The Sam Bankman-Fried Case Isn’t What You Think

SPEAKER_1 (0:00)

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Michael Smerconish (0:30)

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SPEAKER_3 (1:10)

This is The Smerconish Podcast for Independent Minds.

Michael Smerconish (1:14)

An appellate brief has just been filed in the Supreme Court of the United States on behalf of Sam Bankman-Fried, SBF. His appellate lawyer is about to join me. I'm a close observer of this case, and here's why. Actually, for me, it begins with Michael Lewis. You know Michael Lewis from The Big Short, from Blindside, from Moneyball, from Liar's Poker. In 2023, Michael Lewis wrote a book called Going Infinite, The Rise and Fall of a New Tycoon. It was Michael Lewis' take, having spent a lot of time with Sam Bankman-Fried. And then a year later, the book came out in paperback. That's when Michael Lewis was a guest on this radio program to discuss that version of the book. That book was my introduction to Sam Bankman-Fried, the case I'd only superficially followed from afar up until then. I learned from Michael Lewis that the case is very nuanced, certainly not the black and white that I had believed from the headline. I also noted that Michael Lewis in the paperback version, that which I'm holding in my hands and in my customary faction, is all marked up and annotated and highlighted. But there was a particular line toward the end of the book that I circled and underlined where he said this, people wanted to know, I should tell you parenthetically, well, Michael Lewis, what do you think? You spent time with SBF, you wrote the book, you were knee deep in this case. What's your feeling as to his guilt or innocence? And Michael Lewis, whose opinion I hold in high regard, I think he's a smart guy, especially on financial matters, said, for most of the book, I think the truth was always closer to young person with an intellectually defensible but socially unacceptable moral code makes a huge mistake by trying to live by it. Yeah, it's a confusing case, but it's nuanced, and it's not that which many of us were led to believe from the initial press reports and even from the trial.

Thereafter, I met Joe Bankman, Sam Bankman-Fried's father. I met him because he was a law professor of a son of mine at Stanford. Then come January, by coincidence, CNN asked me if I'd be interested in interviewing Sam Bankman-Fried's parents. I readily agreed. I recognized that it was an enormous challenge because it would force me to have to read in further on this case in order to competently interview them, which I did. I spent two hours in their company, in their living room, as a matter of fact.

Ultimately, then, I formed opinions about this case, presented it, if you watch the interview, in a very straightforward manner. But I want to share just five of my personal takeaways, and then I'll welcome our special guest.

Initially, I took Sam Bankman-Fried for a crypto Bernie Madoff, meaning deliberate in his fraud and leaving thousands in his wake. Instead, I came away questioning whether he possessed the requisite mens rea, the intent to commit fraud, the same, I think, that Michael Lewis was questioning in writing Going Infinite. Second, I was surprised that he was not personally enriched. He bought a Bahamian condo that became a combination headquarters and flophouse for his co-workers, but there was no art, there was no stash, there was no personalty, there was no glam associated with Sam Bankman-Fried.

Third, I was surprised when I first learned that the victims had been or are in the process of being made whole and repaid with interest. And that's because his FTX exchange was illiquid but not insolvent. Fourth, from my personal reading of the trial transcript, it was clear to me as an attorney that the judge in this case, Judge Louis Kaplan, had an animus for Sam Bankman-Fried, a contempt that I thought was palpable in reading the transcript and certainly showed in the sentence. Which brings me to my fifth takeaway on the case of Sam Bankman-Fried, most notably 25 years for a 32-year-old first-time offender I thought was excessive, not to mention an $11 billion penalty.