Prosecutors say they will not pursue second Sam Bankman-Fried trial

Indicted FTX founder Sam Bankman-Fried arrives at the United States Courthouse in New York City, July 26, 2023.

Amr Alfiky | Reuters

Prosecutors have decided not to pursue a second trial against disgraced FTX founder Sam Bankman-Fried.

In a note to Judge Lewis Kaplan on Friday, the U.S. government explained that the decision to forego a second set of proceedings had to do with the fact that much of the evidence that would have been presented in a second trial had already been submitted to the Court during Bankman-Fried’s first criminal trial.

In November, following a month’s worth of testimony from nearly 20 witnesses, a jury found the former FTX chief executive guilty of all seven criminal counts against him following a few hours of deliberation. Prosecutors added that the Court could consider the hundreds of exhibits already entered into evidence during these proceedings when he is sentenced next year.

Decades behind bars

That the jury was able to reach a unanimous verdict in a just few hours suggests that they were truly convinced and that there were no holdouts that needed to be coaxed, Yesha Yadav, law professor and Associate Dean at Vanderbilt University, told CNBC in November.

“This overwhelming consensus should give the judge confidence to follow the jury’s decisiveness by imposing a more severe sentence than a lighter one,” continued Yadav.

In this case, the statutory maximum sentence is around 115 years, but there is a sliding scale for sentencing according to recommended guidelines given the scale of the crimes and the criminal history of the defendant.

“I wouldn’t be surprised if SBF spends the next 20 or 25 years of his life in prison,” Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, told CNBC.

“The sheer scale of his fraud was immense, he was defiant and lied on the witness stand, and Judge Kaplan had very little patience for his antics while out on bond. He will have more sympathy for the victims than he has for Bankman-Fried,” added Mariotti.

Caroline Ellison, former chief executive officer of Alameda Research LLC, leaves Manhattan Federal Court after testifying during the trial of FTX CEO Sam Bankman-Fried, on October 10, 2023 in New York City.

Michael M. Santiago | Getty Images

In August, Judge Kaplan revoked Bankman-Fried’s bail and sent him back to jail for witness tampering.

“The federal sentencing guidelines will likely be sky high, but they are just that — guidelines — and the judge is required to consider all of the circumstances surrounding SBF and his offense,” said Mariotti.

Yadav added that the issue of sentencing is governed by guidelines that look to factors such as how many have been harmed and the overall dollar quantum, as well as the seriousness of the damage a defendant has inflicted.

“Here, there are some factors that could push the judge toward a very lengthy prison term, possibly close to the 110 years that the sentencing guidelines suggest,” said Yadav.

The sentence will come down to what the judge believes is sufficient to punish Bankman-Fried, deter others, and promote respect for the law, Yadav added.

Former Assistant U.S. Attorney Kevin J. O’Brien, who specializes in white-collar criminal defense in NYC, thinks Bankman-Fried has the chance at a shorter sentence, telling CNBC, “Since judges have discretion even under the Guidelines, I believe his sentence will be in the 15 to 20 year range.”

O’Brien added that given Bankman Fried’s age, he thinks the judge will be inclined to give him a chance to live a full life after his prison term.

Bankman-Fried’s case has been compared with that of Elizabeth Holmes, founder of medical device company Theranos, which ceased operations in 2018.

Holmes, 39, was convicted in early 2022 on four counts of defrauding investors in Theranos after testifying in her own defense. She was sentenced to more than 11 years in prison, and began serving her punishment in May at a minimum-security facility in Bryan, Texas.

But former federal prosecutor Paul Tuchmann tells CNBC that he expects harsher terms for the former FTX CEO, because “the amount of losses that were suffered is simply staggering.”

Tuchmann compared Bankman-Fried’s case to that of Bernie Madoff, who was sentenced to 150 years in prison.

“Like Madoff, a lot of the losses in this case were small investors. They weren’t all large institutions, which really tends to create a greater pressure for a significant sentence,” said Tuchmann.

“Certainly, there may be some mitigation here. Sam Bankman-Fried is very young. The judge may take that into consideration. Bernie Madoff went to jail for 150 years when he was obviously much older – with limited productive years left,” Yadav said of the Madoff comparison.

“Sam Bankman-Fried still has an opportunity to make some kind of positive contribution during his lifetime. His crimes are also not violent in nature,” continued Yadav.