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Factbox: FACTBOX Georgia on his mind: Donald Trump troubled by more legal woes

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Jan 25 (Reuters) – Donald Trump could learn soon whether he or any associates will be charged or cleared of wrongdoing in a Georgia probe into his efforts to overturn his 2020 election defeat, one of a series of legal threats looming over the Republican former U.S. president:

GEORGIA ELECTION TAMPERING PROBE

On Tuesday, the prosecutor in the state of Georgia spoke to a judge on behalf of a special grand jury empanelled in May to investigate Trump’s alleged efforts to influence that state’s 2020 election results.

Fani Willis, the Fulton County district attorney and a Democrat who will ultimately decide whether to pursue charges against Trump or anyone else, said the grand jury had completed its task and decisions were “imminent.”

The investigation focuses in part on a phone call Trump made to Georgia Secretary of State Brad Raffensperger, a Republican, on Jan. 2, 2021. Trump asked Raffensperger to “find” enough votes needed to overturn Trump’s election loss in Georgia.

Legal experts said Trump may have violated at least three Georgia criminal election laws: conspiracy to commit election fraud, criminal solicitation to commit election fraud and intentional interference with performance of election duties.

Trump could argue that his discussions were constitutionally protected free speech.

U.S. CAPITOL ATTACK

The U.S. Justice Department has investigations under way into both Trump’s actions in the 2020 election and his retention of highly classified documents after departing the White House in 2021.

Both investigations involving Trump are being overseen by Jack Smith, a war crimes prosecutor and political independent. Trump has accused the FBI, without evidence, of launching the probes as political retribution.

A special House of Representatives committee investigating the deadly Jan. 6, 2021, assault by Trump supporters on the U.S. Capitol urged the Justice Department to charge Trump with corruption of an official proceeding, conspiracy to defraud the United States, conspiracy to make a false statement and inciting or aiding an insurrection.

The request is non-binding. Only the Justice Department can decide whether to charge Trump, who has called the Democratic-led panel’s investigation a politically motivated sham.

MISSING GOVERNMENT RECORDS

U.S. Attorney General Merrick Garland appointed Smith to investigate whether Trump improperly retained classified records at his Florida estate after he left office in 2021 and then tried to obstruct a federal investigation.

Garland also appointed former U.S. Attorney Robert Hur for Maryland to investigate the removal of classified records in President Joe Biden’s possession dating to his time as vice president.

It is unlawful to willfully remove or retain classified material.

In Trump’s case, the FBI seized 11,000 documents from the former president’s Mar-a-Lago Florida estate in a court-approved Aug. 8 search. About 100 documents were marked classified; some were designated top secret, the highest level of classification.

Trump has accused the Justice Department of engaging in a partisan witch hunt.

NEW YORK ATTORNEY GENERAL CIVIL LAWSUIT

New York Attorney General Letitia James said in a civil lawsuit filed in September that her office uncovered more than 200 examples of misleading asset valuations by Trump and the Trump Organization business between 2011 and 2021.

Former U.S. President Donald Trump speaks during a rally in Commerce, Georgia, U.S. March 26, 2022. REUTERS/Alyssa Pointer/File Photo

A Democrat, James accused Trump of inflating his net worth by billions of dollars to obtain lower interest rates on loans and get better insurance coverage.

A New York judge ordered that an independent monitor be appointed to oversee the Trump Organization before the case goes to trial in October 2023.

James seeks to permanently bar Trump and his children Donald Jr., Eric and Ivanka Trump from running companies in New York state, and to prevent them and his company from buying new properties and taking out new loans in the state for five years.

James also wants the defendants to hand over about $250 million that she says was obtained through fraud.

Trump has called the attorney general’s lawsuit a witch hunt. A lawyer for Trump has called James’ claims meritless.

James said her probe also uncovered evidence of criminal wrongdoing, which she referred to federal prosecutors and the Internal Revenue Service for investigation.

DEFAMATION CASE

E. Jean Carroll, a former Elle magazine writer, has filed two lawsuits accusing Trump of having defamed her when he denied her allegation that he raped her in New York’s Bergdorf Goodman department store dressing room in late 1995 or early 1996.

Trump accuses her of lying to drum up sales for a book.

Carroll first sued Trump after he denied the accusation in June 2019 and told a reporter at the White House that he did not know Carroll, that “she’s not my type,” and that she concocted the claim to sell her new memoir.

The second lawsuit arose from an October 2022 social media post where Trump called the rape claim a “hoax,” “lie,” “con job” and “complete scam,” and said “this can only happen to ‘Trump’!”

