“Effective Altruism”: Could SBF’s Parents Be The Key To A Plea?
Below is my column in the New York Post on the potential liability of the parents of Sam Bankman-Fried. It is not uncommon for federal prosecutors to go after family members to induce a plea by a defendant. In this case, the reported involvement of the parents in some of operations or payments magnifies that risk.
Here is the column:
As Sam Bankman-Fried faces an eight-count indictment for his alleged massive crypto-fraud, his case could take a sudden turn toward resolution. The prosecutors may have the ultimate inducement for a plea to dangle over Bankman-Fried — actually two: Bankman and Fried.
SBF, as he’s known, is not the only person at risk here, particularly with prosecutors making repeated references to unnamed “co-conspirators.” Two at risk could prove his parents, Joseph Bankman and Barbara Fried. While there’s no proof of criminal acts on their part, Bankman-Fried surprisingly involved his parents in aspects of his alleged fraudulent operation.
If so, the case could bring new meaning to the doctrine of in loco parentis, when people act “in place of a parent” or “instead of a parent.” Federal prosecutors are notorious for targeting family members as a quarry’s vulnerability; do they see such an opening in Bankman-Fried’s parents’ role in litigating this massive alleged fraud?
Both parents of SBF and his close associate and ex-girlfriend, Alameda Research head Caroline Ellison, 28, are professors at leading universities. Ellison’s parents are Massachusetts Institute of Technology professors; Bankman-Fried’s parents are Stanford Law professors. Both children are obviously bright, precocious “fac brats” who spoke of using investments for good deeds. Ellison has said she had only one job before moving over to Alameda and finding herself making huge decisions.
Ellison is an obvious target for a cooperation agreement, and her counsel may be moving quickly to get her a chair before the music stops on the next round of indictments.
The more intriguing prospect, however, is using SBF’s parents as his most vulnerable pressure point. The Justice Department has previously targeted family members, as in the Michael Flynn case, to muscle defendants into pleas. While we’ve seen Justice give targets sharply different treatment in past cases, there’s ample reason for the parents to be concerned.
Joseph Bankman, a longtime Stanford Law School tax professor, was a paid employee of his son and helped promote the company. He spent considerable time in the Bahamas with Sam during the critical periods of alleged fraud. He and his wife may have benefited from some of the lavish expenditures the Justice Department cited in its indictment, including staying in a $16.4 million house in Old Fort Bay, a gated community in Nassau.
Stanford Law prof Barbara Fried didn’t appear to work for the company but reportedly used money from her son in her Democratic political-advocacy network. Fried, 71, resigned last month as board chairwoman of a political-donor network, Mind the Gap, which she’d helped start to support Democratic campaigns and causes.
Fried, who retired this year from Stanford, is an expert on the intersection of law and philosophy. She has notably written about effective altruism, the charitable movement her son and Ellison embraced. SBF pursued effective-altruism models while studying at MIT and later co-founded Alameda. The left heralded Bankman-Fried as showing that effective altruism had “real and growing political power, and an increasing ability to noticeably change the world.”
The inclusion of a federal election campaign financing charge only magnifies questions over Fried’s work. It’s not clear if the alleged use of false donor names included Mind the Gap donors or if Fried was aware of such alleged unlawful efforts. The couple’s spokesperson denied any involvement in the underlying matters relevant to the indictment.
The parents have the misfortune of looking like the type of low-hanging fruit prosecutors find irresistible. In an ordinary case, they would be on top of the targets list. Reports the parents are concerned they could be financially ruined by legal costs may only increase the interest in using them to pressure their son.
Other family members could also be subject to investigation, including Bankman’s sister, Barbara Miller, who works in Florida as a Democratic political consultant.
Again, it’s not clear if Justice will prove as aggressive in pursuing such collateral figures as it did with defendants like Michael Flynn. But it would likely take little to induce a plea given the weight of the evidence against Bankman-Fried.
One benefit is that a plea would make fast work of the case without a messy, drawn-out criminal process. That, however, could draw closer scrutiny. The timing of the indictment remains curious.
The Justice Department charged Bankman-Fried just before he was going to testify under oath for hours on every detail of the case. That is ordinarily a prosecutor’s dream: a potential windfall of self-incriminating statements that are fully admissible at trial. It only needed to wait a few hours but elected to stop the congressional testimony shortly before it was to start.
Pressuring his parents could be the final straw for Bankman-Fried, who is looking at a high likelihood of conviction on counts that can individually bring up to 20 years in prison. While offenses are likely to run concurrently, he can count on little sympathy from a sentencing court if convicted.
That is why a plea “in place of his parents” may be the one prospect SBF has to eke out an “effective altruistic” element to his criminal charges. This movement is based on the notion of “using evidence and careful reasoning to work out how we can do the most good with our limited resources.”
Bankman-Fried reportedly claims he is down to just $100,000 of cash in his bank. His “limited resources” may be reduced to his ability to assume the costs for others, particularly his parents. After wheeling and dealing in billions, SBF has become his own sole remaining asset. That is why the Justice Department just might offer him one final “effective altruistic” moment.
Thu, 12/15/2022 – 12:40