The seven guilty verdicts that a Manhattan jury unanimously returned last week against Sam Bankman-Fried are just the beginning of his legal perils.
The FTX founder, currently held in a Brooklyn administrative jail, has a series of decisions to make in the coming weeks and months that will shape his future.
Should he appeal his criminal convictions? What argument can he make in his own words to reduce his sentence? Does he need to prepare for a second trial on a separate set of government charges?
Here is a closer look at the road ahead:
Should he appeal?
First up is a decision about whether to appeal his criminal convictions. Bankman-Fried is not required to appeal his case, though he’s expected to do so.
And he has to make a move soon. Bankman-Fried’s notice of appeal is due two weeks from his Nov. 2 guilty verdict, and post-trial motions are due by Nov. 20.
In the event of an appeal, the appellate court has only limited factors it can consider in deciding whether to grant or deny his request, and the court’s decision is based not on a redo of Bankman-Fried’s trial but solely on the record of the trial court’s case.
Grounds for appeal can include errors made by government officials in carrying out the criminal process, errors made by Judge Kaplan in applying the law, juror misconduct, and ineffective assistance of counsel.
If errors are found, the appeals court can reverse Bankman-Fried’s convictions in whole or in part.
Can he reduce his sentence?
Bankman-Fried is due to be sentenced on March 28 of next year. The person who decides how long he spends in prison is US federal district court Judge Lewis Kaplan, who presided over Bankman-Fried’s case and admonished him on the stand, repeatedly, for not directly answering questions.
One factor that the judge could weigh is whether a longer sentence would deter others from taking similar actions, said Martin Auerbach, a white-collar criminal defense attorney and former federal prosecutor.
Another factor is the dollar amount of Bankman-Fried’s fraud.
The federal sentencing guidelines, while advisory and not mandatory, suggest a base prison term plus “loss calculation” enhancements, that suggest lengthening the term as victims’ losses increase. The calculation, Auerbach said, is a critical factor in white-collar crimes.
“I think that the challenge is that the magnitude of the loss is sufficiently great,” Auerbach said about the $10 billion to $14 billion that prosecutors argued Bankman-Fried stole from his FTX customers. “He probably tops out on the charts.”
Bankman-Fried’s convictions allow for Judge Kaplan to impose a maximum sentence of 110 years.
Before a sentence is imposed, Bankman-Fried, his lawyers, as well as government prosecutors, will be afforded an opportunity to present evidence that can include witness testimony, in support of a more lenient or stricter sentence.
Bankman-Fried will have an additional chance to make a statement, or “allocution” in court.
Those opportunities will be important, as another common factor that weighs into sentencing is whether a defendant has accepted responsibility for his criminal actions.
“Certainly the way the judge seemed to be approaching this trial was consistent with his view that Sam Bankman-Fried just did not get it. That factors in to impress upon the defendant the severity of his conduct,” Auerbach said.
Will there be a second trial?
Bankman-Fried may also have to start preparing for a second trial. That’s because there are still six criminal charges pending against him.
The charges include conspiracy to commit bank fraud, conspiracy to operate an unlicensed money transmission business, conspiracy to make illegal political contributions and defraud the Federal Election Commission, and conspiracy to violate anti-bribery laws.
In a pre-trial win for the defense, Judge Kaplan agreed to sever those charges from the government’s case.
Bankman-Fried’s lawyers successfully argued that the government should not be allowed to go forward with the charges without the agreement of the Bahamas government, since the charges were not included in its agreement to extradite Bankman-Fried from the Bahamas to the US. He was arrested in the Bahamas in December.
A trial on the additional charges is scheduled to begin jury selection on March 28; however, it’s unclear if the government is considering amending or dropping the charges.
After the jury’s verdict was read in court, Judge Kaplan asked the government’s lawyers if they intended to move forward with the charges or needed more time to decide. The government asked for more time and an update on the decision by Feb. 1.
Will he face civil penalties?
Bankman-Fried also faces the possibility of fines and bans from ever trading certain securities again.
The Securities and Exchange Commission and the CFTC both charged Bankman-Fried in December with separate fraud-related civil claims, including violating anti-fraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as fraud in connection with the sale of digital commodities.
The SEC is asking a judge to impose an injunction that prohibits Bankman-Fried from participating in any future issuance, purchase, offer, or sale of securities, except for his own personal account, to disgorge Bankman-Fried of alleged ill-gotten gains, and to block him from holding corporate director or officer positions.
In February, Judge Kaplan granted the Justice Department’s request to intervene in the cases so that the actions could be paused until the conclusion of Bankman-Fried’s parallel criminal case. The order did not state whether the matter would remain on hold until the conclusion of a second criminal case.
The CFTC in its case is seeking restitution, disgorgement, civil monetary penalties, and permanent bans that would prevent Bankman-Fried and his entities from trading and registering with the commission.
Source: Yahoo Finance