That lawsuit includes a battery claim under the Adult Survivors Act, which starting last Nov. 24 gave adults a one-year window to sue their alleged attackers even if statutes of limitations have expired.

A U.S. judge on Jan. 13 rejected as “absurd” Trump’s effort to dismiss the second lawsuit.

Trump and Carroll are awaiting a decision from a Washington, D.C., appeals court on whether, under local law, Trump should be immune from Carroll’s first lawsuit over his June 2019 comments.

That lawsuit would likely be dismissed if the court decided that Trump spoke within his role as president, and continue if Trump spoke in his personal capacity as Carroll argues.

Any decision would have no effect on Carroll’s second defamation and battery lawsuit. A trial in the first lawsuit is scheduled for April 10.

NEW YORK CRIMINAL PROBE

Although Trump was not charged with wrongdoing, his real estate company was found guilty on Dec. 6 of tax fraud in New York state. A judge this month sentenced Trump’s namesake real estate company to pay a $1.6 million criminal penalty, the maximum the judge could impose.

Jurors convicted the Trump Organization, which operates hotels, golf courses and other real estate around the world, of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.

Weisselberg, the company’s former chief financial officer, pleaded guilty and was required to testify against the Trump Organization as part of his plea agreement. He is also a defendant in James’ civil lawsuit.

Reporting by Joseph Ax, Luc Cohen, Karen Freifeld, Sarah N. Lynch, Jonathan Stempel and Jacqueline Thomsen; Editing by Howard Goller

Our Standards: The Thomson Reuters Trust Principles.

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Business

T-Mobile says investigating data breach involving 37 mln accounts

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Jan 20 (Reuters) – T-Mobile (TMUS.O), the No.3 U.S. wireless carrier by subscribers, said on Thursday it was investigating a data breach involving 37 million postpaid and prepaid accounts and that it could incur significant costs related to the incident.

The company, which has more than 110 million subscribers, said it identified malicious activity on Jan. 5 and contained it within a day, adding that no sensitive data such as financial information was compromised.

However, some basic customer data — such as name, billing address, email and phone number — was obtained, and it had begun notifying impacted customers, said T-Mobile.

“Our investigation is still ongoing, but the malicious activity appears to be fully contained at this time, and there is currently no evidence that the bad actor was able to breach or compromise our systems or our network,” the company said.

The U.S. Federal Communications Commission (FCC) has opened an investigation into the data breach, the Wall Street Journal reported on Thursday, citing an FCC spokesperson.

FCC and T-Mobile did not immediately respond to Reuters’ requests for comment on the reported investigation.

“While these cybersecurity breaches may not be systemic in nature, their frequency of occurrence at T-Mobile is an alarming outlier relative to telecom peers,” said Neil Mack, senior analyst for Moody’s Investors Service.

“It could negatively impact customer behavior, cause churn to spike and potentially attract the scrutiny of the FCC and other regulators.”

Last year, T-Mobile agreed to pay $350 million and spend an additional $150 million to upgrade data security to settle litigation over a cyberattack in 2021 that compromised information belonging to an estimated 76.6 million people.

The Bellevue, Washington-based company’s shares fell 2% in after-hours trade.

Reporting by Eva Mathews and Lavanya Ahire in Bengaluru; Editing by Sriraj Kalluvila, Maju Samuel, Rashmi Aich and Savio D’Souza

Our Standards: The Thomson Reuters Trust Principles.

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Donald Trump’s company to be sentenced for 15-year tax fraud

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NEW YORK, Jan 13 (Reuters) – Donald Trump on Friday will learn how the company that bears the former U.S. president’s name will be punished after being found guilty of scheming to defraud tax authorities for 15 years.

A New York state judge will impose the sentence after jurors in Manhattan found two Trump Organization affiliates guilty of 17 criminal charges last month.

The sentencing comes three days after Justice Juan Merchan of the Manhattan criminal court ordered Allen Weisselberg, who worked for Trump’s family for a half-century and was the company’s former chief financial officer, to jail for five months after he testified as the prosecution’s star witness.

Trump’s company faces only a maximum $1.6 million penalty, but has said it plans to appeal. No one else was charged or faces jail time in the case.

Manhattan District Attorney Alvin Bragg’s office, which brought the case, is still conducting a criminal probe into Trump’s business practices.

Bill Black, a professor at the University of Missouri-Kansas City School of Law specializing in white-collar crime, called the expected penalty a “rounding error” that offers “zero deterrence” to others, including Trump.

“This is a farce,” he said. “No one will stop committing these kinds of crimes because of this sentence.”

The case has long been a thorn in the side of the Republican former president, who calls it part of a witch hunt by Democrats who dislike him and his politics.

