FOIAengine: As Trial Looms, a Private Investigator Pursues the SEC
It’s been a tough couple of months for Sam Bankman-Fried. He’s stewing in jail, facing 155 years in prison, while lawyers, accountants, and other experts rack up $700 million in fees from the crypto implosion.
Bankman-Fried and his companies, including FTX, are facing at least 73 lawsuits. His self-pitying messages to a social-media influencer – “I’m broke and wearing an ankle monitor and one of the most hated people in the world” – were posted to the world. The judge in his coming criminal trial rejected all seven of the “experts” he wants to call as witnesses. And he needed a judge’s order to get his ADHD and depression meds in jail.
Things are likely to get much worse. Bankman-Fried’s trial on charges of fraud and money laundering is set to begin next week, on October 3. It’s expected to take six weeks, a speedy reckoning less than one year after the $8 billion collapse of Bankman-Fried’s crypto empire.
Federal prosecutors slimmed down the case in June, removing six counts from the original 13-count indictment to focus on the seven fraud and conspiracy counts deemed simpler to prove. The remaining counts will be tried later.
When we last checked in on Notorious SBF in this space, in March, he was out on bail and under home detention, holed up in his parents’ house in Palo Alto. But the judge in the case revoked his $250 million bail in August, after ruling that Bankman-Fried was using his freedom to engage in witness tampering – something much less likely to happen inside his current residence, the infamous Metropolitan Detention Center in Brooklyn.
Crypto mavens already can find an abundance of reporting online about the origins and aftermath of one of the biggest financial frauds in history. Docket watchers will see, as of this writing, an eye-popping 291 entries in the criminal case as Judge Lewis A. Kaplan moves things briskly along.
So we decided to open a back door into the SBF saga. We queried PoliScio Analytics’ competitive-intelligence database FOIAengine, which tracks Freedom of Information Act requests in as close to real-time as their availability allows. There are well over a hundred FOIA requests about Bankman-Fried, his co-defendants, and FTX in FOIAengine, predominantly from the news media. But there are no FOIA requests on file from lawyers or law firms – unusual for a matter of this size and scope. What’s up with that?
FOIA requests to the federal government can be an important early warning of bad publicity, litigation to come, or uncertainties to be hedged and gamed out. But in Bankman-Fried’s case, the customary FOIA rules don’t apply. A FOIA signal isn’t going to alert anybody to coming bad news or future litigation about SBF or FTX. The worst-case scenario is already playing out.
Still, one set of FOIA requests caught our attention.
The queries were from Heather Roberts, a licensed private investigator who runs Caliber Sanctions, a Lakeland, Florida private investigation agency. Her requests were logged by the Securities and Exchange Commission on December 14, the day after federal criminal and civil charges were filed against Bankman-Fried.
Investigator Roberts’ FOIA requests are the most sweeping that we’ve seen in the Bankman-Fried/FTX matter. She sought SEC documents not just about Bankman-Fried, but also about his companies, FTX and Alameda Research, and others caught in prosecutors’ cross-hairs: Gary Wang, Andy Croghan, Darren Wong, and Caroline Ellison.
Roberts also made a FOIA request about Constance Wang, the former Chief Operating Officer of FTX, who hasn’t been accused in the federal lawsuits. Wang now works in Singapore, according to reports and her LinkedIn profile.
As to each of those principals in the crypto scandal, Roberts’ requests were for “any/all complaints, correspondence, letters, emails, documents, call logs, meetings notes, etc.” that the SEC might have sent or received since 2016.
But Roberts came up empty handed. The SEC claimed a law enforcement exemption under the FOIA statute, and denied release of any records.
We reached out to Investigator Roberts to find out more. She wouldn’t disclose the identity of her client. But she confirmed that she made the FOIA requests on a client’s behalf, and told us the question she’s still trying to answer: Did the SEC know, as early as 2019, that FTX was engaged in a massive fraud?
Roberts thinks the answer is Yes. Another FOIA request that she made to the SEC, also on the day after Bankman-Fried’s indictment, leads to the backstory.
Roberts asked the SEC for anything in the agency’s files concerning Bitcoin Manipulation Abatement LLC, a company that filed a prophetic $191 million racketeering and fraud lawsuit against FTX in November 2019. That lawsuit named the same co-defendants – and made many of the same allegations – that, three years later, would be repeated in the federal lawsuits. “The sheer magnitude of unlawful activity is truly staggering,” the 2019 complaint said. The lawsuit was dismissed with prejudice the following month, at the plaintiff’s request – an indication that FTX quickly got rid of the lawsuit by settling it.
Roberts’ working hypothesis is that the same players who filed that 2019 lawsuit might also have filed a whistleblower complaint with the SEC. (Here’s our most recent story about the SEC’s whistleblower program.)
“I was looking for the so-called whistleblower complaint,” Roberts told us. If such a complaint existed, it would mean that the SEC was sitting on evidence of crypto fraud for years, without taking action.
Roberts thinks “the SEC was well aware back in 2019.” She is quick to add, “I can’t find proof. But that’s a very detailed 2019 complaint. We’re not talking about a small claim. We’re talking about factual, evidential claims regarding fraud. That’s what I’m looking for. It appears that, with FTX and Sam Bankman-Fried, it could have been avoided. Now, I’m looking for factual evidence.”
Roberts’ FOIA modus operandi is classic, and instructive: Sometimes, a denial of records is better than a grant.
“I put the FOIA out there,” she explains. “My FOIA request tells me which direction I need to go in. It’s like a pinball machine.” One request pings another. “That’s what the FOIA request is for. The whole point is to establish the legal liability of the non-response, to establish the direction you need to go in. Because if you don’t get the expected response, then you know. If you get a denial, then you know you’re going in the right direction. Or, if you receive a whole bunch of information, and you go through that, you’re going to find out what you’re missing, and you’re going to ask for more.”
Roberts says she’s still pursuing her theory that the SEC had specific knowledge of crypto fraud as early as 2019, and failed to act. Her client isn’t giving up.
Where will this lead? “I don’t know yet. I’m still working the case.”
Next: Recent FOIA requests reveal news media investigations.
John A. Jenkins, co-creator of FOIAengine, is a Washington journalist and publisher whose work has appeared in The New York Times Magazine, GQ, and elsewhere. He is a four-time recipient of the American Bar Association’s Gavel Award Certificate of Merit for his legal reporting and analysis. His most recent book is The Partisan: The Life of William Rehnquist. Jenkins founded Law Street Media in 2013. Prior to that, he was President of CQ Press, the textbook and reference publishing enterprise of Congressional Quarterly. FOIAengine is a product of PoliScio Analytics (PoliScio.com), a new venture specializing in U.S. political and governmental research, co-founded by Jenkins and Washington lawyer Randy Miller. Learn more about FOIAengine here. To review FOIA requests mentioned in this article, subscribe to FOIAengine.
Write to John A. Jenkins at [email protected].
