Who Are Sam Bankman-Fried's Politically Connected 'Wealthy Co-Conspirators'?

The FTX founder is accused of violating campaign financing laws by making illegal campaign contributions totaling “tens of millions of dollars" through "straw donors."

AccessTimeIconJan 4, 2023 at 8:06 p.m. UTCUpdated Jan 9, 2023 at 9:35 p.m. UTC
AccessTimeIconJan 4, 2023 at 8:06 p.m. UTCUpdated Jan 9, 2023 at 9:35 p.m. UTC
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James A. Murphy, a securities lawyer and legal writer, was the founder and chairman of law firm Murphy & McGonigle.

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FTX and Alameda Research founder Sam Bankman-Fried (SBF) was arraigned Tuesday in a Manhattan courtroom. Now attention turns to the legal process leading to an epic trial scheduled to start in October.

James A. Murphy is a securities lawyer who publishes content on legal and business issues arising in the world of digital assets and the metaverse, on Twitter @MetaLawMan and at www.MetaLawMan.io.

To recap, the indictment of SBF was made public on Dec. 13, 2022. It alleges that:

  1. SBF stole funds from FTX customers and illegally transferred them to Alameda
  2. SBF facilitated money laundering through FTX accounts
  3. SBF violated campaign finance laws

Understandably, the press focused on the big headline – that SBF had been accused of committing one of the largest financial frauds in U.S. history. But is there a time bomb ticking away in the indictment?

Far less attention was paid to the last count in the indictment: The allegation that SBF conspired with others to violate campaign finance laws. It was well-documented that SBF had been a major contributor to mostly Democratic candidates (while his colleague, Ryan Salame, was a major Republican donor).

Still, the allegations of criminal violations of campaign finance laws were new and unexpected. Interestingly, these allegations go far beyond the basic fact that SBF used stolen customer funds to make these contributions.

Damian Williams, the United States Attorney in Manhattan provided some fascinating details about the campaign finance count in his press conference, including that SBF made illegal campaign contributions totaling in the “tens of millions of dollars.”

He further explained these enormous illegal contributions were disguised to look as if they were coming from, what Williams called, SBF’s “wealthy co-conspirators.” In other words, SBF used “straw donors” to conceal the source of some of his campaign contributions to evade federal contribution limits. That’s illegal.

If these bombshell allegations are proven, what would be the implications?

First, it is telling that prosecutor Williams used the words “wealthy co-conspirators” in his press conference. Generally, it is the one who reimburses the straw donors who gets prosecuted in these kinds of cases. But the federal campaign finance laws make clear that straw donors could themselves be criminally liable as well. This should send a shiver down the spines of these as-yet unnamed wealthy co-conspirators.

Which wealthy individuals would willingly agree to serve as straw donors for SBF? Will there be some recognizable names on that list?

Second, if the allegations are proven, it would mean that all published reports of how much SBF contributed to political campaigns in 2020 and in the 2022 midterms are significantly understated. It has been reported that SBF made over $40 million in campaign contributions. All we know now, according to prosecutors, is that SBF’s real political contribution totals are “tens of millions of dollars” higher than what was reported in the official campaign finance filings.

If the “tens of millions of dollars” is true, this case would go down as one of the largest straw donor campaign finance fraud cases of all time.

Third, the indictment alleges that SBF started making his illegal campaign contributions back in 2020. This is important because in 2020 SBF was contributing to Joseph Biden's presidential campaign. SBF contributed a total of $5.2 million to Biden 2020 – that we know about, according to OpenSecrets. The obvious question an inquiring journalist should be asking is: Did the Biden 2020 campaign also receive illegal campaign contributions through SBF’s network of “wealthy co-conspirators?”

Finally, if the allegations in the indictment are true, it would be logical to scrutinize SBF’s politically active mother, Barbara Fried. The indictment alleges that SBF’s illegal campaign contributions went, not only to individual candidates, but also to “independent expenditure committees,” like political action committees (PACs). Well, it turns out that Barbara Fried was the co-founder of a secretive super PAC called Mind the Gap that directed substantial contributions to Democratic candidates in this time period.

Could Barbara Fried’s PAC have been a recipient of some of her son’s illegal campaign cash? Would SBF have even embarked upon his massive campaign of legal and allegedly illegal political spending without his mother’s knowledge or involvement? Do these dots connect?

We won’t know the answers to these questions until prosecutor Williams decides to release the names of the mysterious “wealthy co-conspirators.” These names must be disclosed to SBF’s criminal defense counsel under federal criminal procedure, so one would expect that the prosecution would let the public in on this information as well. But there has already been an unusual level of secrecy around this prosecution.

Why don’t we just end the speculation right now?

I tend to think that Barbara Fried is not on the list of “wealthy co-conspirators.” Why? Because no prosecutor in their right mind would accept Barbara Fried’s signature on a guarantee of SBF’s “$250 million” personal recognizance bond if she was under investigation for participating in SBF’s campaign finance crimes. Prosecutors don’t typically accept guarantees of a defendant’s attendance at trial from someone who is suspected of being a co-conspirator with that defendant. They wouldn’t make an exception in this case, would they?

The millions of victims of the FTX fraud have been deceived enough.

So, I say, Prosecutor Williams, let’s see that list of SBF’s “wealthy co-conspirators.”


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James A. Murphy, a securities lawyer and legal writer, was the founder and chairman of law firm Murphy & McGonigle.

James A. Murphy, a securities lawyer and legal writer, was the founder and chairman of law firm Murphy & McGonigle.