Greetings from Washington, where I now live, and where we’ll see a bunch of Puck subscribers and fans tomorrow at a party we’re throwing at the French Ambassador’s residence.

Today, I’ve invited Eriq Gardner to trade notes, read tea leaves and make predictions about the legal elements of the federal case against Sam Bankman-Fried. We chat about the legal risk facing Sam’s parents and brother, a new theory as to what federal investigators are probing in Puerto Rico, and whether Ryan Salame is in talks to plead guilty, too. If you’re a lawyer, or frankly just love legal scoops about celebrities and media figures, make sure to sign up for Eriq’s private email, The Rainmaker, here.

But first, a few fundraising notes…

• It’s kind of amazing that Joe Biden still has not attended a fundraising event in the San Francisco Bay Area, one of the top two or three Democratic donor meccas, since 2019. And I’m not the only person in fundraising circles who thinks this is unusual, even if they don’t say so publicly. This was top of mind for me today as I read that Biden is scheduled to raise cash in California next week—but once again, in SoCal. Covid, of course, put a damper on in-person fundraising for much of 2020 and 2021, and Kamala and Jill and Doug have all raised money out here, but none of them are as strong draws as POTUS. Biden, who snubbed the Bay Area during the entire 2022 midterm cycle, should get on a flight to SFO soon. My apartment is now empty.

• Speaking of 2024, my colleague Tara Palmeri and I first reported a few months ago that Guy Cecil was “expected to significantly reduce his role at Priorities” USA, the powerhouse Democratic super PAC that Cecil has led since 2015. He has now officially said he is stepping down as the group’s chief, and some in Washington think that bodes well for Future Forward, the super PAC that Tara and I have reported is likely to be the main “blessed” group behind Biden’s reelection instead. Priorities USA has other capable leaders, of course, but some insiders argue that it is very closely linked as a brand, among donors and party elites, to Cecil himself.

• Speaker emerita Nancy Pelosi is continuing to introduce her biggest, most loyal, most local donors to her successors in the House: She’s doing another fundraising reception for the D.C.C.C.’s top donors in San Francisco next week, according to an invitation I’ve seen, alongside the new Democratic leadership: Hakeem Jeffries, Pete Aguilar, Katherine Clark and Suzan DelBene. You must have donated at least $50,000 to the group to attend.

Eriq: No flip phone for me. Just a PalmPilot 1000. Actually, believe it or not, I’m not quite ready to hang Bankman-Fried just yet. Sure, it looks quite bad, but it almost always does at this stage of a prosecution. Just wait till next month when Sam’s lawyers start bringing motions to chip away at the case. That may cause some re-examination, if not outright skepticism.

Look, the worst aspects for Sam are the commingling of FTX customer funds. That’s going to be a beast to explain away. That said, there’s a lot of confusion about what crypto is, and how it works, that may cause prosecutors fits in their attempts to make sense of these issues for a jury. This is one of the first, and biggest, pursuits of crypto fraud, and I expect that to factor as this moves forward. Prosecutors may see this as Bernie Madoff 2.0, but Sam’s got good lawyers. In particular, Cohen & Gresser’s Mark Cohen, who recently defended Ghislaine Maxwell, and Christian Everdell, who previously investigated and helped convict El Chapo. Both are former prosecutors with experience handling high-profile clients on sophisticated financial matters. They’ll put up a fight.

And as for the campaign finance stuff, those laws are notoriously tough to prosecute, and the Supreme Court has made them even more so over the years. Surely prosecutors hope that’s the frosting on this cake rather than the filling. Maybe it’ll help drive Sam into a plea bargain.

Will this get to trial? You interviewed him at home earlier this year, and are obviously more in his head than I am. What do you think?

Teddy: Structurally, it is hard for me to imagine that this reaches a trial. Seven months is a long way away. But I can also see both sides digging in their heels: I don’t know if there is a scenario in which prosecutors put a reasonable plea deal on the table to Sam. A deal spares prosecutors the risk of a trial going wrong, sure, but convicting Sam would be a major, career-defining win for U.S. Attorney Damian Williams. And S.B.F. is at the top of the food chain—there is no one for him to flip on. Prosecutors have got to think they’ve got him dead to rights. Plus, there is a “Who, me?” arrogance to Sam that makes me wonder whether he’d even take a deal, especially because the expected value—to put this in his own effective-altruist terms—of certainly spending 20 years in jail wouldn’t strike him as that much better than, say, maybe losing 40 years. So I think the Venn diagram of deals he could be offered, and deals he would take, have a pretty slim overlap.

Eriq: I wouldn’t be so quick to assume there’s no one he can flip on. Sure, he’s at the top of the crypto food chain, but this is a case that touches political power. Could he flip on some prominent politician, telling prosecutors that in taking his money, they knew about the fraud? That they induced it? I don’t know enough about what happened to say, but let’s not rule out these possibilities just yet. Not when there’s an ongoing investigation, as you reported, by the Department of Justice’s Public Integrity Section.

Teddy: Can we talk about Sam’s parents for a bit? Joe Bankman and Barbara Fried have their own defense lawyers and flacks, which isn’t a sign of guilt but does speak to the incredible scrutiny they are under. Joe Bankman, in particular, as a legal and philanthropic advisor to FTX, seems like he could be a target for investigators. Barbara Fried faces less risk, I’d say, but she could somehow end up ensnared in this whole thing if prosecutors try to make hay out of Mind the Gap, the donor group funded in part by S.B.F. and Nishad that funneled lots of money to Democratic groups and politicians.

