“Effective Altruism”: Could SBF’s Parents Be the Key to a Plea?

Below is my column in the New York Post on the potential liability of the parents of Sam Bankman-Fried. It is not uncommon for federal prosecutors to go after family members to induce a plea by a defendant. In this case, the reported involvement of the parents in some of operations or payments magnifies that risk.

Here is the column:


As Sam Bankman-Fried faces an eight-count indictment for his alleged massive crypto-fraud, his case could take a sudden turn toward resolution. The prosecutors may have the ultimate inducement for a plea to dangle over Bankman-Fried — actually two: Bankman and Fried.

SBF, as he’s known, is not the only person at risk here, particularly with prosecutors making repeated references to unnamed “co-conspirators.” Two at risk could prove his parents, Joseph Bankman and Barbara Fried. While there’s no proof of criminal acts on their part, Bankman-Fried surprisingly involved his parents in aspects of his alleged fraudulent operation.

If so, the case could bring new meaning to the doctrine of in loco parentis, when people act “in place of a parent” or “instead of a parent.” Federal prosecutors are notorious for targeting family members as a quarry’s vulnerability; do they see such an opening in Bankman-Fried’s parents’ role in litigating this massive alleged fraud?

Both parents of SBF and his close associate and ex-girlfriend, Alameda Research head Caroline Ellison, 28, are professors at leading universities. Ellison’s parents are Massachusetts Institute of Technology professors; Bankman-Fried’s parents are Stanford Law professors. Both children are obviously bright, precocious “fac brats” who spoke of using investments for good deeds. Ellison has said she had only one job before moving over to Alameda and finding herself making huge decisions.

Ellison is an obvious target for a cooperation agreement, and her counsel may be moving quickly to get her a chair before the music stops on the next round of indictments.

The more intriguing prospect, however, is using SBF’s parents as his most vulnerable pressure point. The Justice Department has previously targeted family members, as in the Michael Flynn case, to muscle defendants into pleas. While we’ve seen Justice give targets sharply different treatment in past cases, there’s ample reason for the parents to be concerned.

Joseph Bankman, a longtime Stanford Law School tax professor, was a paid employee of his son and helped promote the company. He spent considerable time in the Bahamas with Sam during the critical periods of alleged fraud. He and his wife may have benefited from some of the lavish expenditures the Justice Department cited in its indictment, including staying in a $16.4 million house in Old Fort Bay, a gated community in Nassau.

Stanford Law prof Barbara Fried didn’t appear to work for the company but reportedly used money from her son in her Democratic political-advocacy network. Fried, 71, resigned last month as board chairwoman of a political-donor network, Mind the Gap, which she’d helped start to support Democratic campaigns and causes.

Fried, who retired this year from Stanford, is an expert on the intersection of law and philosophy. She has notably written about effective altruism, the charitable movement her son and Ellison embraced. SBF pursued effective-altruism models while studying at MIT and later co-founded Alameda. The left heralded Bankman-Fried as showing that effective altruism had “real and growing political power, and an increasing ability to noticeably change the world.”

The inclusion of a federal election campaign financing charge only magnifies questions over Fried’s work. It’s not clear if the alleged use of false donor names included Mind the Gap donors or if Fried was aware of such alleged unlawful efforts. The couple’s spokesperson denied any involvement in the underlying matters relevant to the indictment.

The parents have the misfortune of looking like the type of low-hanging fruit prosecutors find irresistible. In an ordinary case, they would be on top of the targets list. Reports the parents are concerned they could be financially ruined by legal costs may only increase the interest in using them to pressure their son.

Other family members could also be subject to investigation, including Bankman’s sister, Barbara Miller, who works in Florida as a Democratic political consultant.

Again, it’s not clear if Justice will prove as aggressive in pursuing such collateral figures as it did with defendants like Michael Flynn. But it would likely take little to induce a plea given the weight of the evidence against Bankman-Fried.

One benefit is that a plea would make fast work of the case without a messy, drawn-out criminal process. That, however, could draw closer scrutiny. The timing of the indictment remains curious.

The Justice Department charged Bankman-Fried just before he was going to testify under oath for hours on every detail of the case. That is ordinarily a prosecutor’s dream: a potential windfall of self-incriminating statements that are fully admissible at trial. It only needed to wait a few hours but elected to stop the congressional testimony shortly before it was to start.

