Ex-FTX CEO Sam Bankman-Fried has been paying his legal fees out of a tax-free gift of at least $10 million to his father, Forbes reports.
Bankman-Fried gave the money in 2021 to his father, Stanford Law Professor Joseph Bankman, from FTX’s trading firm, Alameda Research, two sources with knowledge of company operations told Forbes. The founder of the fallen cryptocurrency exchange paid the money using his lifetime estate and gift tax exemption, which in 2021 was a maximum of $11.7 million.
Forbes was not able to determine legal costs for Bankman-Fried, who at the peak of his career was estimated to have a net worth of $26.5 billion and who claimed to have only $100,000 in his bank account in November.
The indicted FTX chief is expected to plead not guilty Thursday to new U.S. criminal charges, which include conspiring to violate campaign finance laws and bribe Chinese authorities. He has been charged with 12 criminal counts, including wire fraud, money laundering and securities fraud, tied to misappropriating FTX customer funds through Alameda dating back to FTX’s founding in 2019.
Bankman-Fried has been preparing for his October trial with a team of powerful attorneys, including Mark Cohen and Christian Everdell of Cohen & Gresser, who defended Jeffrey Epstein associate Ghislaine Maxwell. Maxwell was convicted in 2021 of sex trafficking a minor.
Bankman-Fried is also being advised pro bono by a colleague of his father and close family friend, David W. Mills, a criminal defense attorney, a source familiar with the matter told Forbes.
A source close to Bankman-Fried told Forbes his defense costs are likely to run in the single-digit millions.
Corporate restructuring expert John J. Ray III, who is now CEO of FTX, is reported to have charged the company $690,000 in fees for his first two months of work, while hundreds of lawyers and advisers working on the bankruptcy proceedings have reportedly billed FTX $38 million.
FTX debtors claim that Bankman-Fried improperly took out $2.2 billion in company loans and that $8.9 billion in customer deposits are still missing.
SBF has been accused of pilfering FTX funds to fund a lavish lifestyle in the Bahamas, where the cryptocurrency exchange and hedge fund were located. SBF is also believed to have used the funds to cover risky Alameda bets.
Last month, FTX attorneys subpoenaed Bankman, a prominent attorney who specializes in tax law, and his wife, Barbara Fried, a retired Stanford Law professor, for personal finance statements and records of any assets from FTX companies or employees.
Bankman and Fried have told friends their 31-year-old son’s legal bills are likely to wipe them out financially, The Wall Street Journal reported in December.
“I’ll be spending substantially all of my resources on Sam’s defense,” Bankman wrote in an email to a Chicago nonprofit in November.
In December, Bankman-Fried’s parent’s put up their $1.8 million Palo Alto, California, home to secure their son’s $250 million bail.
Bankman-Fried’s lawyers have been asking federal prosecutors to give their client access to 56 million Robinhood shares he bought in 2022 with an Alameda loan. In January, U.S. authorities seized the shares, worth $485 million today, on the grounds they were bought with stolen customer funds.
SBF attorneys have also petitioned the Delaware bankruptcy court for financial assistance and, this month, asked for access to FTX insurance to help defray some of their client’s legal costs.
Bankman-Fried declined to comment on the Forbes story, as did advisor Mills.
Defense attorneys Cohen and Everdell did not respond to a request for comment. Bankman did not respond to a list of questions from Forbes.
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