Eriq: Honestly, that’s the most amazing thing to me about this story. I hope whomever is writing this movie—adapting your work over Michael Lewis’s—is focusing on the fact that Sam is a child of legal ethicists. I’m not sure I feel too bad for the parents. If they didn’t know what was going on, there certainly were some red flags. I’d hope my law professors are more perceptive. Anyway…

Teddy: Not just the parents. Sam’s brother, Gabe Bankman-Fried, is potentially another target for investigators. I reported the other day that prosecutors have been asking around about Gabe, who oversaw Sam’s political and philanthropic operation, which is now implicated in alleged campaign finance law violations. I can report that Gabe has hired his own lawyer, too, although I’ll keep that name to myself. For what it’s worth, from the outset of Sam’s fall, my reporting has suggested that the staff at Guarding Against Pandemics, the lobbying shop that was run by Gabe and funded by Sam, were just as much victims of this scandal as were anybody that trusted Sam. I think I still believe that, but I’ll reserve the right to change my mind. And certainly I’ve been questioning that belief ever since the indictment came down in December that contained an alleged straw-donor scheme, one that Singh admitted to in court. After all, you can see the Southern District’s logic pretty simply: If Sam was orchestrating a massive straw-donor scheme, by paying deputies like Singh or FTX executive Ryan Salame to make political donations for him, how could Gabe, his top political adviser, not know about it?

Eriq: Yeah, the logic makes sense to me, but Damian Williams is going to need to do better than that, I think. These white collar cases are all about willful conduct, and while there are instances where “conscious avoidance” is enough, I’m pretty sure that prosecutors would prefer to see evidence that the family members and advisors were co-conspirators.

Teddy: I will say, though, that regardless of whether Gabe did anything wrong—or the parents for that matter—prosecutors may cynically see going after them as a way to dial up the pressure on Sam. As is their right!

Eriq: Absolutely. They’re targets because they provide leverage. If there’s any deal to be made between Sam and prosecutors, leniency for his family and friends could be on the table. You see any curious notes on the D.O.J. front?

Teddy: I think the next shoe to drop is what happens to Salame, aka “CC-2” in the updated indictment of S.B.F. It was certainly curious to me, along with some lawyers involved in the case, how few details were cited about his alleged involvement in the straw-donor scheme. Especially in comparison to Singh, who appears to have provided much of the information that appeared in that superseding indictment, just days before he pleaded guilty. The S.D.N.Y. doesn’t do something like that by accident. Why are they not going after Ryan at this point? is something that has been put in my ear.

It’s also possible that more charges will emerge from the Justice Department’s activity in Puerto Rico, where, as you helped me report the other week, the Public Integrity Section recently issued at least one grand jury subpoena related to an FTX-funded, G.O.P.-aligned political group. I wonder if that’s because the man who founded that group, Erick Todd, is a part-time Puerto Rico resident. But there is another possibility that a lawyer noted to me after we published, which is that Public Integrity often presents evidence in San Juan. That’s because the U.S. Attorney’s office there is considered to be a very weak operation and is therefore less territorial about cooperating with Washington. I admit I didn’t know that prosecutors can effectively shop for a grand jury venue like that.

Eriq: I don’t know. I think prosecutors are pretty good at manhandling grand juries everywhere. What’s that Bonfire of the Vanities quote about indicting a ham sandwich? There’s probably a little something more there, and hopefully, we’ll eventually find out.

Teddy: Let’s talk about one of the media angles to this case. Given your interest in media law, I know you’ve been closely tracking the controversy surrounding Judge Lewis Kaplan’s decision, first to shield the identities of the folks who guaranteed S.B.F.’s bail, and then his decision to unmask them. One of those guarantors, we know now, is Larry Kramer, a legend in Silicon Valley philanthropy circles and a friend of Sam’s parents. But we still don’t know a lot about the bond sureties, right? Tell me how unusual that is given the public and media interest in this case.

Eriq: Well, I think that in most cases, nobody would really care about the bond sureties. And for the very few cases that people did, they wouldn’t be under seal in the first place. It’d be just taken as a matter of fact. But there was so much secrecy around this, and there’s nothing the media likes more than a mystery at the center of a puzzle. I also thought the prepared statements that were released upon the revelation of the bond sureties were quite adept at taking the hot air out of this balloon. (Kramer explained he was a close friend of Sam’s parents since the mid-’90s and they had once helped his family out during a cancer scare and so he was just repaying the favor.) Long explanation short, it was unusual, certainly, but there’s a lot that’s unusual about this entire affair.

Teddy: I’m of two minds on this one. I can totally see why S.B.F.’s team wanted to protect the family friends from harassment. The Internet sleuths are, predictably, trying to dredge up dirt on them as part of some elaborate conspiracy. And yet at the same time, the individuals responsible for one of the largest bail packages ever, at least on paper, deserve legitimate scrutiny! Unfortunately there’s no way to make this sort of information public without also simultaneously encouraging the Twitter detectives.

One last thing, Eriq, before I let you go. I’ve paid less attention to every step of the bankruptcy proceedings, but I’m interested in the interplay between the D.O.J. investigation and the investigation by FTX creditors. FTX lawyers at Sullivan & Cromwell seem interested in some of the political schemes by S.B.F., and FTX creditors can issue subpoenas, too. But obviously a bankruptcy judge can’t assess criminal penalties. If you’re a lawyer representing a client in this mess, shouldn’t it be a higher priority just to keep your client out of jail? Do you care at all about the bankruptcy proceedings?

Eriq: Oh certainly. Not as much as the criminal stuff, unless you’re a lawyer whose job is to recover money for someone. But even lawyers for the principal criminal targets have to keep an eye on the bankruptcy case. There are subpoenas being issued. There’s stuff that implicates Fifth Amendment rights. And finally, with a parallel investigation happening by very competent lawyers, you never know what may turn up there.