3.Government Rest, Rule 29, and Defense-Case Preparation
107 lines(Witness excused)
JUDGE KAPLAN: Who is next, folks?
MS. KUDLA: Your Honor, at this time the government offers Government Exhibit 505. We can address that at a sidebar.
JUDGE KAPLAN: I appreciate it if someone brings a copy up.
(Continued on next page)
(At sidebar)
MR. COHEN: I was waiting for your Honor to say who won game 7 of the '55 series.
JUDGE KAPLAN: But I don't acknowledge that. I'm a denier as to the '55 World Series.
What's the issue here?
MR. EVERDELL: Your Honor, I believe the government is offering this -- it's a hearsay objection. I believe the government's basis for being able to offer this is under a coconspirator exception and under a statement against interest and unavailable declarant. We don't think it's a coconspirator statement on -- Mr. Salame did not plead to a conspiracy charge. He pled to a substantive charge on campaign finance. This doesn't fall within the scope of a conspiracy.
And I don't think it's a statement against interest. First of all, there is no indication in the record that he would invoke. So if they want to rely on that, I think there should be some record made that he would invoke his Fifth Amendment privilege if he were here to testify. Even so, the government's theory is that he was, I think, some sort of a straw donor, but I think that the message here just reflects the fact that he is going to be donating to causes that he himself supports and that that doesn't make it a statement against interests.
MR. ROOS: I will take those in turn.
First, he did plead guilty to a campaign finance conspiracy, so I am not sure what they are thinking of.
Page 29, footnote 8 of the government's pretrial briefing indicated that the attorney for Mr. Salame represented that if called as a witness he would take five, so, therefore, under United States v. Miller, which is a Second Circuit case, he is an unavailable declarant.
MR. COHEN: Which footnote is that?
MR. ROOS: Footnote 8 of page 29.
So he is an unavailable declarant. The text of the document indicates that he is making a statement against his penal interests. He said: Pass Sam's donations through my name, which is a clearly inculpatory statement in implicating himself in a campaign finance conspiracy. In fact, his plea allocution was very close to that.
I think there is no question that it comes in under 804(b)(3). I know defense counsel has not made the argument yet, so we can let him go, if your Honor wants, but I think it is also admissible as a coconspirator statement, potentially as a nonhearsay basis also.
JUDGE KAPLAN: Anything else?
MR. EVERDELL: No, your Honor.
JUDGE KAPLAN: Overruled. It is received.
(Continued on next page)
(In open court)
JUDGE KAPLAN: Government Exhibit 505 is received.
(Government Exhibit 505 received in evidence)
JUDGE KAPLAN: Ladies and gentlemen, that concludes the presentation of the government's evidence in this case, subject to any rebuttal they might choose to offer to any defense case that the defense may choose to offer.
At this time we will take what I expect will be a very short break to take care of some legal business, and we will be back with you as soon as we can, probably within 15 minutes.
(Jury not present)
JUDGE KAPLAN: Is there a motion?
MR. COHEN: Yes, your Honor.
Pursuant to Rule 29, defense moves for a judgment of acquittal. Your Honor, we submit that the evidence is insufficient to sustain a conviction on all counts.
In particular, we call your Honor's attention to the issues that have been covered in many of the letters before the Court. We don't think the government has set forth viable legal theories of wire fraud. If it hasn't done that, then the evidence is insufficient.
In particular, with regard to Counts One and Two for wire fraud, as set forth in the briefing that your Honor has received, it's our position that the government has not set forth a viable theory under the misappropriation theory, and therefore the evidence could not sustain this conviction.
That would also cover Count Seven, the money laundering count which is predicated on Count One.
We have the same point for Counts Three and Four, which are the lender counts. In addition, we submit that materiality has not been shown on those counts as well.
With respect to Count Five, we also submit that the government has not put forth sufficient evidence of materiality.
And with respect to Count Six, the commodities fraud count, we submit that the government has not put forth sufficient proof to sustain a conviction for committing fraud in connection with a commodities transaction.
