Federal prosecutors have called the collapse of FTX "one of the biggest financial frauds in American history."
Sam Baman Fried's six week trial will see prosecutors pour through testimonies and mountains of internal documents. However, the most striking evidence could come from witnesses who were once Baman Fried's friends and colleagues joining us now to discuss his partner at law firm, Brian Cave Leighton Paisner, Renato Marti Renado. Welcome back to the show. Happy to be back. Right? Sam Bakeman Fried's trial begins. Today we've been talking about it for what feels like forever. What we need to get done first though is jury selection. Uh What are you expecting to happen? Oh, I think it's gonna be pretty hotly contested. Uh This is a case where uh the defendant is very well known. Uh A lot of people have strong opinions about him and don't forget really. I think that SPF here is going to be um the victim of his own success because he spent a lot of money uh advertising FCX. There's, they're very well publicized Super Bowl ads. Uh A lot of average New Yorkers are gonna have an opinion about crypto or about FTX and that's gonna be difficult to sort through and you want to really look for if you're on the defense side, jurors who have, um, you know, either strong positive opinions about him which is gonna be hard to find or people who don't have much of an opinion at all. So, uh, you know, he, he's been quite a, a, uh, a defendant because he seems to not shut up. Um, if I, and I'm using a legal term here, um, it, what happens during the trial is he, is he gonna, is he gonna take the stand for in his defense? Or do you think that if, if his lawyers say, look, Sam, you, no, just don't do it, do you? Is, can he override them? Yes. So first of all, I'll, I'll answer that question first. Yes, he can override them. In fact, the way the judge is going to instruct the defendant here is he's gonna say to SPF you have the, so you have the sole choice one way or the other, whether to take the stand, you know, he'll ask if his lawyers have advised him and has he discussed it with his lawyers? He's gonna say yes, presumably he's also then going to be told that, you know, here are some of the upsides and downsides and, you know, he's going to be told he have an absolute right either to testify or not to testify that the decision is his alone. And just to answer your earlier question, I do expect him to take the stand because as you pointed out, he doesn't shut up. And the reality is, I don't think his lawyers could possibly keep him from the stand. They'd have to chain him to counsel table in order to keep him away from the stand and, and, you know, ultimately, um, I, I think that, you know, it's also kind of a Hail Mary here. I mean, they are really looking at a very, very tough, tough, tough case. And so when you are down, uh, you know, 40 points, you know, throwing your hail Mary, a bomb into the end zone makes a lot of sense because what do you have to lose? And I think that's, that's where the defense is right now. Do you think it would work? Absolutely not. And part of the reason why is because as you point out, he's already made so many public statements, you know, one of the problems for a defendant who's made a lot of public statements already. And by the way, of course, SPF not only made those statements throughout the course of his time at F TX, but even after it was apparent that, you know, things were going down, there was bankruptcy, even after being charged, he was continually talking to journalists and writing tweets, some of which were never sent and so on. But, but under the federal rules, evidence, everything positive that he says everything that's helpful to his case, he cannot introduce without taking the stand himself. Whereas the recover can use all the negative stuff against him. And so realistically, I expect a very intense cross examination using all of the greatest hits that the government has from all of his various interviews and so on. So, one of the things that I think is kind of perplexing about this trial is that, you know, FX obviously was not regulated in the United States. It's being tried in the United States and it's kind of like exchanges in general are not regulated at a federal level, right? So, couldn't sam sort of make the argument like, well, whatever, like this is a crypto exchange, there's no rules for this. Exactly. Like nobody said that I can't do this or I can't do that. I mean, is that expected to be part of his argument because like, do you know what I mean? Like if it was a bank or something you could say like, ok, you're breaking this bank rule, but like, there aren't really rules for crypto exchanges and he's not in the US anyway. So, I mean, do you expect that to be part of his argument? I, I think that he's certainly going to try to make that argument though. The problem for him is that this is a criminal trial. The justice department and former colleagues, uh, you know, are, are portraying this as a massive fraud and that's the allegation and he's going to have some of his former colleagues the stand saying yes, this was a big fraud and essentially what the government is going to say is regardless of the state of regulation, you can't defraud people, whether you're using baseball cards, bubble gum, whatever you're trying to, to sell whatever kind of business you're running. Um You cannot try to defraud people and their claim is going to be, that's what happened here. And the problem for SBF is there are pieces of this that are not gonna add up. And I think really the focus of trial is gonna be on misrepresentations made to people who were making deposits um at uh FTX and, and I think it'll be hard for him to um explain those away, particularly given what some of his former colleagues are saying. I mean, it seems like Sam's biggest defense is basically just like it was an accident, right? And like how like how, how much does that matter if, if for some reason he manages to convince people that that's the case that like, OK, yeah, maybe you guys lost all this money but it wasn't on purpose. Like does does, does that matter? It does matter? In fact, it could be a get out of jail free car. The problem is convincing uh all the jurors of that. So when you are charged with, with fraud, the number one most challenging element for the government to prove something that the government has to prove is something called the intent to defraud in other words. If I hand you some long document, maybe I copied it off the internet, some form contract and there's a, a falsehood on page 11 that I didn't notice that's not fraud. That's inadvertence. That's a mistake. It's only fraud if I'm deliberately trying to trick you out of your money. And so that's gonna be the fault line here. And so fraud defendants usually portray themselves as overwhelmed, distracted, you know, they're juggling so many things. They didn't notice these falsehoods. The problem for, for SPF is not only the, the testimony of, of some of his former colleagues, but also the image he's built up over himself. And by the way, his own self-image even now, I mean, here's a guy uh you know, to go to a point we were talking about earlier about him not closing his mouth. He still thinks of himself as his the smartest guy in the room. You know, the, the, the the best way for him to portray himself is as a guy who was in over his head. He was young, he didn't know what he was doing. He really was not on top of things. And the problem is uh he wants to portray himself as anything but, and for many years, he tried to convince all of us that he was a visionary who was smarter than the rest of us. All right, Reinado and lastly here be Manfred's lawyers also want to block prosecutors from calling FTX investors and former insiders as witnesses, what's the likelihood that this request is going to be granted? Uh close to zero pretty much? Uh You know, he, I have to say I don't see much in the way of a defense strategy. Uh thus far that has any chance of success. You know, I've tried many, many fraud cases. Uh and, and, you know, we have many fraud cases now that, that I, that I handle, uh, I, I don't see anything here. You know, there are times when you can have an aggressive defense that's going to move the needle. None of the filings in this case suggest that the defense really has anything here that's going to potentially move the needle. He really appears like he's on a path to defeat.