judge Lewis Caplan found that he deserved more corporation credit than Caroline Ellison and he was essentially less culpable than the flord at FTX than Ellison.

Speaker 1

Singh's lawyers apparently succeeded in setting him apart from Ellison and Gary Wang, who's yet to be sentenced. Was a factor also that Singh was involved in the front for a shorter period of time.

Speaker 5

Judge Chaplin certainly seemed to focus on the amount of time Mischad sing knew about the fraud, so Nishad, who was the chief engineer at FTX, only found out of twenty twenty two that STX had been sending customer funds billions of dollars worth for customer funds to Alimtor Research.

In contrast, Caroline Allison knew about this for years and was an accomplice to Sam bankman Bridge and Caplan found that this certainly helped Mishad Thing's case, the fact that he only knew about it for a couple of months

before STX collapsed. You know the poe. The prosecution and the defense did admit even when Mishad things found out about this massive board and that STX couldn't afford to cover the whole and customer deposits, he continued to allow campaign donations to be made in his name and forged ahead with a purchase of a beautiful house in Washington State, something that his lawyer said he will forever be ashamed.

Speaker 1

Of three point seven million dollar house.

Speaker 5

Yes, that's right. It was worth three point seven million dollars and he bought it with his friends. Was a place to go and when he could relax and go on holidays. This was kind of the only luxury, maybe indulge in purchase that Mishad Seine had made when he

was FTX. His lawyers, you know, really stressed that he was a true believer in effect of altruism, his philosophy that drew a lot of the STX and alimed to research folks together this idea that you could earn a lot of money and give most of your way to make the world better place. Miss shadd was very interested

in charity. You know, he's been involved in giving away a lot of concernings since he was in college and his lawyers really tried to push that point that this was, you know, yeah, a big purchase, but it didn't look like his philosophies.

Speaker 1

And he's been working all this time, unlike Caroline Ellison.

Speaker 5

In Caroline Ellison's case, her lawyers had said that she was really struggling to find an employment after the STS collapse, mainly because of the reputational damage that came and being associated with STX and elem to research. She had been working on writing a non fiction book and a math book that Mishad Seine had been lucky enough to find

a job. He's been working as a software engineer for a firm in California since FPX collapsed, and he's also been volunteering at a homeless shelter not far from his house in the Bay Area, and at night he's working on code for a affordable housing project. So this certainly went towards his argument for someone that is trying to build his life back up again and certainly doesn't have any interest in getting involved in a multi billion dollar thought again.

Speaker 1

Sing addressed the judge before he was sentenced, saying, quote, I strayed so far from my values and words can express how sorry I am how did he come across.

Speaker 5

Something that struck me about Michadd in court was that he remained very calm and very composed the entire time. When he got up to speak to Judge Kaplan, we approached the lectern with a piece of paper with his written words on it in his hand and said how remorseful he was and how gutted he was about the

harm that he caused to so many innocent people. He spoke about wanting to prove to not only the judge but others that he was on the path to redemption, and he wanted to do good and be a forced good in the world since being part of the calamity at Aps.

Speaker 1

And what was the reaction when he learned that he wasn't going to have to go to prison.

Speaker 5

I think the big question mark was whether Judge Caplan was going to send Mishad's prison or save him from that, especially after the two years Tent said he handed to Caroline Elepent. So when he got to the pointing end of delivering his judgment, michhad was standing between his two lawyers and Judge Caplan said, I order you to report to the Attorney General of the United States for time served, and at that point Shad seeing barely reacted. There was

a very saint smile that came across his face. While his family, of which there were many, seated in the public gallery behind him, augaf his Beyonce Claire put a hand and over her mouth. His mother kissed his fiance on the cheek and they held hands and you could see that how emotional that they were. They were crying, but you could just sense the kind of utter relief that was borught across support room.

Speaker 1

What seemed a little unusual is that the judge addressed Singh's parents and said, I don't see anything you did wrong. Tell us what led to that.

Speaker 5

That's right. As part of seeing sentencing, his parents, along with his brother and other friends and former colleagues that FTX, submitted letters in support of him. And his parents' letters

were pretty heartbreaking. They spoke about raising their sons as best as they could, spoke about how intelligent and talented he was, and then discovering that he had been caught up and explored at FTX, And there were some pretty harrowing parts in there about the impact that the FTX collapse had had on the Shad and how he had

contemplated suicide in the weeks and months after FTX. His parents spoke about the impact on his mental health, and Mishad's lawyerly made a point of saying, you know, every time Chad flew over from California to New York to meet with us at our offices, his father was there in the conference room sitting across from him, or his younger brother was there. So he had the unwavering support of his family. And that was very clear from the amount of people that turned up in the court yard.

And the judge addressed that at the end of his sentence, after he told the Shad that he wouldn't have to serve danger and he said, you know, I'd like to just address this thing's parents on a personal note, and he said, there is nothing I can see that you did wrong, and then he walked out of the courtroom.

And I think that was there was quite an emotional moment in the courtroom, especially I from the Shad parents could see that they were I think quite receptive to what he said and almost grateful because you can imagine the impact that he's had on his family.

Speaker 1

So this case is over. What's the next sentencing. Is that the final sentencing in this case.

Speaker 5

Yes, we've got one final sentencing hearing left in this FTX saga, and that is of Gary Wong. Gary Wong was the co founder at STX and helped build the exchange with Sam Bak mcfreed. He became the chief technology officer and he was also a corporating witness and get testimony at Sam's trial. He's due to be sentenced at the end of November, so it'll be interesting to see where Judge Kaplan puts him on the culpability scale because he knew about the that before STX and Animator Research

a little bit earlier than Mishad Thing did. But from the evidence that we heard a trial, he wasn't as deeply involved as Caroline Ellison was.

Speaker 1

So the judge will have to balance all that out. I know you'll be there for that, Ava, Thanks so much for bringing us inside the courtroom. That's Bloomberg Legal reporter Eva Benny Morrison, and that's it for this edition of the Bloomberg Law Podcast. Remember you've can always get the latest legal news by subscribing and listening to the show on Apple Podcasts, Spotify and at Bloomberg dot Com, slash podcast, slash Law. I'm June Grosso and this is Bloomberg

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