Sam Bankman-Fried and Justice Clarence Thomas. (Photos: AP Photo/Craig Ruttle; Drew Angerer/Getty Images)
A pair of unanimous Supreme Court rulings have been making federal prosecutors’ jobs more difficult in anti-corruption cases, and one of the first beneficiaries of these precedents may be Sam Bankman-Fried, the most hated man in cryptocurrency.
On Friday, Bankman-Fried’s attorneys argued that five of the charges against their client might now be on shaky ground in the wake of the holding in U.S. v. Ciminelli, a decision authored by Justice Clarence Thomas. That ruling voided the corruption conviction of Buffalo-based contractor Louis Ciminelli, who was involved in a major development project ballyhooed by former New York Gov. Andrew Cuomo (D).
In the process, Thomas — with unanimous agreement from his colleagues — voided the so-called “right-to-control” theory of fraud prosecution holding that someone can be found guilty of wire fraud for scheming to deprive the victim of “potentially valuable economic information” needed for “discretionary economic decisions.”
His opinion, however, found that the “federal fraud statutes criminalize only schemes to deprive people of traditional property interests.”
One day after the release of the decision, Bankman-Fried’s attorneys told Senior U.S. District Judge Lewis Kaplan that five out of the 13 counts against their client may be premised on the now-defunct legal theory.
As a result, they argue, “the opinion has a direct bearing on the viability of Counts 7-9 and 1-2” of the most recent indictment, which made various fraud allegations. Those counts include conspiracy to commit wire fraud on lenders of Alameda Research, his proprietary hedge fund, wire fraud on those lenders, conspiracy to commit bank fraud, conspiracy to commit wire fraud on customers of FTX, and wire fraud on those customers.
Bankman-Fried’s attorney Christian R. Everdell does not contend that the Supreme Court decision will affect the other eight counts against his client, including alleged violations of campaign finance law and the Foreign Corrupt Practices Act.
The government’s most recent indictment accuses Bankman-Fried of directing at least $40 million in cryptocurrency bribes to Chinese officials, a claim that would remain untouched by the Supreme Court’s decision.
On the domestic front, prosecutors claim, Bankman-Fried relied upon two FTX employees, identified in court documents only as “CC-1” and “CC-2,” to send donations to different poles of the political spectrum. Prosecutors claim that Bankman-Fried colorfully anointed “CC-1” the face of left-leaning spending by telling this person that the role “will mean you giving to a lot of woke s— for transactional purposes.”
“Likewise, it was the preference of Samuel Bankman-Fried, a/k/a ‘SBF,’ the defendant, to keep contributions to Republicans ‘dark,’” his indictment alleges.
Everdell signed the single-paragraph letter, which includes a copy of the 14-page Supreme Court opinion.
This is a developing story.
Read the letter here.
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