SBF trial is imminent, what legal experts say

FTX founder and former CEO Sam Bankman-Fried (SBF) will go on trial in less than two weeks to defend himself on charges of intentional fraud and conspiracy to defraud investors and clients of FTX and Alameda Research .

Prosecutors need a unanimous jury verdict to convict SBF. The six-week trial is expected to begin on October 3, 2023, EST, just 10 months after Bankman-Fried was first arrested and less than 11 months after FTX collapsed.

To better understand the trial process, CoinDesk spoke to several legal experts, some of whom requested anonymity to discuss the high-profile case.

Jury Selection

Although the trial is set to begin next month, it will be some time before actual arguments are presented. The first step is likely to come next week, with a final pretrial conference.

Judge Lewis Kaplan of the Southern District of New York will outline the final witness schedule, how long the trial date might be, and final pending motions to rule on any issues at the meeting. Martin Auerbach, an attorney at Withersworldwide, said Judge Kaplan may also consider some motions after the jury is selected.

The second step is the voir dire (pre-screening), which will actually begin on October 3rd.

During the jury selection process, the judge will ask potential jurors a number of questions. One attorney with experience in white-collar litigation told CoinDesk he might start by broadly asking if any potential jurors plan to travel in the coming weeks or might otherwise be unable to leave work for several weeks.

They said he may also ask if any potential jurors have FTX accounts, and those people will be passed. Once these broad jury questions are completed, the judge will begin asking individuals questions that were raised by the prosecution and defense teams.

"It's likely that the defense and the prosecution will battle for every juror and it will take a long time... It won't be a yes or no question, it will be a back and forth process, so I think it will take a few days," they said.

Auerbach said that while attorneys might be able to ask questions of potential jurors at the state court level, this is federal court, so only the judge will ask the questions.

Some potential jurors may be barred from the trial if they can prove financial hardship or similar issues. Others may be barred through peremptory challenges, where attorneys can strike down a limited number of potential jurors for any reason.

Other potential jurors may demonstrate a clear bias against either defendant SBF or plaintiff the government and may be barred without counting toward the mandatory barring quota.

The process is usually quick. Given the magnitude of SBF's case, seating just 10 or 12 jurors could take days, though the Justice Department estimated in a Sept. 19 filing that it would take "most of a day."

Auerbach said there will also be alternate jurors who could ultimately be ignored unless one of the original jurors must withdraw from the case.

Both the prosecution and the defense proposed questions for the judge to ask each potential juror to eliminate anyone who might be seriously biased or unfit to serve on the jury, suggesting that Judge Kaplan ask these people if they are familiar with the case, if they have any opinions about it, or if they know (or understand) Bankman-Fried or the attorneys involved.

SBF's team also asked questions about effective altruism, political donations and lobbying, and ADHD. The Justice Department objected to these questions, arguing that they seemed designed to sway jurors to his side.

Reasonable suspicion

Once the trial begins, jurors, reporters and the public in the gallery will see the Justice Department and the defense make opening statements, followed by the Justice Department presenting evidence and questioning witnesses. In addition to written documents, prosecutors will also present audio recordings during the trial, according to pretrial documents from the U.S. Justice Department.

In this way, the witnesses will be cross-examined.

One expert told CoinDesk that the first witness called by the DOJ could help signal the strength of the case, at least in the eyes of prosecutors. The DOJ could call an FBI agent as the first witness, or it could “hit the bullseye” and immediately call in members of FTX’s inner circle.

Both sides are also seeking to provide certain expert witnesses to describe details such as the FTX code and even explain crypto basics, although there is still controversy over whether some or all of the potential witnesses should be allowed to testify.

Given that this is a criminal trial, the Justice Department must prove guilt "beyond a reasonable doubt." In contrast, in civil cases, the "preponderance of the evidence" standard is lower.

“There’s no specific percentage beyond a reasonable doubt, but you can assume it’s 90 percent or more, that you have a deep and abiding belief that the defendant is guilty,” one legal expert told CoinDesk.

They said the assistant U.S. attorneys trying the case will likely present every element of each charge and explain what evidence they have to support a conviction on each charge.

“They are tracking down every testimony, every document, to make sure there is enough in the record, and [Bankman-Fried] will inevitably argue — as every defendant argues after a trial — that they had deficiencies in this or that piece of evidence,” the expert said.

