1.Jury Impanelment and Preliminary Instructions

JUDGE KAPLAN: Okay. Folks, now that you're sworn, I have a few preliminary instructions to facilitate your participation in the trial. I think I said before that your job is going to be to decide the facts——that is to say, come to a conclusion about what, if anything, happened. That's your job. Nobody's going to tell you the answer. As there are conflicts in evidence, nobody is going to tell you who's telling the truth. Things like that are for you to decide. You will then apply the law that I instruct you on, and you're bound to do that. Bear in mind that I run the trial, which means that in the course of it, I'm going to make various rulings; I will say things to the lawyers; I may ask questions of the witnesses. I want you to understand absolutely that under no circumstances should you construe anything that I do or say as having any bearing at all on your evaluation of whether the defendant has been proved guilty or has not been proved guilty. I'm expressing no opinion on the case. I just decide the issues of law, and you do the rest. And so if, as has been known on rare occasions to happen, I seem that I'm getting impatient with a lawyer or something like that, I'm just doing my job, and it doesn't reflect on the lawyer's client or anything like that. It doesn't reflect any views on my part. The evidence from which you are going to find the facts will consist of the testimony of the witnesses, documents and other things that may come into the record as exhibits, and in certain circumstances facts that the lawyers agree upon, or, to use the jargon with which my profession is afflicted, stipulate to. A stipulation is simply an agreement between the lawyers, and you must accept those agreements, if there are any. I'll instruct you in more detail if that happens. Some things are not evidence, and they're not to be considered by you, and let me just tick off a list. First of all, statements, arguments, and questions by the lawyers are not evidence. Lawyers object to evidence all the time. They have a job to do. Their job includes objecting to evidence when they think it shouldn't be offered or considered by you. You shouldn't be influenced by the fact that lawyers make objections. I will rule on them. If I let the evidence in, you'll consider it like any other evidence. If I don't let the evidence in, you'll just ignore it entirely, you'll ignore the question entirely, and you won't speculate about what the answer might have been if I had let the witness answer the question. There are occasions when a piece of evidence comes in because an objection is not voiced quickly enough or something like that and I then tell you to strike it or disregard it. When I do that, you must disregard it, disregard whatever came in. There will be occasions in all likelihood in this case where I will instruct you that a particular piece of evidence may be considered for a certain purpose but not for others, and if I do that, you must follow that instruction. That will become clearer to you as we roll along here. As I'm sure you understand by now, nothing that you may have seen or heard outside the courtroom or may hereafter hear or see outside the courtroom is evidence. You must disregard it and put it entirely out of your mind. I remind you you're not to do any research or allow yourself to be exposed to any conversation or reporting or anything else like that about the case. You're not to tweet or make Instagram posts or anything else about the case. And I'm just not making these up. These things have all happened, and it's nothing but aggravation, and it just eats up time when things like that happen. You are to decide the case based solely on what happens in the courtroom. You've probably all heard the terms "direct evidence" and "circumstantial evidence." I'll explain all that in more detail at the end of the case. The one thing I want you to understand is what they mean, and the punchline, so to speak. Direct evidence is something that either you observed in the evidence, like what does a document say. You can read it. It's direct evidence of what the document says. Or something a witness tells you as the witness perceived it with the witness's own senses, and is now here telling you: I personally saw it and this is what happened. Circumstantial evidence relates generally to the process of reasoning from something you can observe to a conclusion about something that is either not clear to you or that you can't observe. I'll