Pressuring his parents could be the final straw for Bankman-Fried, who is looking at a high likelihood of conviction on counts that can individually bring up to 20 years in prison. While offenses are likely to run concurrently, he can count on little sympathy from a sentencing court if convicted.

That is why a plea “in place of his parents” may be the one prospect SBF has to eke out an “effective altruistic” element to his criminal charges. This movement is based on the notion of “using evidence and careful reasoning to work out how we can do the most good with our limited resources.”

Bankman-Fried reportedly claims he is down to just $100,000 of cash in his bank. His “limited resources” may be reduced to his ability to assume the costs for others, particularly his parents. After wheeling and dealing in billions, SBF has become his own sole remaining asset. That is why the Justice Department just might offer him one final “effective altruistic” moment.

Jonathan Turley is an attorney and professor at George Washington University Law School.

64 thoughts on ““Effective Altruism”: Could SBF’s Parents Be the Key to a Plea?”

  1. Is the FBI going to put his pet hamster in a vice and give it a 1/4 turn for each answer they don’t like.
    I hope we get to return the favor in 2023.

  2. Professor I know you are moving on to other articles….but today I watched a lot of Sam on you-tube. He kept insisting that USA accounts weren t exposed. Whatever. And none the less. Can you explain how the WTO works? Let’s say Canada’s pension fund that lost x on ftx. ….can they bring that to the WTO.
    ..and basically get a judgement against the USA for failure to regulate? Like they did about pine caskets early 2000s. That is to say he may not just have blown down crypto he might have blown it all up. Really big. Like WTO levels were judgements are against whole countries. Whilst our sec chose not to regulate and even gave Sam a we won’t prosecute you note because his dad used to be the boss at MIT of our current sec cop. This seems ugly. I’m afraid after WTO….their dwindle is socialized on my kids. Got pitch fork sharpened….

  3. It will be sad if the case just can’t stand on its own….because to snarl a plea by this pressure….denies US of a jury trial….in public. We would not have 5000 federal felonies or 15000 regulatory felonies….if we didn’t have…99 percent pleading guilty for less than the book thrown at them.!!…and yet here it’s different than general Flynn. Here the family was involved perhaps ….but when they squeezed Flynn’s….they weren’t actually involved. We should ballk at squeezing family on trumped up….not trumpet it as a win by squeeze. Nothing gets fixed if he pleads. And the people remain as vulnerable. Which makes “accredited investor” status a total farce. So maybe that needs changed too….but pleas just bury the loop holes until next time…..so we churn millions of people over the barrell….so once in a while….they give a fall guy. No I want as the public…a speedy and public jury trial….not a squeeze plea….I want the lilacs of our lawa exposed….so we can fix them….and we can’t here with a plea. I reject a plea. Good judges should too.

    1. Moreover I know you like all the traffick you get from cfp…the problem is you’re bait. Click bait. You should decide if thats what you want to be. Or do you want to be serious logic and analysis? Because while your platfform is free speech…coff coffee…..you site could become ” pull my finger”….as more banned ppl look for a place. Just observing and forecasting.

    2. We must severly restrict proprietorial discretion.

      Prosecutors should not be leveraging family to get plea deals.

      They should proceed with all prosecutable cases against all prosecutable individuals,
      and NOT those they can not prosecute.

  4. It’s with a foul taste that ‘cynicism’ places on me when I think of Charities that consume 97% of donations for Administrative cost (Salaries, Overhead, Advertising). Is this ‘Effective Altruism’?

    It’s underlying premise is basically ‘Do Something Good’ with what you are given by your work or community (socially like minded). If it’s true then it’s a rare event. Yes I see Religious establishments, Civic Culture institutions, and Individuals, taking up the efforts of labor & giving to improve Society by making an engagement with under privileged People and Environments.

    BUT “Effective Altruism” seem more to me a Public Relations Campaign of Businesses than an “Effective” means of improving Society by getting some dirt under your fingernails and getting out there doing what the fore-mentioned Religious, Civic, and Individuals do.

    The Cynic in me says, “I gave at the Office, so I am ‘Effectively Altruistic'”, … just doesn’t cut it – Hokum.
    [And what the Bankman-Fried Family committed was complete Civic Blasphemy]

    As a last resort, WE should be able to count on Our Government, but they have F’d that up as well.

