Bankman-Fried details jail discomforts in latest arraignment

MANHATTAN (CN) — Disgraced FTX founder Sam Bankman-Fried made his first courtroom appearance since his remand to federal pretrial jail, shuffling into court on Tuesday morning in tan jailhouse garb and ankle shackles.

As soon as he joined his lawyers at the defense table in the large 26th floor Manhattan courtroom, the 31-year-old crypto entrepreneur quickly took gulps from a bottle of San Pellegrino sparkling water.

Bankman-Fried entered a plea of not guilty before U.S. Magistrate Judge Sarah Netburn and waived a public reading of the superseding indictment that is set to go to trial on October 2, 2023.

While it no longer includes campaign finance charges, the seven-count superseding indictment is otherwise a reprise of the case that led to Bankman-Fried’s arrest in December 2022, alleging securities and wire fraud, money laundering, and conspiracy.

Prosecutors say Bankman-Fried cheated investors and looted customer deposits on FTX’s cryptocurrency exchange platform to make lavish real estate purchases and to make risky trades through the crypto hedge fund Alameda Research, of which he was a co-founder and majority share owner.

For the past eight months, Bankman-Fried had been on house arrest at his parents’ home in Palo Alto, California, thanks to a $250 million personal recognizance bond package. Amid allegations of witness tampering and intimidation, however, Bankman-Fried was stripped 11 days ago of that cushy bail package.

After Bankman-Fried entered his plea on Tuesday, the defense team complained about the conditions of Bankman-Fried’s pretrial hold at the Metropolitan Detention Center in Brooklyn, a facility run by the federal Bureau of Prisons.

Defense attorney Mark Cohen said Bankman-Fried has attention deficit hyperactivity disorder but has been deprived his prescribed dosage of Adderall, “which helps him focus.”

“He has not received his Adderall at all in the last 11 days,” the lawyer said. “Being denied medication to focus, your honor, that’s outrageous.”

Cohen also said that Bankman-Fried, a vegan, is subsisting on bread, water and occasionally peanut butter after being served a “flesh diet” despite his principles and dietary restrictions, which prohibit meat and dairy products.

Judge Netburn said she would contact the Bureau of Prisons about the medical and dietary issues.

Bankman-Fried’s mother, Stanford Law School professor Barbara Fried, attended the brief hearing Tuesday morning.

After losing bail earlier in the month, Bankman-Fried petitioned unsuccessfully for permission to leave his jail cell from 9 to 5, Monday to Friday, so that he can meet with counsel at the Manhattan federal courthouse every weekday until his trial.

U.S. District Judge Lewis Kaplan denied the request but allowed the defendant to meet with his counsel on Tuesday in the U.S. Marshals Office’s cellblock attorney room, from approximately 8:30 a.m. until approximately 3 p.m.

Judge Kaplan previously severed Bankman-Fried’s case into two separate trials: After a trial this fall on the counts of the initial indictment, Bankman-Fried must return for a second trial in March 2024 on five additional counts.

The U.S. Justice Department brought its original indictment back in December while Bankman-Fried was living in the Bahamas where his business was headquartered.

Bankman-Fried consented to be extradited after authorities arrested him at his palatial island compound, pursuant to a provisional arrest request from the U.S., but he signed an affidavit in which he purportedly limited such consent to the eight counts listed in a diplomatic note and arrest warrant.

U.S. Attorney Damian Williams has accused the former billionaire of conducting one of the biggest frauds in U.S. history.

Prosecutors previously accused Bankman-Fried of using the proceeds of his embezzlement scheme to make large political campaign donations that benefitted both Democratic and Republican candidates, in violation of campaign-finance laws.

According to OpenSecrets.org, a nonpartisan group that tracks campaign spending via Federal Election Commission filings, Bankman-Fried was the second biggest Democratic-leaning megadonor in the 2022 election cycle. FTX co-chief executive officer Ryan Salame separately made over $19 million in contributions to Republican campaigns.

The superseding indictment still retains accusations of Bankman-Fried misappropriating customer money to help fund over $100 million in dark money political contributions in advance of the 2022 election.

“By directing donations through [Former FTX Engineering Director Nishad] Singh and another FTX executive, Bankman-Fried was able to evade restrictions on certain types of political contributions, and thereby maximize FTX’s political influence,” the indictment states. “He leveraged this influence, in turn, to lobby Congress and regulatory agencies to support legislation and regulation he believed would make it easier for FTX to continue to accept customer deposits and grow, which would, in turn, allow the misappropriation scheme to continue. Bankman-Fried also used these connections with politicians and government officials to falsely burnish the public image of FTX as a legitimate exchange.”

The new charges allege that Bankman-Fried violated the anti-bribery provisions of the Foreign Corrupt Practices Act by directing the payment of $40 million in bribes to a Chinese official or officials to free up $1 billion in cryptocurrency assets were frozen in early 2021.

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