Trump also faces a $250 million civil lawsuit by state Attorney General Letitia James accusing him and his adult children Donald Trump Jr., Ivanka Trump and Eric Trump of inflating his net worth and the value of his company’s assets to save money on loans and insurance.

Bragg and James are Democrats, as is Bragg’s predecessor Cyrus Vance, who brought the criminal case. Trump is seeking the presidency in 2024, after losing his re-election bid in 2020.

At a four-week trial, prosecutors offered evidence that Trump’s company covered personal expenses such as rent and car leases for executives without reporting them as income, and pretended that Christmas bonuses were non-employee compensation.

Trump himself signed bonus checks, prosecutors said, as well as the lease on Weisselberg’s luxury Manhattan apartment and private school tuition for the CFO’s grandchildren.

“The whole narrative that Donald Trump was blissfully ignorant is just not real,” Assistant District Attorney Joshua Steinglass told jurors in his closing argument.

Weisselberg’s testimony helped convict the company, though he said Trump was not part of the fraud scheme. He also refused to help Bragg in his broader investigation into Trump.

The Trump Organization had put Weisselberg on paid leave until they severed ties this week. His lawyer said the split, announced on Tuesday, was amicable.

Weisselberg, 75, is serving his sentence in New York City’s notorious Rikers Island jail.

State law limits the penalties that Justice Merchan can impose on Trump’s company. A corporation can be fined up to $250,000 for each tax-related count and $10,000 for each non-tax count.

Trump faces several other legal woes, including probes related to the Jan. 6, 2021, attack on the U.S. Capitol, his retention of classified documents after leaving the White House, and efforts to overturn his 2020 election loss in Georgia.

Reporting by Karen Freifeld and Jonathan Stempel; editing by Jonathan Oatis

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Trump executive Weisselberg prepares for jail on Rikers Island

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NEW YORK, Jan 10 (Reuters) – A longtime executive for Donald Trump is expected to be sent to New York’s notorious Rikers Island jail after being sentenced on Tuesday for helping engineer a 15-year tax fraud scheme at the former president’s real estate company.

Allen Weisselberg, the Trump Organization’s former chief financial officer, pleaded guilty in August, admitting that from 2005 to 2017 he and other executives received bonuses and perks that saved the company and themselves money.

Weisselberg is expected to be sentenced to five months behind bars, after paying nearly $2 million in taxes, penalties and interest and testifying at the criminal trial of the Trump Organization, which was convicted on all counts it faced.

The sentence will be imposed by Justice Juan Merchan, who oversaw the trial in a New York state court in Manhattan. Weisselberg would likely serve 100 days with time off for good behavior.

Those days will probably not be easy for Weisselberg, 75, at a jail known for violence, drugs and corruption. Nineteen inmates there died last year.

“You’re going into a byzantine black hole,” said Craig Rothfeld, a prison consultant helping Weisselberg prepare for lockup.

50-YEAR RELATIONSHIP

Many convicts in New York City facing one year or less behind bars head to Rikers Island, which lies between the New York City boroughs of Queens and the Bronx and houses more than 5,900 inmates.

Rothfeld spent more than five weeks at Rikers in 2015 and 2016 as part of an 18-month sentence for defrauding investors and tax authorities when he was chief executive of the now-defunct WJB Capital Group Inc.

He now runs Inside Outside Ltd, which advises people facing incarceration. Another client is Harvey Weinstein, the former Hollywood movie producer convicted twice of rape.

After being sentenced, Weisselberg will likely be driven to Rikers and trade his street clothes for a uniform and sneakers with velcro straps.

Rothfeld said he hopes Weisselberg will be segregated from the general population, and not placed in a dorm with inmates who may not know him but will know his boss, who is seeking the presidency in 2024.

“Certainly Mr. Weisselberg’s 50-year relationship with the former president is on all our minds,” Rothfeld said.

A spokesman for the city’s Department of Correction said the agency’s mission is “to create a safe and supportive environment for everyone who enters our custody.”

Rikers is scheduled to close in 2027.

STAR WITNESS

Weisselberg was the star government witness against his employer.

He told jurors that Trump signed bonus and tuition checks, and other documents at the heart of prosecutors’ case, but was not in on the tax fraud scheme.

Though no longer CFO, Weisselberg remains on paid leave from the Trump Organization. He testified in November that he hoped to get a $500,000 bonus this month.

Weisselberg testified that the company is paying his lawyers. It is paying Rothfeld as well, a person familiar with the matter said. Rothfeld declined to comment.

Trump was not charged and has denied wrongdoing. The Manhattan District Attorney’s office is still investigating his business practices.