    My apologies if my cynicism has left a foul taste in your mouth. Guess all I can say is ‘Look Out Ahead’ there’s a Storm coming.

    The Myth of the Public Good
    Andy Hines – September 8, 2022 proteanmag.com Critique & Essays

    1. Yep….when you could work for a company fulfilling a need….your pay is x. Do it for the govt….it’s 2x….do it for a non profit….paid by the govt it’s 4x…..I often wonder why our defense contractors don’t become “non profit”. Maybe then the ” non profit” ruse would become to obvious ..and piss both sides off. Never forget…antifa and blm and splc are “non profit”. Yet who gets the tax write off for a charitable contribution.? The first it’s rule on that is….your donation can’t go to a specific person. But if the charity is taking in x and only spending y….97′ on overhead….then it’s a lead pipe cinch the money is going to specifically ppl running it. It’s pretty simple actually.if you don’t want your charitable contribution denied…don’t give it to any outfit that doesn’t use 51 percent for the cause…of it. That’s why many of the charities the govt puts on their list are ineligible in the first instance. Why govt shouldn’t even be involved in charity….but they want to be to make sure your food kitchen doesn’t give people more food because food stamps already gave them food. At which case the Christians are oh that’s cool…..b because scammers lie…when we could locally root out the scammers locally….no the feds want to merge church and state….whatever. Soon the son of man returns. He’ll set shit straight. And when he comes…..there will still be nations. Hopefully still ours.

  5. Well, they DO have an escape hatch from the Matrix they both love so much that they made careers out of it, if only they desire enough to use it!! At their age, and considering their financial situations that may be tapped out from other LIEyers like them eating up their life’s savings, they just may play their Get Out Of Jail For Free cards!! All that they have to do, is submit to any fake judge and his/her prostituting attorneys, an affidavit signed under the pains and penalties of perjury, stating that at no time will they ever commit any kind or amount of fraud upon the court, and demand for the fake judge and everyone else involved in the case to also sign said affidavit! You will see all of them scatter like roaches when the lights go on!!! The legal system runs on, depends upon, various forms of fraud and other crimes to operate and rip us off! And if that’s not enough, behind door #2, they can submit a demand to be shown where it is in writing, that they will actually GET a fair and unbiased trial! It’s totally impossible to get a fair trial with the legal system being as rigged up as a game of Three Card Monte or the pea under the shell game!! The fake judges act in cahoots with their prostituting attorneys to get CONVICTIONS and rob people and put them in jail, it’s NEVER about truth, justice and the American way of life!!

    1. For what it’s worth heartbeat…Madoff died in jail….but Enrons almost escaped jail. This kid had balls….but did he break the law? The text book example is orange groves…does his translate? To his security? Which the our govt failed to define. And waffles about for years. ..looking for taxation. But even then it doesn’t matter…he’s guilty of insider trading. A 10b1 court created off the back of the criminal code. I’m mystified why he wasn’t charged with insider trading…..bc he knew shit only he could know….and traded on it. That got the NY spritz guy in deep shit. And that was just a prostitute paying scandal. This is way worse…and is anyone charging insider trading? My Google isn’t the same as yours I only get to see certain “ai” picked for you. (Me). So we could be reading different news.

      1. But to me it’s telling the scope of the case….they are not charging insider….which seems to me…there is no “securities” case. There is only a “fair trades” case….and they don’t even have that….so they Capone it and call it wire fraud…..and conspiracy….yeah that’s the blank check I don’t want my government to have…it’s everything….didn’t actually use the dryer used the clothes line but told people in Indianola you dried your cloths….wire fraud. ….your husband hung the clothes before you said that….conspiracy…to commit wire fraud. B.s.. He’s the most easily charged with insider trading….but that’s not a charge? Meaning they have no securities charges. At all. So we are left with basic fraud. Yet we can’t let all selling swallow the sec. So what was he selling…so then it becomes intent. Did he intend to swindle ppl. Probably not at the start. But definitely at the end. Maybe that’s the fraud he’s charged with….more of fraudulent hiding ”…’ Transfer. But fraudulent transfer isn’t a crime until bankruptcy. Or maybe we can back date it until insolvency…never the less if we want shit to change…he hasn’t been charged to make a shorten lick of difference. Why hide that analysis in a feel good plea?

