Sam Bankman-Fried’s lawyers must be ‘cringing’ from Substack post amid FTX defense: Attorney

Neama Rahmani, president of the West Coast Trial Lawyers and former federal prosecutor, joins Yahoo Finance Live anchors Dave Briggs and Seana Smith to discuss the latest developments in Sam Bankman-Fried's trial.

Video transcript

DAVE BRIGGS: Former FTX CEO Sam Bankman-Fried taking the internet once again today to defend himself amid the crypto exchange's ongoing bankruptcy case. This time, Bankman-Fried took to Substack, posting a lengthy explainer of why he believes not only that FTX did not misuse customer funds, but also FTX US remained solvent up until when he passed over the books.

Here to talk about SBF continuing to plead his case outside of the courtroom is Neama Rahmani, president of the West Coast Trial Lawyers and a former federal prosecutor. Nice to see you. This is just head scratching, to say the least. He says, I did not steal funds. I certainly did not stash billions away. Just on the surface, before we dive into it, if you're his attorney, what are you doing today?

NEAMA RAHMANI: You're cringing if you're Sam Bankman-Fried's attorney. I mean, this is what you're not supposed to do. And the reason is this. It's simple. These types of statements can only be used against you. You can't use these types of self-serving statements at trial. That would be hearsay, of course. So if you're Bankman-Fried's lawyer, you're begging, you're pleading, you're telling him, keep your mouth shut. Stay off social media. This is not going to help your case.

SEANA SMITH: Well, it certainly doesn't seem like it is helping his case so far. Question for you, just in terms of the approach that he's taken so far, basically, saying he doesn't know anything, certainly out of his control. He hasn't been involved in Alameda now for months. Any thoughts there just in terms of whether or not that sort of route could potentially help him?

NEAMA RAHMANI: Well, there's two types of defenses in these cases. It wasn't me, or I didn't know. And Bankman-Fried's taking the second approach. The problem is, you already have cooperating witnesses. You've got Gary Wang, you have Carolyn Ellison, who already pled guilty and who are testifying against him, saying that he absolutely knew what he was doing. And he directed them to falsify financial statements and to siphon money from his company. So it's going to be an uphill battle for Bankman-Fried and his defense team.

DAVE BRIGGS: He didn't mention Ellison. He didn't mention Wang. He did mention the bankruptcy counsel, which is Sullivan and Cromwell. He also mentioned general counsel Ryan Miller and saying this. S and C, Sullivan and Cromwell, and the general counsel were the primary parties strongarming and threatening me into naming the candidate they themselves chose as CEO of FTX, including for a solvent entity at FTX US, who then filed for Chapter 11 and chose Sullivan and Cromwell as counsel to the debtor entities. What do you make of that portion of his blog?

NEAMA RAHMANI: Well, there's always going to be finger pointing in these high profile fraud cases. We recently saw it with Elizabeth Holmes, right, pointing the finger at ex-boyfriend and COO Sunny Balwani. And of course, he was pointing the finger at Holmes. So this is what we're expected to see. The money is gone. Obviously, someone stole it. And even though he's the CEO, the buck stops with him. We're going to probably see some sort of shifting the blame type defense at trial.

SEANA SMITH: How long does something like this could potentially go on for? We've talked to a number of attorneys, a number of defense attorneys here over the last couple of months-- a month or two. And they're saying that this could take months, potentially years.

NEAMA RAHMANI: Yeah, these complex fraud cases are difficult to prosecute. And it's actually surprising we got an indictment so quickly, probably because prosecutors in the Southern District of New York thought that Bankman-Fried may flee. We saw a barebones indictment before the grand jury. Typically, you see much longer indictments in these types of cases.

So both from a defense perspective, I expect that we're not going to get a speedy trial here. We're going to see lots of witnesses, hundreds, maybe thousands of exhibits at trial, one that will probably last months. So strap in your seat belt. It's going to be a while before we see Bankman-Fried actually present his case to a jury.

DAVE BRIGGS: There was one sensible thing he did. He turned off the pay option. Initially, there was a button encouraging people to pay 150 bucks to listen to more of this blogging. But let's go back. He's done Twitter Spaces. He's done numerous Zooms. He sat down with Andrew Ross Sorkin and now the blog. Is there anything here to you, Neama, that you can say, all right, here is a substantive defense he might be able to use in the courtroom?

NEAMA RAHMANI: I don't see any because, again, we have those cooperating witnesses. I think the government has a very strong case because he's using these funds for personal reasons. And let's not forget, in addition to his TV interviews, in addition to social media, he was about to testify before Congress the day before he was arrested. And he was going to say he expletive up.

So this is someone who clearly thinks he's smarter than everyone else. Maybe because his parents are Stanford Law professors, he thinks he has an understanding of the law. But he is doing himself a disservice. And I don't think there's any real defense here.

DAVE BRIGGS: Do you think a plea deal is the likely end of this story, Neama?

NEAMA RAHMANI: I do think so because he's looking at so much time. His guideline range is through the roof, almost a life sentence, because we're talking about potentially the largest fraud in US history, billions of dollars. And even if you're looking at that 20-year statutory maximum for the fraud counts, if he's going to try to get anything near 10 to 15 years, like some of these other big fraudsters have gotten, like the Elizabeth Holmes and Balwanis of the world, he's going to have to plea, because if he takes this case to trial, pushes it all the way, and gets convicted, I can see a judge hammering him and sentencing him at or near the max. I know he's young, but he should do what Wang and Ellison did-- plead guilty, accept responsibility. But I don't expect that to happen.

DAVE BRIGGS: No indication of accepting responsibility. Neama Rahmani, good to have you, sir. Thank you.