Bankman-Fried May Call Experts at Up to $1,200 an Hour

Money can’t buy love or friends, but it can help you find a lot of expert witnesses.

(Bloomberg) — Money can’t buy love or friends, but it can help you find a lot of expert witnesses.

FTX co-founder Sam Bankman-Fried may call seven expert witnesses, paying them up to $1,200 an hour, to testify on his behalf at his upcoming fraud trial.

The witnesses would give evidence about campaign finance laws, valuations of FTX and its hedge fund affiliate Alameda Research and the crypto exchange’s software infrastructure and terms of service, according to a letter filed in federal court in Manhattan this week. 

The document gives an insight into how the former chief executive, who is accused of orchestrating a multibillion dollar fraud, is shaping his defense when prosecutors have a group of his former friends and colleagues poised to testify against him in October. Judge Lewis A. Kaplan revoked his bail in August after finding he likely committed witness tampering on two occasions.

A spokesman for Bankman-Fried declined to comment. The 31-year-old has pleaded not guilty to all the counts against him.

Federal prosecutors are seeking to block the witnesses however, arguing the experts will only provide testimony about Bankman-Fried’s “supposed lack of criminal knowledge or intent” gleaned from talking to others. It is not unusual for both defendants and the prosecution to use expert witnesses as part of their cases.

Prosecutors and Bankman-Fried’s defense team have recently exchanged a volley of letters about his conditions inside Brooklyn’s Metropolitan Detention Center and the rate at which evidence is being handed over. The defense wanted any discovery — including communications on the Slack messaging app from former FTX executive and cooperating witness Gary Wang’s laptop —  to be excluded from the trial because the information was given to Bankman-Fried after July 1, mere weeks before the start of the trial. 

But at a hearing on Wednesday, Judge Kaplan knocked down the request, saying “the accusation of broken promises and missed deadlines are not at all accurate.” The judge still hasn’t made a decision about whether Bankman-Fried can leave jail several days a week so he can work with his attorneys at the Manhattan federal courthouse. 

After Bankman-Fried complained about his lack of internet access in the detention center, the government organized hard drives with some legal materials to review and a laptop for him to use. 

“There are a number of procedures in place that allow him access to review discovery even seven days a week up to 70 hours if he so chooses,” federal prosecutor Danielle Kudla said. 

While Bankman-Fried’s lawyers push for more access to their client, they are also lining up experts to prepare his defense on the outside. 

Former Federal Election Commission Chairperson Bradley Smith will charge Bankman-Fried’s legal team $1,200 an hour to provide insight into US campaign finance laws and straw donors. While the government dropped a campaign finance charge against Bankman-Fried recently, prosecutors still will present evidence about how the crypto mogul allegedly had company executives make millions in political donations to influence industry regulation.

The other witnesses could charge between $400 and $1,100 an hour.

One expert witness, financial services industry consultant Peter Vinella, would opine that many allegations in Bankman-Fried’s indictment were “widely-accepted practices in the financial services industry,” including the unrestricted use of customer assets. Another possible witness, Professor Andrew Di Wu, would discuss blockchain technology and the crypto market meltdowns of 2022. 

Three of Bankman-Fried’s closest associates have pleaded guilty to fraud and agreed to cooperate with the government. 

Bankman-Fried is accused of commingling customer funds and funneling money from the exchange to spend on loans to executives, real estate purchases and high-risk trading before FTX collapsed in November 2022. 

Bankman-Fried may also rely on an advice of counsel defense, court filings show, and argue he was following the directions of FTX’s attorneys when he did many of the things prosecutors claim were illegal. 

The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).

(Adds outcome from Wednesday’s court hearing)

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