Merchan will also sentence the Trump Organization on Friday. Penalties are limited to $1.6 million.

Weisselberg remains a defendant in New York Attorney General Letitia James’ $250 million civil lawsuit alleging that Trump and his company inflated asset values and Trump’s net worth.

Rothfeld said he advised Weisselberg not to go outside at Rikers because of the risk of violence in courtyards, and not to interject himself into conversations between other inmates.

“The goal is to keep to yourself,” Rothfeld said.

Reporting by Karen Freifeld; Editing by Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

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Business

Exclusive: FTX’s former top lawyer aided U.S. authorities in Bankman-Fried case

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Jan 5 (Reuters) – FTX’s former top lawyer Daniel Friedberg has cooperated with U.S. prosecutors as they investigate the crypto firm’s collapse, a source familiar with the matter said, adding pressure on founder Sam Bankman-Fried who was arrested on criminal fraud charges last month.

Friedberg gave details about FTX in a Nov. 22 meeting with two dozen investigators, the person said. The meeting, held at the U.S. Attorney for the Southern District of New York’s office included officials from the Justice Department, Federal Bureau of Investigation, and the U.S. Securities and Exchange Commission, the source said. Emails between attendees scheduling the meeting with those agencies were seen by Reuters.

At the meeting, he told prosecutors what he knew of Bankman-Fried’s use of customer funds to finance his business empire, the source said. Friedberg recounted conversations he had with other top executives on the subject and provided details of how Bankman-Fried’s hedge fund Alameda Research functioned, the source said.

Friedberg’s cooperation has not been previously reported. He has not been charged and has not been told he is under criminal investigation, the source said. Instead, he expects to be called as a government witness in Bankman-Fried’s October trial, the person said.

Friedberg’s lawyer, Telemachus Kasulis, the FBI and FTX did not respond to requests for comment on his cooperation. The SEC, the Department of Justice and Bankman-Fried’s spokesman declined to comment.

Bankman-Fried is accused of diverting billions of dollars in FTX client funds to Alameda to bankroll venture investments, luxury real estate purchases, and political donations. On Tuesday, he pleaded not guilty in Manhattan federal court.

Manhattan U.S. Attorney Damian Williams, who is leading the criminal case against now bankrupt FTX, said last month: “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it.”

Two of Bankman-Fried’s closest associates, Caroline Ellison, Alameda’s former chief executive, and Gary Wang, FTX’s former chief technology officer, pleaded guilty to fraud and agreed to cooperate. A lawyer for Ellison didn’t respond to a request for comment. Wang’s lawyer declined to comment.

MEETING WITH PROSECUTORS

FTX filed for bankruptcy protection on Nov. 11. A few days later, on Nov. 14, Friedberg received a call from two FBI agents based in New York. He told them he was willing to share information but needed to ask FTX to waive his attorney-client privilege, according to a person familiar with the matter and emails viewed by Reuters.

Friedberg wrote to FTX the next day asking the company to waive his privilege so he could cooperate with prosecutors, according to the email seen by Reuters. FTX did not do so, but agreed with Friedberg on the points he could disclose to investigators, the person said.

Friedberg then wrote back to the two FBI agents, telling them in an email reviewed by Reuters: “I want to cooperate in all respects.”

The U.S. Attorney’s Office set up a meeting where Friedberg signed so-called proffer letters prepared for him by the SEC and other agencies, according to the source and an email exchanged by participants. Proffer letters typically describe a potential agreement between authorities and individuals who are witnesses or subjects of an investigation.

“THROUGH THICK AND THIN”

Prior to his work advising FTX, Friedberg advised a mix of banking, fintech, and online gaming companies.

One of his previous employers, a Canadian online gaming firm named Excapsa Software, where he was general counsel, also drew controversy due to a cheating scandal involving a poker site it operated called Ultimate Bet. A Canadian gaming commission in 2008 fined Ultimate Bet $1.5 million for failing to enforce measures to prevent fraudulent activities. Excapsa has since dissolved.

According to an audio recording available on the website PokerNews, Friedberg and some other Ultimate Bet associates privately discussed that year how to handle the scandal and minimize the amount of refunds owed to players. Friedberg previously told NBC News that the audio was illegally recorded but NBC’s article did not say that Friedberg challenged its authenticity.

Friedberg first represented Bankman-Fried in 2017 as outside counsel while at U.S. law firm Fenwick & West, where he chaired its payment systems group, the source familiar with the matter said. At the time, the source said Friedberg advised Bankman-Fried on running Alameda, which he founded that year.

In 2020, when Bankman-Fried launched a separate exchange for U.S. customers called FTX.US, Friedberg moved in-house as FTX’s chief regulatory officer.

