Three days into Sam Bankman-Fried’s criminal trial in Federal District Court in Manhattan, Judge Lewis A. Kaplan’s warnings to the defense had become unequivocal.
Judge Kaplan, who is presiding over the high-profile white-collar fraud case, repeatedly told Bankman-Fried’s lawyers to stop repeating themselves. Again and again, he instructed them to rephrase their questions. And with his frequent interruptions in his cross-examinations, Judge Kaplan kept Bankman-Fried’s legal team off balance, putting them on the defensive.
“I just want to express my growing concern about the extent of the totally unnecessary repetition, and I have given you a lot of latitude,” Judge Kaplan told one of Bankman-Fried’s attorneys, Christian Everdell, during a brief pause Thursday when the jury was not in the courtroom. “You’re wearing out your welcome with repetition.”
Judge Kaplan is a veteran jurist with a history of presiding over high-profile trials such as that of Mr. Bankman-Fried, 31, accused of orchestrating a scheme to misappropriate up to $10 billion that customers deposited on his crypto exchange, FTX. While he is known for his no-nonsense demeanor in the courtroom, legal experts say Judge Kaplan keeps the defense under unusual control.
Any trial has natural ebbs and flows, and the tenor of the initial stages could change during the six weeks Judge Kaplan has allotted. But after three days of testimony, the first signs have been ominous for Bankman-Fried.
“When jurors see the judge interrupt one of the attorneys and say, ‘that’s an inappropriate question, or we’ve already covered this, you’re wasting your time,’ that creates a very big problem for the defendant,” he said. Paul. Tuchmann, former federal prosecutor. “For them, the judge is a figure of immense authority.”
Mr. Bankman-Fried’s trial will resume on Tuesday with two crucial witnesses. Defense attorneys will continue to question Gary Wang, a top FTX executive, who testified last week that Bankman-Fried had ordered him to insert a secret backdoor into the company’s code that allowed the theft of customer funds. Prosecutors next plan to call Caroline Ellison, Bankman-Fried’s ex-girlfriend, who ran a cryptocurrency trading company that the government says took advantage of FTX customer deposits.
Mr. Wang and Ms. Ellison have pleaded guilty and are cooperating with authorities. Bankman-Fried pleaded not guilty to seven counts of wire fraud and conspiracy.
The tight control that Judge Kaplan exercises over the defense has potentially far-reaching implications. In criminal cases, defendants often win or lose based on their attorneys’ ability to undermine prosecution witnesses during cross-examination. Attorneys aim to find holes in the testimony, establishing enough reasonable doubt for a jury to acquit.
Judges often give defense attorneys wide latitude, glossing over issues related to how a lawyer asks questions or allowing a lawyer to delve into areas that a prosecution witness did not directly raise in initial testimony.
But so far in Bankman-Fried’s trial, Judge Kaplan has repeatedly warned defense attorneys to stop asking about facts that a witness discussed during cross-examination by prosecutors. He also accepted the prosecution’s objections to the way defense lawyers phrased their questions.
The repeated warnings have disrupted questioning, making it difficult for Bankman-Fried’s lawyers to make their points. Judge Kaplan also seemed irritated.
“Don’t do that again, Mr. Everdell,” he snapped on Friday, after prosecutors objected to a question the lawyer asked Mr. Wang.
Judge Kaplan has said his warnings are intended to keep the trial on track.
“Experienced trial judges tend to be quite sensitive to repetition that can threaten jury concentration,” said Daniel Richman, a law professor at Columbia University and former federal prosecutor.
Rachel Maimin, a former Manhattan prosecutor who appeared before Judge Kaplan, said he “maintains control of his courtroom in a way that, in the end, makes life much more efficient for jurors, lawyers and all involved”.
The disruptions have compounded the challenges Bankman-Fried’s defense attorneys were already facing. Before the trial, Judge Kaplan issued several rulings that limited the defense’s ability to raise certain issues at trial. In one of them, he expressed concern about arguments that FTX relied on the advice of outside lawyers to make many of the business decisions related to the charges against it.
Judge Kaplan has also ruled that Bankman-Fried cannot argue that the venture investors who invested $2 billion in FTX should have performed better due diligence. That had an effect in court on Thursday, when Judge Kaplan short-circuited the defense’s questioning of Matt Huang, founder of the venture firm Paradigm Capital, one of FTX’s biggest backers.
In a private conference that the jury could not hear, Judge Kaplan warned Bankman-Fried’s lawyers that their questions to Huang nearly violated the ruling that they could not suggest that investors lost money due to “credulity and negligence.” “, according to a transcript of the trial.
Judge Kaplan also hinted that the defense could expect another potentially troubling ruling. On Friday, he told lawyers to investigate the “buried facts doctrine,” which states that it is insufficient to express disclosures about an investment’s risks in opaque language or to bury them in a lengthy document filled with legal jargon.
Judge Kaplan offered no further explanation, but judges have ordered juries that they can ignore corporate disclosures buried in lengthy documents. That could potentially prevent Bankman-Fried from claiming that FTX clients and investors should have been aware of the risks associated with holding money on the exchange.
Several attorneys said it was a bit of a mystery why Judge Kaplan would raise the issue so soon. Discussions over jury instructions tend to occur in the final stages of a trial.
“It sounds like he’s coaching the prosecution on an argument to make,” said Tuchmann, the former prosecutor. “The fact that he brings it up is ominous for the defense.”
