A House of Cards Falls Down

Posted On Thursday, December 15, 2022
By: Christin M. Roberts

Takeaway: Ignorance was not bliss for Samuel Bankman-Fried. The young cryptocurrency entrepreneur faces 8 charges in the Southern District of New York for allegations that his company, FTX, mishandled millions of dollars of its investors money.

Samuel Bankman-Fried’s “house of cards” played its final hand on Tuesday, December 13, 2022, as a federal grand jury in Manhattan returned an indictment against him. Fried is charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations. The grand jury handed down the indictment amidst allegations that Fried mislead investors out of approximately $1.8 billion.

In 2019, Fried founded FTX, a cryptocurrency exchange, when he was 27 years old. By 2022 it had a $32 billion valuation and was backed by investors and celebrities alike. FTX’s demise, ironically, was nearly as rapid as its ascent. In less than a week, Fried went from being portrayed in the media as the ‘white knight’ of cryptocurrency, to a disgraced former CEO. FTX’s swift downfall comes as no surprise, however, as Fried admittedly had no Board of Directors and was reportedly blissfully ignorant of his duties as CEO. According to the SEC Complaint, “FTX customers deposited billions of dollars into Alameda[1]-owned bank accounts, which Alameda spent on Its own trading operations and to expand Bankman-Fried’s empire.”

Despite being at the center of a heavily regulated space, i.e., cryptocurrency, it is alleged that Fried was able to assuage sophisticated investors that FTX was the premier cryptocurrency domain. Fried was over funded and under educated in the cryptocurrency space. While his public apologetic stance is refreshing, the full effects of his reported lack of concern for compliance remains to be seen. In an interview with the New York Times on November 30, 2022, after stepping down as FTX’s CEO, Fried maintained that he never intended to defraud his customers, and that he did not ‘intentionally co-mingle’ funds.

SEC Chair Gary Gensler stated that Fried “built a house of cards on a foundation of deception while telling investors that it  was one of the safest buildings in crypto.” Fried is being prosecuted criminally by the Southern District of New York. He is also being sued and investigated civilly by a number of federal agencies.  

Fried’s empire allegedly includes tens of millions of dollars of real estate in the Bahamas, political favor bought with customer funds, private jet excursions, a Super Bowl ad, and a sports stadium sponsorship. Fried’s pocket was limitless. Until it wasn’t.

Pietragallo Gordon Alfano Bosick & Raspanti, LLP has a robust white-collar practice that includes involvement at all stages of a criminal or civil investigation. Our attorneys have decades of experience advising companies of their regulatory and compliance duties, as well as defending individuals and companies against criminal allegations. Our attorneys are equipped to handle complex cases across the United States. For more information on our team and specific practice areas, visit our website here.  

The SEC Complaint can be viewed here.

[1] Alameda was originally founded in October 2017 and was utilized for over-the-counter trading services and to make and manage debt and equity investments.

The Need for Accommodations in Prison for those with Autism Spectrum Disorder

Posted On Thursday, December 8, 2022
By: Tama Beth Kudman

Neurodiversity is a real thing, especially in prison. 

People with Autism Spectrum Disorder (ASD) often have sensory processing disfunctions that make life behind bars unbearable. The anxiety and trauma caused by bright lights, loud sounds, unpredictable behavior from neighbors, and  trying to learn unwritten social rules makes incarceration for someone with ASD inarguably cruel and dangerous. That’s on a good day.

Because people with ASD often have difficulty communicating and understanding facial expressions and other nonverbal communications, they are frequently targeted by other inmates and subjected to physical and sexual abuse, bullying, and other forms of creative manipulation. People with more severe ASD may need assistance with self-care, suffer from poor concentration, and may not understand the intentions, good or bad, of those around them. They may also be unable to perform manual tasks that inmates are often assigned as part of their “jobs” while in custody. Incarcerated people with ASD or other forms of neurodiversity are a particularly vulnerable population that need to be better identified so that added protections can be put into place when needed.

Because ASD isn’t always obvious, it often goes undiagnosed, or completely misdiagnosed. There are differing levels of severity, and it presents differently in everyone who has it. Women with ASD are diagnosed far less often than men, possibly because women tend to be better at masking their symptoms to appear more like their neurotypical peers.

Americans With Disabilities Act  

From a legal perspective, ASD is a recognized disability protected under the Americans with Disabilities Act (ADA) because its symptoms impede typical daily activities. In a typical work or school setting, those with diagnosed ASD are legally entitled to various reasonable accommodations including environmental adjustments, and the support of a caregiver. 

Although Title II of the ADA protects individuals with mental health and intellectual disabilities from discrimination within the criminal justice system, as a practical matter, the level of support that is often needed for basic survival is just not available to inmates.  

With funding from the International Society for Autism Research, the A.J. Drexel Autism Institute researched ways to enhance interactions between people with ASD and the legal system. See, “Autism and the Criminal Justice System: Policy Opportunity and Challenges” which offers guidance on how the legal system can better help people with ASD or other forms of  neurodiversity.      

Our understanding of what ASD is, what the diagnostic criteria are, and how common it is, seems to change by the day as more research and studies are completed. Whatever the future holds for how we collectively define this disability, we must be vigilant to ensure that the legislative intent of the ADA is applied fairly to neurodiverse people while in prison.

Article authored and contributed to by Tama Beth Kudman and Neysa Nardi.