For those reasons, your Honor, we would move under Rule 29 for a judgment of acquittal.
JUDGE KAPLAN: Thank you.
Does the government want to be heard briefly?
MR. ROOS: Your Honor, the government opposes the motion and submits that there is sufficient evidence for the jury to conclude on Counts One and Two that the defendant either made, participated in making, and conspired to make material false and fraudulent representations, promises, pretenses in connection with a scheme to defraud and obtain money and property. I'm happy to elaborate on that further, if your Honor would like.
On Counts Three and Four, which relate to fraud on lenders, the Court heard testimony from Zac Prince, among other evidence, about the materiality of balance sheets that were false that were submitted to BlockFi to induce it to lend.
On Count Five, fraud on investors, the Court heard evidence from two investors with extensive testimony about the materiality of various statements that were made to them.
And on Count Six there is ample evidence in the record about both commodities and swaps that were either transactions in connection with those commodities or swaps that were either fraudulent or resulted in embezzlement.
Therefore, it's sufficient to give it to the jury on that question.
JUDGE KAPLAN: The motion is denied.
Will there be a defense case?
MR. COHEN: Yes, your Honor.
JUDGE KAPLAN: And order of witnesses, please.
MR. EVERDELL: Yes, your Honor. The first witness will be Krystal Rolle. Second will be Joseph Pimbley.
One moment, your Honor.
Your Honor, I am just confirming that we don't have any issues with stipulations. I don't think we do, in which case the third witness will be Mr. Bankman-Fried.
JUDGE KAPLAN: Now, how long do you expect the first two witnesses to take?
MR. EVERDELL: Your Honor, I don't think that's going to take very long. I can't speak for cross-examination, but I believe Ms. Rolle will be 15 minutes, 20 minutes tops. Mr. Pimbley about the same.
JUDGE KAPLAN: Now of course I received the relatively lengthy letter from defense counsel last night raising various issues with respect to the admissibility of certain areas of proposed testimony by the defendant.
I have concluded that in order to determine all or most of those issues, probably all, I am going to take the testimony initially out of the presence of the jury because the letter provides insufficient detail for me to rule on it.
The question is, do you have sufficient other testimony, without touching those subjects, to put Mr. Bankman-Fried on and go as far as we can go and then break for the hearing out of the presence of the jury, or is there simply no point of starting him without having that hearing take place and resolved?
MR. COHEN: Your Honor, I think we have enough to start.
JUDGE KAPLAN: Give me an idea of how much time, please.
MR. COHEN: As I mentioned on our call yesterday, I think the direct will take about as long as Mr. Wang and Ms. Ellison, somewhere around four hours.
JUDGE KAPLAN: That's without touching these other subjects?
MR. COHEN: I think without touching them, yes.
JUDGE KAPLAN: Fine.
Mr. Roos.
MR. ROOS: Just one thing on the first witness, your Honor.
Last night we got some 26.2 material that contained redactions to it. Under Rule 26.2(c), the defense needs to first submit the material to the Court for its in camera review before making any redactions for privilege. We would ask for them to do that. Then if it's not in fact privileged to give us the unredacted copy of the 26.2 material.
In particular, this is a former current attorney for the defendant. We don't know what the direct is going to look like. I think there is a possibility that things that are redacted, even if they are privileged, they could create an implied waiver, depending on how the testimony goes.
So I think it's important that the Court have an opportunity to review that material and give it to the government, if it is not in fact privileged or if there is a waiver.
JUDGE KAPLAN: First of all, Mr. Cohen -- I assume it's Mr. Everdell?
MR. EVERDELL: Yes.
JUDGE KAPLAN: What was the basis for redacting the material that you turned over?
MR. EVERDELL: There are two bases, your Honor. Some are simply notes that were jotted by the attorney who was -- notes of himself. It wasn't based on --
JUDGE KAPLAN: I didn't quite get that.