Once the prosecution adjourns, the defense will have a chance to present more witnesses. One unanswered question is whether SBF himself will testify in his own defense.

One of the people told CoinDesk that defendants in white-collar crime cases are increasingly waiving their Fifth Amendment rights and testifying in court, citing Theranos founder Elizabeth Holmes , who was convicted last year and sentenced to more than 11 years in prison, as an example.

“The idea is that jurors are so concerned about celebrity that even if they don’t know who the [defendant] is at trial, almost all of them will probably go on Twitter and the internet during the trial to research them, and the judge will tell them not to do that… But because there’s this celebrity culture around these cases, the idea is that if they don’t testify, essentially, the presumption is that they’re not testifying just because they don’t want to admit their guilt,” the expert said.

Concerns about jury pool disruption have already emerged during some pre-trial hearings, with Bankman-Fried’s defense team arguing that more than a million negative articles have been written about the FTX founder, fueling the media narrative around him.

Unanimous decision

Federal criminal trials require a unanimous verdict to convict. If the jury consists of 12 people, all 12 must be convinced of SBF's guilt by the end of the trial -- beyond a reasonable doubt.

The defense’s job may be the (relatively) simplest, convincing one juror that the evidence is insufficient or that the prosecutor has failed to make an argument for a different charge.

Auerbach said the judge will read a series of instructions explaining how they should evaluate what they heard and saw. Both the U.S. Justice Department and SBF teams presented their own jury instructions.

"[It's] a piece of paper that lists the legal elements that they have to prove beyond a reasonable doubt to convict, and if they don't prove beyond a reasonable doubt, they have to acquit, and if they can't agree, they stick to that particular legal element," he said.

The jury can ask questions, but usually those questions are reserved for the duration of deliberations. Jurors can send written questions to the judge, who will read them in court and work with the various attorneys to provide answers.

"I have to believe that in a case this complex, the jury will ask one or more questions," one legal expert said.

Another complicating factor, another person told CoinDesk, is that much of the conduct at the heart of the charges isn’t actually in question. All prosecutors have to do is convince jurors that SBF acted within the terms of the statute he’s being charged with.

One example is extraterritoriality, or extraterritorial jurisdiction. Neither the wire fraud nor the antifraud rules of the securities laws apply to defendants who conduct their activities “primarily outside the United States.” In other words, prosecutors had to prove that SBF’s conduct not only met the definition of wire fraud, but that his targets were U.S. citizens or were otherwise committed in the United States.

Bankman-Fried had lived in the Bahamas, where FTX’s global physical headquarters is located.

Another person told CoinDesk that if a jury is split, the judge could use certain tools to tell deadlocked jurors to “go back and try again.”

They said: " It's not like in the first round of voting, one juror says 'I don't believe it' and they will be told to go back and keep trying to reach a unanimous verdict."

If the jury comes back after multiple attempts to agree on a verdict saying they are irreconcilably conflicted on all counts, the judge may declare a mistrial, Auerbach said. Otherwise, the jury may agree to convict on all or some of the counts, or acquit on all or some of the counts.

Sentencing

If SBF is convicted of one or more of the charges he faces, how long he spends in prison will largely depend on Judge Kaplan.

One of the people told CoinDesk that while sentencing guidelines were once mandatory decades ago, following the Supreme Court ruling they are now viewed more as a starting point than a hard and fast rule.

There are still statutory requirements that judges must follow, but they are different from the guidelines.

The U.S. Probation and Pretrial Services system will first create a report that includes "preliminary calculations of the recommended sentencing range," the person said. The Justice Department and defense team can then file any objections, arguing for a longer or shorter sentence.

Judge Kaplan will then consider the various recommendations and make the actual sentence taking into account many other factors, including the severity of the crime.

Often, if there are multiple convictions for similar charges, a judge may choose to distill the charges down to “core misconduct.”

Given how the case has progressed so far, it is also possible that if SBF is convicted, his team will appeal. Another person said that due to the "double jeopardy" rule, the Justice Department cannot appeal a "not guilty" verdict. The legal source said: "Except for the rarest cases, the government will not appeal in all cases...Once you are released by a jury, it basically means you are released for life."

This won’t be SBF’s last criminal trial by any means. Early next year, he will face a slew of additional charges filed by the Justice Department following the initial indictment.

Given that Monday, October 9, is Columbus Day, a U.S. holiday , Judge Lewis Kaplan approved the Justice Department's move to Friday, October 6 as the trial date.