Nailing Kevin McCarthy And Hakeem Jeffries On The Same Day Would Be... Cleansing For American Democracy
Kadia Goba had something of a mini-scoop yesterday that the mainstream media hasn’t picked up on yet. Writing for Semafor, she reported that Southern District of New York prosecutors in the FTX case are “demanding” that politicians “disgorge” the stolen funds Sam Bankman Fried and his underlings gave them— over $100 million that went to overwhelmingly to crooked conservatives in both parties. The notice from the feds said “the ‘donations represent the proceeds of Bankman-Fried’s crimes’ and can therefore be clawed back under federal asset forfeiture laws. It instructs recipients to return the cash to the U.S. Marshals service rather than FTX itself… Prosecutors plan to use any forfeited funds to compensate” Bankman-Fried’s victims.
This morning Theodore Schleifer, writing for Puck, had an even bigger FTX story, one that is even less likely to be aired by the mainstream media at this point. Nishad Singh’s guilty plea revealed new details of SBF’s straw-donor scheme, “depicting a sophisticated and highly choreographed endeavor wherein Bankman-Fried effectively embezzled tens of millions of dollars in customer deposits to Singh and… Ryan Salame, to make political contributions in their names. Is it really possible that not a single person who handled political donations for the three crypto billionaires knew anything about it?” Think about the top coordinators with SBF— Hakeem Jeffries, Josh Gottheimer and Ritchie Torres for Team Blue and Kevin McCarthy and Tom Emmer for Team Red, 5 men who should be rotting in jail cells next to SBF now instead of running around Capitol Hill like nothing even happened. That they pretend to know nothing “might,” wrote Schleifer, “strain credulity… But it has been the position of nearly all of my sources inside SBF’s operation since FTX’s downfall in November: that the people involved in the Bankman-Fried family influence machine were merely stewards dispersing checks, not people with intimate knowledge of misconduct at FTX, Alameda Research, or financial arrangements between Sam’s C-suite. Now, as federal prosecutors distinguish between so-called witnesses, subjects, and targets in the SBF investigation, we’ll see if those claims withstand legal scrutiny, too.”
Schleifer reported that prosecutors have subpoenaed a number of SBF aides in recent months as they investigate his political operation. “One of those to receive a subpoena, I’m told, is Jenna Narayanan, a donor-advisor to Guarding Against Pandemics, Sam’s principal lobbying group, who was asked to cooperate with the investigation earlier this year… Receiving a subpoena doesn’t mean that you’re under investigation as a target or a subject, of course— just that you might have helpful information to prosecutors. And I don’t mean to single out Narayanan when others got them, too. But given the specific charges facing SBF, lawyers say there is expected to be greater scrutiny from prosecutors of the GAP officials who actually moved the money, which was Narayanan’s purview as the group’s top check-cutting official. For instance, people like Sean McElwee, a GAP pollster, are now seen as less likely to be in the cross-hairs as are people like Tyler Deaton, who moved money for Salame. The prosecutorial thesis, in short, is that advisors who facilitated these transfers via FTX must have known about the alleged reimbursement scheme; otherwise, could they really be effective donor-advisors at all? That assumption is very much disputed by GAP employees. But the real question going forward, defense lawyers in the case say, is just how deep into the org chart prosecutors intend to drill when they already have the big fish, SBF, seemingly dead to rights.”
At the top of the food chain was Gabe Bankman-Fried, Sam’s younger brother, who launched the group in 2021 and was effectively everyone’s boss. Democratic strategist Michael Sadowsky, a data nerd and a die-hard effective altruist, oversaw the super PAC, Protect Our Future, and the two co-pilots were at times closely advised by a former New Hampshire state legislator Elizabeth Edwards-Appell. (The triumvirate were sometimes referred to as “GEM,” shorthand for their first names.) There was also Dave Huynh, aka “Delegate Dave,” who worked with Sadowsky for years and was a key liaison to the Democratic political establishment, given his presidential-campaign level experience with Kamala Harris and Hillary Clinton. A few other aides— Narayanan, McElwee, Simon Vance, Varun Krovi, Matt Lackey, and Keenan Lantz— rounded out the core Democratic political crew that surrounded SBF and Nishad Singh. (There were also a bunch of lower-level aides and Ph.D. types who focused on scientific policy matters, whom I will spare the public mention.)
