A House of Cards: From Co-inhabitants to Cooperators

Posted On Friday, January 13, 2023

The United States continues its investigation into the now bankrupt FTX and its founder, Sam Bankman-Fried. Mr. Bankman-Fried was extradited from his luxurious Bahamas penthouse to the Southern District of New York. Now that he is back state-side, Mr. Bankman-Fried faces an 8-Count Indictment for FTX’s shortcomings, and his alleged mismanagement and overindulgence. Mr. Bankman-Fried, once at the top of the cryptocurrency world, is set to live with his parents on electronic home monitoring while out on bail, also paid for by his parents.

The Judge has set a tentative trial date of October 2, 2023. Mr. Bankman-Fried and his legal team will have to work quickly to defend against the charges, which are now being bolstered by the government’s cooperating witnesses.

Caroline Ellison, the on-again and off-again girlfriend of Mr. Bankman-Fried, and Gary Wang, the co-founder of FTX, will cooperate with the prosecution. Even though both Ms. Ellison and Mr. Wang lawyered up quickly, they both accepted plea deals pleading guilty to fraud last month. This move signals that Ms. Ellison and Mr. Wang provided the government with substantial assistance against Mr. Bankman-Fried.

Ms. Ellison’s cooperation is particularly critical for the government because she was not only Mr. Bankman-Fried’s sporadic love interest, but she was the CEO of the highly controversial Alameda Research, having just assumed the role in August of last year. Ms. Ellison and Mr. Wang have the unique perspective of the inner workings of FTX’s short lived empire. Both Ms. Ellison and Mr. Wang, along with other individuals connected with FTX, lived in the luxurious Bahamas penthouse with Mr. Bankman-Fried.

Nishad Singh, FTX’s chief engineer, is the most recent member of Mr. Bankman-Fried’s inner circle to meet with the government. Mr. Singh, who has not been named by the government in any indictment, met with the prosecution last week for a proffer session. Whether Mr. Singh joins Ms. Ellison and Mr. Wang to provide information against Mr. Bankman-Fried is yet to be seen, however, Mr. Bankman-Fried and his legal team have not seen the last cooperator. On December 21, 2022, shortly after negotiating plea deals with Ms. Ellison and Mr. Wang, US Attorney Damian Williams issued a caution to others connected to FTX, “If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it, we are moving quickly, and our patience is not eternal.”

Stay tuned as this matter develops.

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 office and seasoned defense attorneys are well versed in compliance matters at the local, state, and federal level. If your company is under investigation, or you are a person of interest in an investigation, our attorneys can guide you through the process.

Shah-Exposed: From the Glamorous Life to Life Behind Bars

Posted On Friday, January 6, 2023

Real Housewives of Salt Lake City star Jen Shah was sentenced to 78 months in prison on January 6, 2023, in the Southern District of New York on charges of masterminding a wire fraud scam from 2012-2021, that targeted thousands of elderly citizens, while living a life of immense wealth and celebrity. Ms. Shah initially pled not guilty and was headed to trial proclaiming her innocence on social media and the show. However, Ms. Shah had a change of heart shortly before the trial was set to begin and pled guilty citing the government’s abundance of evidence against her. She further has stated that being confronted with their overwhelming evidence “finally woke her up.” Her defense attorney Priya Chaudhry stated to Judge Stein that “Ms. Shah was lost for months in an echo chamber of her own denial” but that “she found herself staring at her truth and the depth of her wrongs and she hurt them, and they were real and there was no more lying.”

Shah’s defense requested a sentence of 36 months incarceration while the Government argued in their sentencing memorandum for a sentence of 120 months incarceration. Government prosecutors indicated that Shah mocked the victims and suggested that any remorse was an extension of her acting. They supported their contentions by detailing the public offensive Ms. Shah went on after the indictment, including continually proclaiming her innocence on her television show as well as her attempts to profit off the charges by selling “Justice for Jen” merchandise.

There was a total of twenty-nine other individuals indicted as co-conspirators to Ms. Shah, including her longtime friend and assistant Stuart Smith. Mr. Smith along with other co-conspirators became cooperating witnesses for the government. Based upon this cooperation, the government was able to focus in and establish that Ms. Shah was the boss and mastermind behind the fraud. The following is a list of the defendants, grouped based upon an assessment of culpability by the Government, and sentence imposed:

Tier A

Jennifer Shah – sentenced to 78 months’ imprisonment

Carl Morris – sentenced to 78 months’ imprisonment

Cameron Brewster

Kevin Handren

Ryan Hult – sentenced to 60 months’ imprisonment

Stuart Smith

Tier 1

Arash Ketabchi – sentenced to 87 months’ imprisonment

Christopher Wilson – sentenced to 78 months’ imprisonment

Jason Sager* – sentenced to 12 months’ imprisonment

Joseph Minetto Chad Allen – sentenced to 48 months’ imprisonment

Shane Hanna

Anthony Cheedie

Joseph Ciaccio – sentenced to time served

Tier 2

Joseph McGowan – sentenced to 72 months’ imprisonment

William Sinclair* – sentenced to 15 months’ imprisonment

Peter DiQuarto* – sentenced to six months’ home confinement

Michael Finocchiaro* – sentenced to 15 months’ imprisonment

Raymond Quiles

Tier 3

Jack Kavner – sentenced to 51 months’ imprisonment

Daniel Quirk* – sentenced to 366 days’ imprisonment

Derrek Larkin – sentenced to 72 months’ imprisonment

Anthony Medeiros – sentenced to 66 months’ imprisonment

Brooke Marcus

Andrew Owimrin – sentenced to 52 months’ imprisonment

Joseph DePaola – sentenced to 30 months’ imprisonment

Tier 4

Shahram Ketabchi – sentenced to four months’ imprisonment

Thomas O’Reilly – sentenced to 366 days’ imprisonment

Mattie Cirilo – sentenced to 12 months’ home confinement

*These Defendants received the benefit of a motion pursuant to U.S.S.G. sec. 5k1.1

This is not the first Bravo franchise star to faceoff with the Government in the court room, Teresa Giudice (Real Housewives of New Jersey) and LuAnn de Lesseps (Real Housewives of New York) have also been convicted of criminal offenses.

Article authored and contributed to by Lee K. Goldfarb and Heidi J. Bondiskey.