JUDGE KAPLAN: give you the famous examples that are always used in this court at the end of the case, but just bear in mind that whatever you may have heard on TV, the law considers direct and circumstantial evidence to be the same. It just requires that your verdict be a product of your reasoned and impartial consideration of all the evidence, whether it's direct or circumstantial. Obviously part of what you're going to do in deciding the facts is deciding which witnesses you believe or how much of what a witness testified to you believe, and bear in mind that that refers not only to matters as to whether you think a witness is consciously lying to you but also to matters such as, well, did the witness really have an opportunity to know that; is the witness telling you something that he now believes because he's talked himself into it and would like to believe it. Things like that. Credibility of witnesses is a nuanced thing sometimes. And I just want you to understand that a lot goes into making those nuanced evaluations. And of course once in a while it's clear as a bell. You see somebody gets on the witness stand and your sense of it, for all sorts of reasons, may be, this is a made-up story. That happens. But that doesn't happen all the time. And juries all the time make judgments about what you think is credible and what you think isn't credible for reasons well short of that, even with respect to things that people tell you in subjective good faith, they think they're telling an accurate story, but you think otherwise. That's your job. And I'm not going to give you any answers about that at the end of the case. Now of course I told you basic rules about criminal cases at the beginning. Just to remind you, the defendant is innocent unless and until proven guilty to the unanimous judgment of all 12 jurors. The burden of proof is always on the government. The defendant has no burden to prove innocence, no burden to produce any evidence, no burden to testify or obligation to testify. The defendant has an absolute right to remain silent, and if that's what happens in this case, you may not consider his silence against him in any way. I'll talk to you about what "proof beyond a reasonable doubt" means at the end of the case. Just bear in mind that the burden of proof in a civil case——for example, who gets to pay the damages for a bumper dent——is much lower. Proof beyond a reasonable doubt is a high burden, and it's intended to be a high burden because people's lives are at stake. I don't mean in the literal sense of the death penalty, but important things about their lives are at stake in criminal cases. I'm going to say a few words about the charges, but not too much, because I'm going to talk to you at great length at the end, and I'll try to make it not so great length. You know what the case is about generally. There are seven counts in the indictment. And I want you to understand that the indictment is a piece of paper that contains the charges against the defendant. The fact that there is an indictment is not evidence. The indictment is not evidence. It is an accusation, and it's going to be your job to decide whether it's been proven beyond a reasonable doubt or not. There are seven accusations. Counts One and Three——and you don't have to remember this now because you'll get it all later again——charge the defendant with committing the crime of wire fraud. They allege, generally, that he engaged in a scheme to defraud customers of FTX——that's Count One——and a scheme to defraud lenders to Alameda Research. That's Count Three. Counts Two and Four charge the defendant with two different crimes of conspiracy. In the case of Count Two, it's a conspiracy to commit wire fraud, and to defraud customers of FTX; and in the case of Count Four, it's to defraud lenders to Alameda. Count Five is another conspiracy charge. It's a charge of conspiracy to commit securities fraud, and it alleges, very generally speaking, that the defendant and at least one other person agreed to defraud investors in FTX in connection with this alleged conspiracy. Count Six is another conspiracy count. That one is to commit commodities fraud on customers of FTX. And finally, Count Seven charges a fifth conspiracy, and that is a conspiracy to commit money laundering, and it alleges that the defendant and others agreed to violate either of two federal statutes, which I'll explain to you later on. The defendant, just to make absolutely clear, denies

