Judge Kaplan's Ire Hits All Lawyers in the Sam Bankman-Fried Case

“This is a joke," the judge told the attorneys after a bizarre bit of testimony.

AccessTimeIconOct 19, 2023 at 10:00 a.m. UTC
Updated Oct 19, 2023 at 7:18 p.m. UTC
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We’ve entered the soul-sucking phase of Sam Bankman-Fried’s month-long criminal trial. The part where an antsy Judge Lewis Kaplan paces and glares – and then lashes out at prosecutors (and also defense lawyers) for wasting everyone’s time.

The government proffered two dud witnesses on Wednesday that probably did more harm to their working relationship with Judge Kaplan than good to their borderline airtight fraud case. Ex-FTX lobbyist Eliora Katz and the paper-pushing Google bureaucrat Cory Gaddis didn’t spend an hour on the stand between them delivering lackluster performances that peeved the no-nonsense judge.

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Late in the day, Kaplan accused prosecutors of "calling up a mannequin" in Katz, who had spent her morning testimony mumbling variations of "I don’t know anything and I didn’t work at FTX back then" in response to most every question. Her perplexing statements hinted that Katz would rather nuke her own credibility than play the game prosecutors wanted her to. That game was hardly earth-shattering: simply reading tweets and transcripts into the court record. At times, Kaplan was very clearly peeved at the sheer number of documents that Katz was asked to read into the record – especially given these were all public statements made on Twitter or uttered from the defendant's mouth in front of Congress.

As bad as she was, the Googler was worse. Gaddis, who responds to legal requests the search engine giant receives, spent his ever-so-brief testimony saying there existed metadata that (I guess) demonstrated some Google doc whose contents weren’t actually discussed had been received, or worked on, or something, by Bankman-Fried. (Editor's note: No, I'm not going to touch that sentence because it's perfect.) Then cross-examination demonstrated Gaddis didn’t know a damn thing about metadata, a revelation that threw the bench into disarray.

"We have 18 people devoting time to this case, and it's really a crime" what you’re doing to them, an exasperated Kaplan grumbled at the prosecution once the jury had left the room. He blasted them for making Gaddis fly "from Texas" to New York City to spend what couldn’t have been more than 10 minutes saying literally nothing of value.

"Lawyers are supposed to do a little better than this – and I’m talking to both sides," the judge said.

The crux of Kaplan’s indignation with both the prosecution team and defense attorneys was the result of their apparent failure to stipulate. Stipulations are how things run smoothly in a court. Some pieces of evidence are facts that both sides agree are facts. I can appear on C-SPAN and say my crypto exchange isn’t stealing anyone’s money, while also wearing a $10,000 suit I bought with their cash. Those statements notwithstanding (I pinkie swear I didn’t do it), my defense and prosecutors SHOULD be able to "stipulate" (before blabbing in front of jurors) that the video is, itself, real.

That might be what happened with Katz – or, rather, what didn’t happen. Prosecutors had an array of videos and blog posts related to Bankman-Fried’s and FTX’s representations to lawmakers and they seemed to lack stipulations for some of them. They took the long route to getting it in the record, despite actually having stipulations for a small handful of exhibits Wednesday.

The situation was even more absurd for the Google employee. During a short afternoon recess, Kaplan pressed defense lawyer Chris Everdell on why his team didn’t simply agree to a stipulation that would have eliminated entirely the need for Gaddis’ testimony.

Everdell said prosecutors gave them late notice about the evidence they’d focus on Wednesday – and then never asked for one.

Now, that’s not to say that every government witness Wednesday was a fizzler. We can’t forget finance Santa Claus: a white-bearded Australian accounting professor named Peter Easton who teaches at Notre Dame. His testimony was tantamount to beating Bankman-Fried with a sock full of coal. He dug a knife into the defense by arguing it was simply impossible for Alameda to spend billions of dollars on its various pursuits without also dipping into customer funds. On cross-examination he twisted it.

The defense did land a pretty solid punch on a different accounting expert called by the government: an FBI forensic accountant whom defense lawyers pinned in a corner for seeming to mess up her analysis of the flow-of-funds that led her to believe Alameda spent its own money on political donations. Her lip seemed to quiver from the stand.

But the day’s best zinger went to the prosecution, who, despite their frosty moments with the judge, still finished Wednesday strong. With the help of an SDNY investigator they dug through the infamous Twitter conversation between Bankman-Fried and journalist Kelsey Piper. You know the one: where Bankman-Fried curses out regulators as well as the stupid little games "woke westerners play" and bemoaned his loss of funds.

The lines sounded pretty soulless and damning. Jurors certainly thought so. At least three nodded their heads and smiled after hearing them – as if to say, "Yeah, he really did it."

— Danny Nelson

Courtroom scenes

  • Two of the government’s witnesses – Richard Busick and Shamel Medrano – brought their own water bottles, eschewing the court-provided standard bottles on the witness table.
  • We appear to be past the halfway point of this trial. Time isn’t real but it’s definitely been flying. Tempus fugit, as Kaplan says.
  • Assistant U.S. Attorney Danielle Sassoon told Kaplan she accidentally walked into the jurors' room during lunch. "I walked right out, but not before they all laughed at me," she told the court.
  • Eliora Katz, the former FTX lobbyist, really did not want to be up there. She said 11 times that she wasn’t involved in drafting FTX’s proposed policy documents or that those statements were made before she arrived at the company in April 2022.

— Nikhilesh De

What we're expecting

So, we finally heard from many of our outstanding witnesses and it turns out both Shamel Medrano (not Chanel, as a court transcript suggested) and Paige Owens were with the government. Medrano is an investigative analyst with the U.S. Attorney’s Office in the Southern District of New York, who explained tweets and direct messages, while Owens is a financial forensics expert who looked at money flows for political contributions.

The Department of Justice confirmed on Wednesday that it will not call Andria van der Merwe, a proposed expert witness, and only expects to call former FTX General Counsel Can Sun and Third Point’s Robert Boroujerdi to the stand on Thursday. Everyone expects the court day to end early on Thursday. Defense attorney Mark Cohen, asked whether the defense has a broad list of possible witnesses, said the defense is still working on it. "We’re certainly not going to rebut the expert that they didn’t call," he said. "That seems reasonable," Judge Kaplan quipped in response.

We’re then on break until Oct. 26, when the DOJ expects to rest its case. The defense, which is still not acknowledging whether or not it will actually bring a case, could begin presenting it that same day.

One note on this last point: A defense is not obligated to present a case. The burden of proof is on the government to prove beyond a reasonable doubt that Bankman-Fried committed fraud and conspiracy on the different charges he faces. The defense can just immediately rest, as if to indicate that the DOJ has not met that burden of proof. I don’t think that’s likely, and I fully expect the defense to present its case that Bankman-Fried is not guilty of the seven different charges, but Cohen and Judge Kaplan have both acknowledged this possibility, including on the first day of the trial.

"The burden of proof is always on the government," the judge told the jury before opening statements on Oct. 4. "The defendant has no burden to prove innocence, no burden to produce any evidence, no burden to testify or obligation to testify. The defendant has an absolute right to remain silent, and if that's what happens in this case, you may not consider his silence against him in any way."

— Nikhilesh De

Edited by Nick Baker.

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Danny Nelson

Danny is CoinDesk's Managing Editor for Data & Tokens. He owns BTC, ETH and SOL.

Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.


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