Cryptocurrency: Noting The Carnage

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"Effective Altruism": Could SBF's Parents Be The Key To A Plea?

https://jonathanturley.org/2022/12/15/in-loco-parentis-could-sbfs-parents-be-the-key-to-a-plea/

https://jonathanturley.org/2022/12/13/enough-of-that-the-justice-department-faces-questions-after-effectively-preventing-bankman-fried-from-testifying-in-congress/

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.