On the Republican side of the FTX/GAP universe there was Deaton, who served as a de facto proxy for Salame with senior GOP leaders, and Brinck Slattery, who ran Salame’s super PAC, American Dream Federal Action. I’ve recently looked into whether there was any funny business at the Salame super PAC, given that its funding allegedly derived from FTX deposits, and because, as I’ve reported, a grand jury in Puerto Rico recently issued at least one subpoena related to FTX’s Republican campaign-finance activity. But based on my reporting, Salame’s super PAC— advised by top GOP consulting firms like FP1— was a fairly traditional outside group: they monitored races; they commissioned polls; they cut ads. Of the multiple people I spoke with, no one involved suggested it was anything more than a normal super PAC doing normal six- and seven-figure interventions in Republican primaries.
Running parallel to the Republican and Democratic operations was the FTX lobbying team, overseen by former C.F.T.C. commissioner Mark Wetjen, which occasionally scuffled over political turf with SBF’s personal team. (Naturally, sources from both teams have privately blamed the other for their current legal and financial predicament.) It was somewhat unusual, after all, for a CEO to simultaneously have his own aggressive personal lobbying operation in addition to a traditional, equally-aggressive corporate lobbying shop. And the lines were easily blurred: if someone on the Hill was meeting with SBF on crypto policy, they surely also knew he was also a major Democratic donor with his own super PAC.
So who knew what? To be sure, some of these SBF advisers were responsible for sloppy compliance and legal work: At one point, in the lead-up to the Carrick Flynn congressional race, they basically failed to file a legally required FEC report until I questioned them about it. An initial filing from Protect Our Future, the super PAC overseen by Sadowsky, misattributed $13 million from SBF in the name of some crypto trust LLC. The Bankman-Fried indictment from S.D.N.Y. details other sloppy campaign-finance behavior, which presumably had the sign-off from Bankman-Fried’s professional help. Were those missteps, though, or federal crimes?
If prosecutors want to nail anyone from Gabe on down, they will have to show something more sinister. In the months since SBF’s arrest, multiple people in his circle have argued to me that a fair-minded observer wouldn’t fault his advisors for not asking questions about the provenance of the money they helped donate. If you were Narayanan or Deaton, they contend, there was no reason to believe that Singh or Salame weren’t cash-flush billionaires, capable of making $10 million or $20 million donations. Sure, GAP officials may have gotten creative with who signed their names to certain checks— who should be in charge of the transactional “woke shit,” as one consultant put it, and who should be in charge of the MAGA checks— but coordinating fundraising, in and of itself, isn’t illegal, even if it is a little gross. The truly illegal stuff was the reimbursement scheme, and maybe only Sam, Ryan and Nishad knew about that.
Nevertheless, the cloud persists. The reputational injury to a small group of political and philanthropic consultants is not the concern of prosecutors, of course, but it has weighed heavily on many people in SBF’s once-sprawling political and philanthropic circles who fear that dozens of careers may be irreparably damaged. Some of their friends and lawyers have wondered to me: When will their moment of absolution arrive? Sam will have his day in court, presumably. Some targets may eventually receive a so-called “declination letter” from prosecutors many, many months from now, that would allow them to claim innocence. But for the rest, the letters SBF and FTX will forever stain their resumes, whether evidence ever emerges that they knew about his wrongdoing or not.
And what about the politicians? There are no bribers without bribees. Coming next: another cog in Hakeem Jeffries' successful adventure wrecking progressives' campaigns with stolen FTX funds, GOP moolah laundered through AIPAC and... money from a scumbag billionaire who now would like to see Ron DeSantis in the White House.
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