In a now-deleted blog post published that year on FTX’s website, Bankman-Fried wrote that Friedberg was FTX’s legal advisor “from the very beginning,” noting he had been “with us through thick and thin.”

Friedberg resigned from his position on Nov. 8, a day after Bankman-Fried disclosed to top executives that FTX was almost out of money, according to the source and three other people briefed on the talks, along with text messages his legal team exchanged at the time.

Additional reporting by Hannah Lang; editing by Megan Davies and Anna Driver

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Sam Bankman-Fried to enter plea in FTX fraud case

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NEW YORK, Dec 28 (Reuters) – Sam Bankman-Fried is expected to enter a plea next week to criminal charges he defrauded investors and looted billions of dollars in customer funds at his failed FTX cryptocurrency exchange.

The 30-year-old is expected to be arraigned on the afternoon of Jan. 3, 2023, before U.S. District Judge Lewis Kaplan in Manhattan federal court, court records on Wednesday showed.

Kaplan was assigned to the case on Tuesday, after the original judge recused herself because her husband’s law firm had advised FTX before its collapse.

Prosecutors have accused Bankman-Fried of engaging in a years-long “fraud of epic proportions,” by using customer deposits to support his Alameda Research hedge fund firm, buy real estate and make political contributions.

Bankman-Fried is charged with two counts of wire fraud and six counts of conspiracy, including to launder money and commit campaign finance violations, and if convicted could spend decades in prison.

Before his Dec. 12 arrest, Bankman-Fried acknowledged risk-management failures at FTX, but said he did not believe he was criminally liable.

Two of his associates, former Alameda chief executive Caroline Ellison and former FTX chief technology officer Gary Wang, have pleaded guilty over their roles in FTX’s collapse and agreed to cooperate with prosecutors.

A lawyer for Bankman-Fried did not immediately respond to requests for comment.

Bankman-Fried was released on Dec. 22 on a $250 million bond and ordered to stay with his parents in Palo Alto, California, where they teach at Stanford Law School. He is subject to electronic monitoring.

FTX filed for bankruptcy protection on Nov. 11. Its new chief executive, John Ray, told Congress on Dec. 13 that the exchange lost $8 billion of customer money while being run by “grossly inexperienced, non-sophisticated individuals.”

Reporting by Jonathan Stempel in New York
Editing by Matthew Lewis

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Bankman-Fried, FTX execs received billions in hidden loans, ex-Alameda CEO says

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NEW YORK, Dec 23 (Reuters) – Sam Bankman-Fried and other FTX executives received billions of dollars in secret loans from the crypto mogul’s Alameda Research, the hedge fund’s former chief told a judge when she pleaded guilty to her role in the exchange’s collapse.

Caroline Ellison, former chief executive of Alameda Research, said she agreed with Bankman-Fried to hide from FTX’s investors, lenders and customers that the hedge fund could borrow unlimited sums from the exchange, according a transcript of her Dec. 19 plea hearing that was unsealed on Friday.

“We prepared certain quarterly balance sheets that concealed the extent of Alameda’s borrowing and the billions of dollars in loans that Alameda had made to FTX executives and to related parties,” Ellison told U.S. District Judge Ronnie Abrams in Manhattan federal court, according to the transcript.

Ellison and FTX co-founder Gary Wang both pleaded guilty and are cooperating with prosecutors as part of their plea agreements. Their sworn statements offer a preview of how two of Bankman-Fried’s former associates might testify at trial against him as prosecution witnesses.

In a separate plea hearing, also on Dec. 19, Wang said he was directed to make changes to FTX’s code to give Alameda special privileges on the trading platform, while being aware that others were telling investors and customers that Alameda had no such privileges.

Wang did not specify who gave him those directions.

Nicolas Roos, a prosecutor, said in court on Thursday that Bankman-Fried’s trial would include evidence from “multiple cooperating witnesses.” Roos said Bankman-Fried carried out a “fraud of epic proportions” that led to the loss of billions of dollars of customer and investor funds.

Bankman-Fried has acknowledged risk-management failures at FTX but said he does not believe he has criminal liability. He has not yet entered a plea.

Bankman-Fried founded FTX in 2019 and rode a boom in the values of bitcoin and other digital assets to become a billionaire several times over as well as an influential donor to U.S. political campaigns.

A flurry of customer withdrawals in early November amid concerns about commingling of FTX funds with Alameda prompted FTX to declare bankruptcy on Nov. 11.

Bankman-Fried, 30, was released on Thursday on $250 million bond. His spokesperson declined to comment on Ellison and Wang’s statements.

Lawyers for Wang and Ellison declined to comment.

