Bankman-Fried’s bail amount is meant to shape public opinion about the gravity of the case, that’s all.
I’ll have more to say in the weekend column about developments in the Sam Bankman-Fried case. For now, I’ll just comment briefly on the setting of his bail at a purported $250 million when he appeared in the Manhattan federal courthouse (the Southern District of New York) after being extradited from the Bahamas. What a laugh!
I am reminded of the Mueller investigation dog-and-pony show with Roger Stone. You remember? They showed up with so many FBI agents that CNN — which just happened to be on the scene — had trouble finding a parking space. It was as if the bureau were locking up Osama bin Laden; reportedly, they even had amphibious teams in case the sixty-something Stone made a dive for it. After all, it was collusion with Russia, and Stone was being charged with . . . well . . . okay . . . process crimes that had nothing to do with collusion with Russia. A few hours after they made their big splash, the prosecutors and agents quietly consented to Stone’s release on his own recognizance. Not exactly the way the government normally treats a guy who is so apparently fearsome that you need a cast of thousands to effect the arrest.
So here we go again. The Biden Justice Department and the SDNY want you to know that this is a very serious case — an “epic” fraud, the prosecutors said in court today. So bail was agreed to at $250 million, so the Justice Department could say it is the highest bail amount in the history of federal prosecutions, maybe even the history of the universe.
But is it really? SBF did not have to put up $250 million in collateral. The only thing that appears to be posted is his parents’ home in Palo Alto. I’m sure it is very nice, but rest assured it’s not anything remotely close to $250 million nice.
Other than that, the bond has to be co-signed by four “financially responsible people.” A financially responsible person is one who is reasonably trustworthy when it comes to paying his bills; financially responsible does not mean financially rich. There is no requirement in the bond that the FRPs demonstrate a capacity to pay $250 million if Sam goes on the lam.
The fact is, SBF has already been released. They let him go on a signature. He didn’t need to establish that, if he absconds, the government would have $250 million in cash or other assets on which to execute. DOJ likes being able to tell the media that SBF’s bail is “a quarter billion dollars.” But if an alleged criminal were really so terrible as to rate that kind of historically exorbitant bail amount, then the government wouldn’t release him on little more than a signature on a piece of paper. It would instead make him come up with lots and lots of property so that the government would have something close to the bond amount that it could quickly collect if he took off.
I am not saying that the crimes charged are unserious. SBF is obviously looking at scores of years in prison. But Bernie Madoff’s swindle dwarfed what SBF is charged with — about $50 billion, compared to about $2 billion. Yet, Madoff’s bail was $10 million, 1/25th of what the Biden Justice Department claims SBF’s bail is.
Clearly, it is true that anyone who signs the bond as a surety would be liable for the face amount of the bond. In theory, if SBF flees, the four co-signers, only one of whom must be nonfamily, would theoretically be on the hook for a quarter-bil. That doesn’t mean, though, that the sureties have that kind of money, or that the government has any realistic expectation of collecting such a sum.
In essence, the government took SBF’s passport and told him to stay with his parents. They told the world he was such a flight risk that he was forced to sign a bond for $250M . . . and then they released him — home for the holidays! — having posted no assets and having provided the government with no indication that the taxpayers can expect to see anything close to $250M if he flees.
I don’t believe he’ll flee, mind you. He’s probably tapped out, he doesn’t want to see his parents lose their home, and he doesn’t seem like the type who’d do well in the life of a fugitive. But the bail amount is meant to shape public opinion about the gravity of the case, that’s all.