For months, John Jay Ray III, the corporate turnaround expert appointed to oversee the bankruptcy of crypto exchange FTX, accused the company’s founder, Sam Bankman-Fried, of “old-fashioned fraud.”
Now, Mr. Ray has a new target: Mr. Bankman-Fried’s parents.
On Monday, FTX filed case Longtime Stanford law professors Joe Bankman and Barbara Fried are accused in federal court in Delaware of “using their access and influence within FTX to enrich themselves.” The lawsuit seeks to recover millions of dollars the couple received from their son.
In the complaint, FTX’s attorneys, Mr. Bankman and Ms. Fried, Mr. Bankman-Fried said they received a $10 million cash gift, as well as a $16.4 million home in the Bahamas, based on FTX, purchased by the exchange. . Mr. Mr. Bankman said he helped cover up complaints filed by a former attorney for his son’s business, and to avoid revealing demands for political donations. The lawsuit also claims Ms. Fried coached Bankman-Fried and another FTX executive.
The couple “knew — or ignored the bright red flags that were emerging — that their son, Bankman-Fried and other FTX insiders were planning a massive fraud scheme,” the lawsuit said.
In a statement, Mr. Bankman and Ms. Fried’s attorneys said FTX’s claims were “absolutely false” and that Mr. Bankman-Fried also called it a “dangerous attempt to undermine the performance of the jury by intimidating Joe and Barbara” just ahead of schedule. A criminal investigation.
FTX filed for bankruptcy protection in November, following an $8 billion hole deposited into the exchange’s accounts. Next month, federal prosecutors in Manhattan will allege that Mr. He has pleaded not guilty and is due in court on October 3
The collapse of FTX Mr. Bankman and Mrs. It prompted the study of Fried et al. A decorated tax professor, Mr. Bankman was an FTX employee who was heavily involved in the company’s philanthropic efforts, while Ms. Fried, a respected scholar, ran a political donor network that her son helped finance.
According to the case, Mr. The bankman helped arrange hundreds of millions of dollars in loans to top employees and was listed in an internal document as a member of the company’s management team. In reports cited in the case, Mr. Bankman complained that he was only getting paid $200,000 a year, as opposed to the $1 million he had hoped to earn.
“Gee, I don’t know what Sam is saying here,” she wrote in an email. “This is a first [I] I have heard that the salary is 200k a year!
Soon, Mr. Bankman-Fried sent her a $10 million gift, the suit said. Mr. Bankman also flew private jets and spent $1,200 on one-night hotel stays for FTX, and he appeared in a cameo with comedian Larry David in an FTX commercial during the 2022 Super Bowl.
Mr. Bankman pressed for his role in the ad, the suit said, saying he was not obsessed with celebrity and “didn’t really care about meeting Tom Brady. But Larry David …”
Mr. Mr. The suit also claims Bankman assisted. Instead of looking into those claims, Mr. Bankman suggested.
Ms. Fried never worked for FTX, but she was closely involved in her son’s work, the lawsuit said. According to the complaint, he instructed her on political donations and encouraged her and other executives to make “straw donations” by disguising the fact that the money was coming from FTX, a strategy designed to “evade (if not violate) federal campaign finance disclosure rules.”
Cited in the case Mr. In an August 2022 email to Bankman-Fried, she brought up another donor who would “only give in an undisclosed form” and “would strongly urge you to do the same — or switch someone else. Name someone else.”
Federal prosecutors Mr. Bankman-Fried has been accused of masterminding the hay donation scheme, and two of her key advisers, Nishad Singh and Ryan Salem, have pleaded guilty to participating in it.
Mr. Bankman and Mrs. The Frieds, frequent visitors to the Bahamas, lived in a 30,000-square-foot residence with ocean views. After FTX’s collapse, the couple said they no longer believed they owned the house. But according to the lawsuit, FTX’s subsidiary paid for the house; Mr. Bankman emailed a top FTX executive in May 2022, inviting him and others to “celebrate the house you helped us buy/buy.” He and Ms. Fried were granted permanent residency in the Bahamas last October, with FTX covering $30,000 in fees associated with the applications, the suit said.
According to the suit, Mr. Bankman asked. A month after the purchase, the complaint said, Ms. Fried instructed FTX employees to order online a sofa, at least eight vases and a Persian hand-knotted rug valued at more than $2,500.
