That's the subtext of a motion filed on Tuesday by his
lawyers at Cohen & Gresser, who are defending Bankman-Fried against federal
charges of fraud, conspiracy and bribery. They're asking for access to
documents from Fenwick & West, the Silicon Valley law firm that represented
FTX and sister hedge fund Alameda Research from the companies' inception
through their collapse in November 2022.
Fenwick & West did not respond to my email queries. The
firm has not yet filed a response to a civil suit by FTX customers who named
Fenwick as a defendant.
Bankman-Fried has pleaded not guilty to the charges. The
defense motion claims that Fenwick & West advised him, FTX and Alameda on
at least four matters at the heart of the Manhattan federal court indictment
against the onetime crypto billionaire.
The California law firm, for instance, allegedly provided
counsel to FTX on the creation of shell companies that opened accounts at
Silvergate Bank to receive deposits from FTX customers, according to Tuesday's
motion. Those shell company bank accounts are a critical element of the
government's bank fraud conspiracy charge.
Fenwick & West also allegedly advised FTX that it was
not required to register with the U.S. government as a money transmitting
business, according to the new motion. Prosecutors have charged Bankman-Fried
with conspiring to violate wire transfer laws by failing to register but his
lawyers said in the new motion that Fenwick's alleged advice "directly
contradicts the government's theory."
Bankman-Fried's filing similarly contends that Fenwick &
West reviewed internal agreements in which Alameda loaned money to
Bankman-Fried and other FTX executives. The government alleges that the loans
were an illegal misappropriation of customer deposits as part of a scheme to
violate federal campaign finance laws. Bankman-Fried's new motion argues that
Fenwick & West's legal advice on the tax consequences of the loans might
rebut the government's contention that the loans were improper.
Finally, the motion asserts that it was Fenwick that
instructed Bankman-Fried to communicate with other FTX and Alameda executives
via Signal and other ephemeral messaging apps. That alleged advice would
undercut the government's claim that Bankman-Fried directed his colleagues to
use Signal and other encrypted communication apps to hide evidence of his
crimes.
Bankman-Fried's lawyers acknowledged in the motion that
their assertions about Fenwick & West are based on a very limited set of
documents.
The filing does not specifically invoke the words
"advice of counsel" to refute government claims that Bankman-Fried
acted with criminal intent. But Bankman-Fried's lawyers seem to be headed in
that direction, telling U.S. District Judge Lewis Kaplan of Manhattan that they
need to know more about Fenwick's work for FTX and Alameda to determine if the
law firm's documents exonerate their client.
Those documents could help Bankman-Fried later argue at
trial that he was following advice from FTX's lawyers.
Tuesday's filing asks Kaplan to order the government to turn
over evidence from Fenwick & West or to authorize Bankman-Fried to subpoena
documents from the law firm.
The firm would almost certainly rather not turn over client
files to Bankman-Fried. Among other reasons, Fenwick & West has been named
as a defendant in a sweeping class action by FTX customers. The plaintiffs'
lawyer who filed that case, Kerry Miller of Fishman Haygood, told me on
Wednesday that he plans to monitor the Bankman-Fried criminal case for any
Fenwick & West documents that might boost the class allegations.
Bankman-Fried's lawyers from Cohen & Gresser declined
comment on the new motion through a spokesperson. The Manhattan U.S. Attorney's
office also declined to comment.
Attorney-client privilege is often a complication for
white-collar defendants who want to blame their companies' lawyers for
providing bad advice. Companies - rather than individual executives or outside
law firms -- control the right to insist that communications with their counsel
remain confidential. Companies are typically reluctant to waive privilege for
fear that their lawyers' documents might be used in other cases.
Bankman-Fried's new motion said his lawyers are in
negotiations with FTX's new counsel about whether the company intends to assert
attorney client privilege over relevant Fenwick & West documents. (The
motion did not name FTX's new law firm but it is Sullivan & Cromwell.)
Defense counsel also said that Fenwick & West told them it would not turn
over any documents without FTX's permission.
The motion floats two theories for why Bankman-Fried is
entitled to access to certain Fenwick & West communications even if FTX
claims privilege. Bankman-Fried said the law firm represented him personally in
addition to serving as counsel to FTX and Alameda. That assertion seems to hint
that Bankman-Fried will claim that he can personally waive privilege over some
Fenwick & West communications.
Defense lawyers also argued that FTX, which is in Chapter 11
bankruptcy, has already waived its privilege over certain documents by turning
them over to prosecutors. If that's correct, said former federal prosecutor
Harry Sandick of Patterson Belknap Webb & Tyler, it will be easier for
Bankman-Fried to obtain Fenwick's communications.
"It's hard to see why the defense should be denied
access," Sandick said.
If Bankman-Fried's lawyers believe that Fenwick documents
can help them refute the government's evidence of criminal intent, Sandick
said, they will eventually have to make a strategic decision about how to get
the law firm's communications in front of a jury.
The documents must be introduced through a witness -
presumably Bankman-Fried himself or a Fenwick & West lawyer. The strongest
defense case, Sandick said, would probably feature testimony from a Fenwick
& West witness to bolster testimony from Bankman-Fried about his reliance
on advice from FTX lawyers. But contradictory testimony from a law firm witness
could undermine Bankman-Fried's advice-of-counsel defense.
That's a concern for another day. Right now, Sandick said,
Bankman-Fried's lawyers just want to know whether Fenwick & West's files
will help their client.
"It's an understandable motion," he said.
"They're saying, 'Let's see what the documents say, then we'll decide how
to use them.'" -Reuters
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