Ellison told the court that when investors in June 2022 recalled loans they had made to Alameda, she agreed with others to borrow billions of dollars in FTX customer funds to repay them, understanding that customers were not aware of the arrangement.

“I am truly sorry for what I did,” Ellison said, adding that she is helping to recover customer assets.

Wang also said he knew what he was doing was wrong.

The transcript of Ellison’s hearing was initially sealed out of concern that the disclosure of her cooperation could thwart prosecutors’ efforts to extradite Bankman-Fried from the Bahamas, where he lived and where FTX was based, court records showed.

Bankman-Fried was arrested in the capital Nassau on Dec. 12 and arrived in the United States on Wednesday after consenting to extradition.

A magistrate judge ordered him confined to his parents’ California home until trial.

On Friday evening, Abrams recused herself from the case, saying in a court order that the law firm Davis Polk & Wardwell LLP, where her husband is a partner, advised FTX in 2021.

The firm also represented parties that could be adverse to FTX and Bankman-Fried in other proceedings, the judge said, and while her husband had no involvement in these matters, which “were confidential and their substance is unknown to the Court,” she was recusing herself to avoid a possible conflict.

Reporting by Luc Cohen in New York; Writing by Tom Hals in Wilmington, Del.; Editing by Noeleen Walder, Matthew Lewis and Daniel Wallis

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

Tom Hals

Thomson Reuters

Award-winning reporter with more than two decades of experience in international news, focusing on high-stakes legal battles over everything from government policy to corporate dealmaking.

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Business

In sweltering Bahamas courtroom, Bankman-Fried fights incarceration

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NASSAU, Dec 13 (Reuters) – Cordoned-off roads, a sweltering courtroom and numerous delays marked Sam Bankman-Fried’s first in-person public appearance since his crypto company collapsed.

The Bahamas courtroom hearing, conducted over the course of six hours, saw Bankman-Fried, dressed in a suit rather than his typical t-shirt attire, seeking bail to dispute his extradition to the U.S. He was ultimately refused and faces possible extradition to the United States.

It was a stunning fall from grace for the crypto boss, once estimated by Forbes as worth as much as $26.5 billion.

“I’m not waiving,” Bankman-Fried said when asked if he would seek to waive his right to an extradition hearing.

It was a rare comment in a hearing that was largely taken up with lawyers discussing process. In another comment, Bankman-Fried referred to the night of his arrest as “hectic.”

There was high anticipation ahead of the appearance by Bankman-Fried, who has done numerous media interviews since his firm collapsed but not been widely seen in public.

The day started with Bankman-Fried ushered into court away from the main entrance and photographers and reporters who crowded to get a shot.

Bahamas Chief Magistrate JoyAnn Ferguson-Pratt contributed witty asides that often left the courtroom chuckling, once quipping “I wasn’t born yesterday” at the defense counsel’s interpretation of the law.

Ferguson-Pratt’s repeatedly forgetting the defendant’s last name led to laughter.

“Samuel,” she said before trailing off, with the once-billionaire crypto magnate reminding her of his name: “Bankman-Fried.”

People in the courtroom fanned themselves to keep cool in the tropical heat as sun shone through the windows.

The hearing was adjourned twice, once to consult about the court’s jurisdiction to grant bail, and again in the afternoon.

It also included an extensive discussion of Bankman-Fried’s medication, which his lawyer said was for conditions including depression, insomnia and attention deficit disorder.

At the start of the proceedings, Bankman-Fried asked to change an Emsam patch, a medical strip applied to the skin that is used to treat adult depression. He asked to briefly leave the court room to take the medication.

Bankman-Fried acknowledged that he had not taken his medications with him when he was arrested, which he attributed to having had a “hectic night”.

His parents, Joseph Bankman and Barbara Fried, at times seemed frustrated with the arguments made by the prosecution, which described him as a flight risk.

Bankman-Fried’s defense counsel pointed out that Bankman-Fried had spent weeks in The Bahamas after his business collapsed without attempting to leave the country.

At the end of the hearing, his head lowered, he hugged his parents. A van outside the court waited to take him away.

Reporting by Jared Higgs in Nassau and Brian Ellsworth in Miami; editing by Megan Davies, Noeleen Walder and Sam Holmes

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FTX founder Sam Bankman-Fried charged with fraud, denied bail

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NASSAU, Bahamas/NEW YORK, Dec 13 (Reuters) – U.S. prosecutors on Tuesday accused Sam Bankman-Fried, the founder of crypto currency exchange FTX, of fraud and violating campaign finance laws and a judge in the Bahamas denied him bail, sending him to a local correctional facility instead.

The former FTX CEO, who was arrested in the Bahamas on Monday, lowered his head and hugged his parents after the magistrate judge refused bail citing a “great” risk of flight.

He was ordered remanded to a correctional facility in the island nation until Feb. 8, where he will initially held in the medical department, according to a local official.

The day’s events capped a stunning fall from grace in recent weeks for the 30-year-old, who amassed a fortune valued over $20 billion as he rode a cryptocurrency boom to build FTX into one of the world’s largest exchanges before it abruptly collapsed this year.

Bankman-Fried has previously apologized to customers and acknowledged oversight failings at FTX, but said he does not personally think he has any criminal liability.

Earlier on Tuesday, U.S. Attorney Damian Williams in New York said Bankman-Fried made illegal campaign contributions to Democrats and Republicans with “stolen customer money,” saying it was part of one of the “biggest financial frauds in American history.”

“While this is our first public announcement, it will not be our last,” he said, adding Bankman-Fried “made tens of millions of dollars in campaign contributions.”

Bankman-Fried faces a maximum sentence of 115 years in prison if convicted on all eight counts, prosecutors said, though any sentence would depend on a range of factors.

Williams declined to say whether prosecutors would bring charges against other FTX executives and whether any FTX insiders were cooperating with the investigation.

In his first in-person public appearance since the cryptocurrency exchange’s collapse, Bankman-Fried appeared in court on Tuesday in the Bahamas, where FTX is based and where he was arrested at his gated community in the capital, Nassau.

He appeared relaxed when he arrived at the heavily guarded Bahamas court and told the court he could fight extradition to the United States.

Bahamian prosecutors had asked that Bankman-Fried be denied bail if he fights extradition.

“Mr. Bankman-Fried is reviewing the charges with his legal team and considering all of his legal options,” his lawyer, Mark S. Cohen, said in an earlier statement.

‘BRAZEN’ SCHEME

[1/12] Sam Bankman-Fried, who founded and led FTX until a liquidity crunch forced the cryptocurrency exchange to declare bankruptcy, is escorted out of the Magistrate Court building, last month he was arrested after being criminally charged by U.S. prosecutors, in Nassau, Bahamas December 13, 2022. REUTERS/Dante Carrer

FTX’s current CEO, John Ray, told congressional lawmakers on Tuesday that FTX lost $8 billion of client money, saying the company showed “absolute concentration of control in the hands of a small group of grossly inexperienced, nonsophisticated individuals.”

In the indictment unsealed on Tuesday morning, U.S. prosecutors said Bankman-Fried had engaged in a scheme to defraud FTX’s customers by misappropriating their deposits to pay for expenses and debts and to make investments on behalf of his crypto hedge fund, Alameda Research LLC.

He also defrauded lenders to Alameda by providing false and misleading information about the hedge fund’s condition, and sought to disguise the money he had earned from committing wire fraud, prosecutors said.

Both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) alleged Bankman-Fried committed fraud in lawsuits filed on Tuesday.

The CFTC sued Bankman-Fried, Alameda and FTX on Tuesday, alleging fraud involving digital commodity assets.

Since at least May 2019, FTX raised more than $1.8 billion from equity investors in a years-long “brazen, multi-year scheme” in which Bankman-Fried concealed FTX was diverting customer funds to Alameda Research, the SEC alleged.

CRYPTO INVESTORS LOST BILLIONS

Bankman-Fried, who founded FTX in 2019, was an unconventional figure who sported wild hair, t-shirts and shorts on panel appearances with statesmen like former U.S. President Bill Clinton. He became one of the largest Democratic donors, contributing $5.2 million to President Joe Biden’s 2020 campaign. Forbes pegged his net worth a year ago at $26.5 billion.

FTX filed for bankruptcy on Nov. 11, leaving an estimated 1 million customers and other investors facing losses in the billions of dollars. The collapse reverberated across the crypto world and sent bitcoin and other digital assets plummeting.

The collapse was one of a series of bankruptcies in the crypto industry this year as digital asset markets tumbled from 2021 peaks. A crypto exchange is a platform on which investors can trade digital tokens such as bitcoin.

As legal challenges mount, the U.S. Congress is also looking at crafting legislation to rein in a loosely-regulated industry.

FTX has shared findings with the SEC and U.S. prosecutors, and is investigating whether Bankman-Fried’s parents were involved in the operation.

The attorney general’s office of the Bahamas said it expected Bankman-Fried to be extradited to the United States.

Bankman-Fried resigned as FTX’s CEO the same day as the bankruptcy filing. FTX’s liquidity crunch came after he secretly used $10 billion in customer funds to support his proprietary trading firm Alameda, Reuters has reported. At least $1 billion in customer funds had vanished.

Additional reporting by Luc Cohen and Jack Queen in New York and Hannah Lang, Chris Prentice and Susan Heavey in Washington
Writing by Nick Zieminski and Deepa Babington
Editing by Noeleen Walder, Megan Davies, Anna Driver and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

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US

Trump Organization found guilty of tax fraud scheme

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NEW YORK, Dec 6 (Reuters) – Donald Trump’s real estate company was convicted on Tuesday of carrying out a 15-year-long criminal scheme to defraud tax authorities, adding to the legal woes facing the former U.S. president as he campaigns for the office again in 2024.

The Trump Organization – which operates hotels, golf courses, and other real estate around the world – was found guilty of paying personal expenses for top executives including former chief financial officer Allen Weisselberg, and issuing bonus checks to them as if they were independent contractors.

The company faces up to $1.6 million in fines after being convicted on all charges, including scheming to defraud tax authorities, conspiracy and falsifying business records. Trump was not charged in the case.

Justice Juan Merchan, who presided over the trial in state court in New York, set a sentencing date for Jan. 13.

While the fine is not expected to be material for a company of the Trump Organization’s size, the conviction could complicate its ability to do business.

Weisselberg, 75, testified as the government’s star witness as part of a plea deal that calls for a sentence of five months in jail.

Manhattan District Attorney Alvin Bragg, whose office prosecuted the case, called the verdict “very just.”

“The former president’s companies now stand convicted of crimes,” Bragg said in the New York courthouse after the verdict, speaking of the Trump Corporation and Trump Payroll Corporation, the two units of the Trump Organization which were convicted.

Asked if he regretted not charging Trump in the case, Bragg did not respond.

He has said that the office’s investigation into Trump is continuing.

APPEAL

Alan Futerfas, a lawyer for the Trump Organization, said the company would appeal and that the criminal law governing corporate liability was vague.

“It was central to the case,” he told reporters after the verdict.

The jury deliberated for about 12 hours over two days.

[1/6] Former U.S. President Donald Trump attends a rally to support Republican candidates ahead of midterm elections, in Dayton, Ohio, U.S. November 7, 2022. REUTERS/Gaelen Morse/File Photo

The case centered on charges that the company paid personal expenses like free rent and car leases for executives including Weisselberg without reporting the income, and gave them bonuses as non-employee compensation from other Trump entities like the Mar-a-lago Club, without deducting taxes.

According to testimony during the four-week trial, Trump himself signed the bonus checks annually, paid private school tuition for Weisselberg’s grandchildren, authorized the lease for his luxury Manhattan apartment and approved a salary deduction for another executive.

“The whole narrative that Donald Trump was blissfully ignorant is just not real, prosecutor Joshua Steinglass told jurors during his closing argument on Friday.

He said the “smorgasbord of benefits” was designed to keep top executives “happy and loyal.”

Republican Trump, who on Nov. 15 announced his third campaign for the presidency, said in a statement he was “disappointed” by the verdict but called the case a “Manhattan witch hunt.” Both Bragg and his predecessor who brought the charges, Cyrus Vance, are Democrats.

SEPARATE LAWSUIT

The Trump Organization separately faces a fraud lawsuit brought by New York state Attorney General Letitia James.

Trump himself is being investigated by the U.S. Department of Justice over his handling of sensitive government documents after he left office in January 2021 and attempts to overturn the November 2020 election, which he lost to Democrat Joe Biden.

Lawyers for the Trump Organization argued that Weisselberg carried out the scheme to benefit himself, not the company. They tried to paint him as a rogue employee. Weisselberg is currently on paid leave and testified that he hopes to get another $500,000 bonus in January

Trump wrote on his Truth Social platform on Nov. 19. that his family got “no economic gain from the acts done by the executive.”

Weisselberg, who pleaded guilty in August to concealing $1.76 million in income from tax authorities, testified that although Trump signed checks involved, he did not conspire with him.

He said that the company saved money by paying for his rent, utilities, Mercedes-Benz car leases for him and his wife and other personal expenses rather than raising his salary, because a wage hike would have had to account for taxes.

He said Trump’s two sons – who took over the company’s operations in 2017 – gave him a raise after they knew about his tax dodge scheme.

By then, Trump was president, and the company was preparing for greater scrutiny.

“We were going through an entire cleanup process of the company to make sure that since Mr. Trump is now president everything was being done properly,” Weisselberg testified.

Reporting by Luc Cohen and Karen Freifeld in New York; additional reporting by Andrew Hofstetter in New York; Editing by Noeleen Walder and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

Luc Cohen

Thomson Reuters

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

Read original article here