U.S. Government’s Precedents Challenged by Bankman-Fried’s Defense Team in Bid for Lesser Prison Term
Sam Bankman-Fried’s defense team has contested the application of legal precedent by the U.S. Department of Justice (DOJ), which is seeking a lengthy prison sentence for the former FTX CEO. In contrast to the DOJ’s recommendation of 40 to 50 years, the defense has requested a sentence of approximately 6 years. The defense team, in response to the DOJ’s sentencing memo, has raised objections to the legal cases cited by the government in a court filing on Wednesday.
Bankman-Fried’s lawyers have already criticized the DOJ for attempting to portray him as a “super villain” in a letter earlier this week. In a subsequent letter, the defense team took aim at some of the legal arguments put forth by the prosecution.
Bankman-Fried was convicted of fraud and conspiracy last year and is scheduled to be sentenced on March 28. His defense attorneys argue that a sentence of no more than 6.5 years is appropriate, considering that FTX creditors will recover their losses. In contrast, the DOJ has argued for a sentence of 40 to 50 years. Notably, a presentence investigation report recommended a sentence of 100 years, primarily due to the loss suffered by FTX when it filed for bankruptcy, which exceeded $8 billion at the time.
One of the points of contention revolves around the interpretation of a “precedent-setting” U.S. Supreme Court case called Kisor v. Wilkie. This case discussed whether punishment should be based on intended loss or actual loss. The government argues against Bankman-Fried’s attempts to have the court adopt the definition of “loss” based on the Supreme Court’s reasoning in Kisor v. Wilkie.
In response, Bankman-Fried’s defense team argues that the government’s citation of a single, non-precedential summary order from the Second Circuit is insufficient. They highlight that this order was from five years before the Kisor decision, did not address the Kisor argument, and ultimately applied actual loss instead of intended loss.
The defense argues that there has been “zero” harm to customers, lenders, and investors and therefore recommends a maximum sentence of 6.5 years. The current CEO of FTX, John J. Ray III, contradicts this claim, calling it “categorically, callously, and demonstrably false.” Ray’s team estimates that FTX’s former customers, who are now the exchange’s creditors, might recover nearly all of the value of their assets as of the date of FTX’s bankruptcy.
Judge Lewis Kaplan, presiding over Bankman-Fried’s case, will also consider other factors alongside the question of loss when determining the sentence. These factors include evidence presented at trial, character references, victim impact statements, and potential testimonies during the upcoming sentencing hearing.
Tama Kudman of Kudman Trachten Aloe Posner LLP describes the presentence report, which recommended a sentence of 100 years, as a “mechanical calculator.” She emphasizes that the defense argues against this calculation, deeming it nonsensical and draconian due to the absence of actual loss at the time of the crime.