MR. EVERDELL: Your Honor, the first basis is work product because some of the redactions are attorney notes to themselves on the same page that the actual statements of the witness during the interview were transcribed.
JUDGE KAPLAN: Which attorney? Who?
MR. EVERDELL: Attorney on my team who was preparing the witness.
JUDGE KAPLAN: You don't have a clean copy of the document?
MR. EVERDELL: They are on the same page, so we decided just to redact that portion. They are handwritten notes. Some are typed. We could produce the version of the typed notes without those, but we didn't want to alter the original of the document. But we can do that for the typewritten notes.
JUDGE KAPLAN: You said there were two bases.
MR. EVERDELL: Yes.
The other basis is that during the prep there was some discussion about legal advice that was given from the attorney to the defendant, and we don't intend to go into that in the direct of Ms. Rolle.
Just to be clear, your Honor, we are going to have her elicit testimony not of any advice that she gave to the defendant, but simply as a percipient fact witness because she was there at the interview at the securities commission in the Bahamas on November 12, which has already been testified about by Gary Wang.
She is going to be testifying about -- she was there -- just who was there, the fact that an interview took place and what happened after the interview took place, because she was there as well.
If you recall the testimony from Mr. Wang, they returned to the FTX offices and they began -- after some other things took place, there was -- they began transferring assets to the SCB, and she was at the offices when this all took place.
So the point of her testimony is purely fact testimony. We are going to stay away from any legal advice or any discussions she had with the defense. And we just want to get her recollection of those events because she was there as a participant.
JUDGE KAPLAN: But the second basis is, you're asserting attorney-client privilege with respect to the material redacted, is that correct?
MR. EVERDELL: Yes. For those portions, yes, your Honor.
JUDGE KAPLAN: What is the volume of this material?
MR. EVERDELL: It's two pages, three pages.
JUDGE KAPLAN: Good. Produce the unredacted ones to the Court, please.
MR. EVERDELL: Yes, your Honor.
JUDGE KAPLAN: Andy will mark them court exhibit next in order, whatever that is.
MR. COHEN: Your Honor, in terms of timing, because I know the Court wants to keep on top of that, even without the topics that we will need to have a separate hearing on, it's possible that the direct will be longer than four hours. It could be closer to five. I don't know.
JUDGE KAPLAN: Thank you for keeping me posted.
MR. EVERDELL: Your Honor, I'm sorry. I didn't hear what you said. I have redacted, unredacted copies of the two.
JUDGE KAPLAN: Give me the unredacted copy, and we will mark it court exhibit next in order, and I will review it.
Mr. Akahoho's note will be marked as an exhibit prior to the redacted notes.
MR. EVERDELL: The material that you have in the 3500 material has redactions on it. Those are the unredacted copies.
JUDGE KAPLAN: Right. I guess I better have the other so I can tell what you redacted.
MR. EVERDELL: Exactly.
JUDGE KAPLAN: Court Exhibit G is the unredacted and Court Exhibit H is the redacted.
So now I'm thoroughly confused because instead of two documents I have four.
MR. EVERDELL: Your Honor.
JUDGE KAPLAN: If anything has been redacted, I don't necessarily see where.
MR. EVERDELL: Yes, your Honor. I apologize. You have two documents. There is a pair of each. One is the redacted version, one is the unredacted version of the same document. So there are two documents: One redacted, one unredacted.
JUDGE KAPLAN: There are two typewritten documents which are marked G and I. G, I take it, is unredacted, and I has one subparagraph which has the letter D in front of it redacted. That's what I should be dealing with with that pair?
MR. EVERDELL: Your Honor, I'm sorry. I don't know how it was marked. There is a set of typewritten notes and then there is a set of handwritten notes.
JUDGE KAPLAN: The typewritten notes are marked G and I. G has no indication of any redactions. I has what appears to be one line or subparagraph marked privileged and not subject to Rule 26.2. That's the redacted version of G, is it, and it's marked I.