JUDGE KAPLAN: all these charges. He's presumed innocent, as I said before, unless the government convinces the jury unanimously to the contrary, and beyond a reasonable doubt. You do have to consider each of the seven charges separately. Now I just want to give you a couple of points that you should bear in mind about what the law is, and principally about the law of conspiracy as distinguished from the law of wire fraud. The essence of the crime of conspiracy is an agreement or an understanding between or among two or more people to accomplish one or more unlawful objectives. The agreement that constitutes an element of conspiracy can be explicit, such as if two people sat down around the dining room table and agreed that they're going to do some horrible thing, or it may be implicit; that is, it can be simply a matter of an understanding among the people involved that they're going to work toward some unlawful objective. And the existence of an implicit agreement is something that can be inferred from all the evidence in a case. I always use a concrete example to illustrate this point. If two guys sit down together and say, Let's rob the Chase Manhattan Bank on the corner, and they agree, and one of them gets a bag to carry loot out of the bank, the crime of conspiracy to commit bank robbery is committed by what I have just described to you, and that's true even if nobody ever robs the bank. If they rob the bank, that is a substantive crime of bank robbery, and if that happens, the defendant can be found guilty both of conspiring to rob the bank and of robbing the bank. Just to complete the circle, if one guy decides to rob a bank and then goes and does it and there's no second person involved, there's no conspiracy but there's a bank robbery, substantive crime of bank robbery. That's the law of conspiracy as opposed to substantive crimes, and we have here two substantive crimes charged, mail fraud, and five conspiracies with different objectives, which I'll explain later on. What's wire fraud? Real simple. In order to prove a case of wire fraud, the government has to prove that there was a scheme to defraud a victim or more than one victim of money or property by false or fraudulent pretenses. The defendant has to have participated in the scheme, and somebody, not necessarily the defendant, foreseeably has to have used interstate or foreign wires. What is that? Email, telephone, cellphones, a lot more things, in this electronic world. That's the elements of mail fraud, briefly stated. Now I tell you, I'm going to explain this all in much more detail later, and the takeaway for right now is: This is a brief summary. To whatever extent at the end of the case my instructions are more complete or even different, those are the instructions you apply in deciding the case, and if they're different from what I've said now——I doubt they will be but if they are——it's those final instructions you apply, not this quick summary, which I'm only giving you so you have some idea of why people are putting in proof on different points. The last thing I want to talk to you about is your conduct as jurors, which I've pretty much covered, but I'll run through it quickly, and how the trial will work. I don't have to repeat what I've said about not discussing the case or reading anything about the case, or doing any research on the case. If anybody approaches you and tries to talk to you about the case, turn it off and tell Andy. I told you all about not doing any research. You understand where we are on that. Try to keep an open mind till the end of the trial. Evidence does not come in at trials the way you would tell a bedtime story to your kids, with a logical progression. Lawyers do the best they can to accomplish that, but it's impossible because sometimes you have four or five or six people telling you different parts of the story, no one of which is known to all of them. So sometimes there's not one person who can come and tell you everything that's relevant. So just hang in there and follow it all. You're welcome to take notes during the trial. If you decide to take notes, make sure, if you can, that it doesn't interfere with listening and considering all the evidence. Don't discuss your notes with anybody before deliberations start at the end of the case. Don't take your notes out of the jury room at night. Leave them there. They'll be kept secure. It's your individual obligation to follow the evidence, and I

JUDGE KAPLAN: know you're going to do that and do your very best whether or not you're taking notes. Okay. We're starting the trial. Or we've already started, actually, but we're starting the next part, in just a minute, with the opening statements. Opening statements are not evidence. They're not arguments. The way I often think about opening statements is the way I think about trailers at the movies. The lawyers are going to get up and in a sense try to tell you what the movie they plan to present is going to turn out being. They'll tell you the story and how it's going to come out. And when I see trailers in the movies and then see the movie, sometimes it's just what I expected, and sometimes it doesn't turn out that way. So you'll listen to the opening statements, and it will help you understand why the lawyers are doing what they're doing, but it's going to be your job to decide whether the presentations they make actually are consistent or not consistent with the proof at the end. The government will go first. The defendant has the right but not the obligation to make an opening statement. The government then will call its witnesses. The defense has the right to cross-examine the government witnesses. When the government is all done, when they rest their case, as the language goes, the defendant may, if he wishes, present evidence. He may elect not to do that. We'll see. If the defense calls witnesses, the government gets to cross-examine them. When the evidence is all in, the government has the right, although not the obligation, to make a rebuttal presentation, which may involve witnesses. And then we'll go to closing arguments, where the lawyers will argue what they think you should find they proved and why. And then I'll instruct you on the law, and then you will deliberate. One thing you should be aware of is that before the lawyers give their closing statements, their closing arguments, I have to meet with the lawyers and inform them of what my instructions are going to be and hear any objections they may have and resolve those objections. The likelihood in a trial of this duration is that you won't ever know that that's going on. But depending on how the timing works right at the end, there may come a point where we may have a recess for an hour or two while the lawyers and I flesh out some point of law and so that they can sum up, and we'll do our best to avoid having to do that. We will likewise do our best to avoid too many sidebars——you've seen quite enough of those already in the course of jury selection——and to resolve matters affecting the flow of the trial at the end of the day or over the lunch hour, but we're very conscious of your time. Believe me, we all are. So there we are. And we will now hear the opening statement for the government. And Andy, we have sworn the jury, right?

JUDGE KAPLAN: We have. Thank you. Okay. Mr. Rehn for the government.