  6. As usual a very insightful analysis of what appears to be a complex case, but which I think boils down to old-fashioned fraud. Your commentary on the timing of the indictment and arrest, your comparison of this case with the Flynn case, and your suggestions about use of “effective altruism” are restrained, perceptive, and hilarious. Congratulations. I enjoy your work.

    Doug Santo
    Pasadena, CA

    1. OK, Doug, if you really do want to talk about fraud, let’s drill down a bit and find the bottom of that rabbit hole called fraud! Please tell us, one and all now, just exactly how the federal reserve banking system ISN’T committing massive fraud upon us all, when it creates “money” out of thin air and electronic bookkeeping entries! How about that now, huh, Doug? So the next logical step we take down the rabbit hole in pursuit of that fraud, is that SBF really didn’t commit ANY amount of fraud more than what he started with, and juggling some electronic bookkeeping entries around is all just another part of, another facet of, the huge con game and swindle all of us are forced into playing!! Are you rolling on the floor and laughing out loud now after reading this, Doug, huh? Is this also hilarious for you?!?! Or are you cringing in a fetal position and worrying about what you’re going to do next?? I won’t bother to even ask you if you’re embarrassed at all here, because it seems that you have no shame to begin with, so you can’t be embarrassed!! Do you enjoy my work too, like my paper called The Legal System Is Even WORSE Than Gambling!, or Pulling The Teeth Out Of The Mouth Of The Legal System, or Any Person Subject To…, The Scam Of The Legal System, The Holes In The Legal System, The Three Magic Questions, The Achilles’ Heel Of EVERYHING In The Universe and many more? Yeah, I think your heart would stop, (if you really do have one!) if you read any of my papers named above.

      1. That’s the point I think…what ccrime did Sam commit? Pperhaps fraudulent transfer’ after he knew he was insolvent. But that’s bankruptcy court jurisdiction….this isn’t like sec orange groves…he did this well in the open…for everyone to see. That what he was selling….and it’s really no different than those ppl selling empty ended funds. With no underlying asserts except promoters…and those empty funds get on exchanges…listed….he just got too big for his britches…yet that’s not a crime. We can’t have ex post facto crimes. It needs to be a crime when he started. If not all we have is fraudulent transfer on the rear end. And thats all they got. If I were Bahamian….I wouldn’t extradite him until bankruptcy charges fraudulent transfer. Until then …America gets what? No change in laws and no justice by punishing him…since nothing changes….it can happen again tomorrow….it just takes a family willing to sacrifice a kid
        Rinse and repeat.

  7. nothing will happen to any of them: too democrat to prosecute given the politicized DOJ under Biden/Garland

  8. Since he donated dark money to R’s in addition to his D contributions, this might be a fun venture into the absolute porta potty crime scene of Citizens United wreckage. My guess is it won’t happen though.

    And hey…, how about those trump trading cards, ay???

    1. I do not care that he donated money – though I would note the data is it was 99% to D’s.

      The PROBLEM is that he stole the money.

      Since you like to fixate on CU – the 40M he donated is NOT dark money.

      The estimate is that he donated 500M in dark money.

      Increasingly this is looking like another stolen election.
      In this case an election won using stolen money.

      Regardless, – everyone – D, R should have to give it all back.
      Because it was STOLEN

        1. If that is so, and the reports about the Democratic affiliations of his mother and sister are correct, then he likely gave tremendous amounts of dark money to Democrats and possibly to a limited number of Republicans whose influence he needed.

          Thank you for reminding us about the dark money to Democrats.

  9. “It is not uncommon for federal prosecutors to go after family members to induce a plea by a defendant.”
    If some Italians do that, it’s calledorganized criminal extortion. When the Feds do it, it’s good law enforcement. Explain the moral difference to me. We like one tribe better?

  10. Why would any deal/plea be available to ANYONE involved in this obvious fraud? If we have a balanced justice system, all involved get prosecuted.

    1. “The Justice Department charged Bankman-Fried just before he was going to testify under oath for hours…”

      Couldnt SBF have testified to Congress from his Bahamian jail cell ???

  11. The squeeze seems immoral to me but if they bankrupted General Flynn after attacking his son, these folks should pay the same price, IMO.

  12. Why the heck can I log in to post a comment, but this site tells me that no such account exists when I use the exact same information to try to like someone’s comment? Fix your system.

Leave a Reply