MR. EVERDELL: I think that's right, your Honor. In the first page there is a place that says privileged as well.
JUDGE KAPLAN: Not on mine.
Excuse me. I found it. Yes. Correct.
MR. EVERDELL: That's the unredacted and redacted version of that document.
JUDGE KAPLAN: Handwritten document H appears to have no redactions.
I guess this must be Exhibit J, Andy. Is that a J?
COURT CLERK: Yes, Judge.
JUDGE KAPLAN: That's a J.
That has a couple of redactions.
We will recess for a few minutes so I can sit down and read them.
(Recess)
(In open court; jury not present)
JUDGE KAPLAN: We are having an issue with the realtime transcription, but we'll go ahead and the record will catch up with us.
First of all, with respect to Court Exhibits G and I, tell me again, please, who had the call with Ms. Rolle and who is the author of the document?
MR. EVERDELL: So G and I, your Honor, are the handwritten notes, the typewritten notes?
JUDGE KAPLAN: Yes. The typewritten notes.
MR. EVERDELL: The typewritten notes. Sorry. Okay. That was an attorney on our team.
JUDGE KAPLAN: And that attorney did the notes as well.
MR. EVERDELL: Yes.
JUDGE KAPLAN: Okay. And exactly whose privilege is asserted? Who is the client, who is the attorney?
MR. EVERDELL: Yes, your Honor. So the privilege is Mr. Bankman-Fried's privilege with Ms. Rolle as his attorney in the Bahamas matters, and so some of the redactions relate to advice that Ms. Rolle gave him in connection with that matter.
If it helps clarify, your Honor, for example, if we're looking at the typewritten notes on the second page, where there's D——there's a D1D, that bullet is redacted for privilege. And that bullet refers to discussions between Ms. Rolle and Mr. Bankman-Fried that captures some legal advice, and some discussions between him and his lawyer.
JUDGE KAPLAN: All right. The unredacted version of Court Exhibit I need not be produced.
Let's go to the other one.
Same questions.
MR. EVERDELL: Yes. So starting with that one, there's the note on the first page off the side, "not subject to Rule 26.2." That portion below is sort of the note that the attorney made to herself, you know, for purposes of capturing, you know——for purposes of preparing for the direct. It wasn't the statements that were made at that interview. You can see that they're talking about a few other things in the rest of the notes about her background, and that's just a note to herself to be able to prepare the direct.
JUDGE KAPLAN: Okay. And the second page?
MR. EVERDELL: Yes. Second page is similar. This is, again, notes to prepare the direct, and also, at the bottom, it's the similar——it's the same thing we had before, which is, it reflects discussions between Mr. Bankman-Fried and Ms. Rolle that reflect legal advice.
JUDGE KAPLAN: Okay. The redactions objections are overruled there too.
Okay. Are we ready for the jury? Bring the jury back, please.
MR. EVERDELL: Your Honor, would it be useful for me to just mention this to the witness? I can run out quickly just to make sure that we're not going to run afoul of what we discussed so——and give her some quick direction, make sure we don't——
JUDGE KAPLAN: Yes. So let's hold on the jury for a minute.
MR. EVERDELL: Thank you, your Honor. I'll be right back.
(Continued on next page)
(Jury present)
JUDGE KAPLAN: Mr. Everdell, your witness.
MR. EVERDELL: Thank you, your Honor. The defense calls Ms. Krystal Rolle.
COURT CLERK: Please remain standing and raise your right hand.
(Witness sworn)
COURT CLERK: Thank you. Please be seated. And if you can please state your name and spell your first and last names for the record.
KRYSTAL ROLLE: First name is Krystal, K-R-Y-S-T-A-L, surname Rolle, R-O-L-L-E.
JUDGE KAPLAN: You may proceed, Mr. Everdell.
MR. EVERDELL: Thank you, your Honor. KRYSTAL ROLLE, called as a witness by the Defendant, having been duly sworn, testified as follows: