- The U.S. Department of Justice (DOJ) presses for full disclosure from Sam Bankman-Fried on his planned advice-of-counsel defense in his upcoming fraud trial.
- The embattled former CEO of FTX faces a potential 100+ years in prison over allegations of misusing customer assets; FTX filed for bankruptcy in November 2022.
The Intricacies of an Advice-of-Counsel Defense
As October looms closer, bringing with it the much-anticipated trial of Sam Bankman-Fried, former CEO of FTX, the U.S. Department of Justice (DOJ) has raised the stakes. In a recent legal filing, the DOJ is calling for further elucidation of Bankman-Fried’s proposed advice-of-counsel defense. This plea for clarity suggests a more convoluted evidentiary landscape, given that Bankman-Fried faces grave charges, including fraud, with penalties amounting to over a century in prison.
The Fine Line Between Legal Advice and Good Faith
On August 16, Bankman-Fried notified the DOJ of his intent to invoke an advice-of-counsel defense, suggesting that legal advice from Fenwick & West LLP, as well as in-house counsel, guided his contested actions. The core of this defense strategy is the assertion that Bankman-Fried acted in “good faith,” believing his conduct was lawful due to professional legal guidance. However, the DOJ contends that the current disclosure falls short of providing a thorough understanding of the nature of the reliance on counsel.
In legal parlance, the advice-of-counsel defense requires defendants to demonstrate a good faith effort to seek legal advice, full disclosure of facts to their advisors, and actions based on said advice.
U.S. Attorney Damian Williams emphasized in the filing that mere consultation with lawyers doesn’t serve as an automatic vindication of Bankman-Fried’s actions. This argument challenges the defendant to offer more than vague statements and to produce actual evidence supporting the authenticity and depth of the legal advice he received.
Legal Complexities and Sixth Amendment Concerns
The defense team, led by attorney Mark Cohen, responded by asserting that the existing disclosures were adequate. Moreover, Cohen emphasized that current conditions, which he claims violate Bankman-Fried’s Sixth Amendment rights, hinder effective preparation for the trial. He pointed out that internet access two days a week is “woefully inadequate,” further complicating consultations for the defense strategy.
The defense also expressed concerns about the DOJ’s delayed production of discovery materials, which could impinge upon their trial preparedness. On the flip side, Bankman-Fried’s defense faces another setback as the DOJ moves to bar all seven of his proposed expert witnesses from testifying in October.
In sum, the DOJ’s push for clarity sets the stage for a highly scrutinized examination of Bankman-Fried’s advice-of-counsel defense, elevating the trial’s stakes and putting the defense under intense judicial scrutiny.