A possible legal defense to keep Sam Bankman-Fried out of prison may be unfolding before our eyes. My name is Joseph Tully, defense attorney and criminal law specialist.

SBF and Twinkie Defense 2.0?

The story of the collapse of crypto-currency platform FTX and the arrest of its CEO Sam Bankman-Fried (SBF) has captivated the nation and dominated news cycles. It is a compelling and titillating story with epic arcs of hubris, tabloid headlines, and collective schadenfreude. 

Is SBF's defense team laying the groundwork for him to walk away a free man by showing that he lacked the intent to defraud as a result of diminished capacity? The details of the case that are being shared publicly, wittingly or unwittingly, can be used to build a defense for the crimes he is accused of, even if he did mismanage customer funds.

The “Twinkie defense” became infamous in 1979 during the trial of Dan White who beat a first-degree murder charge even though he plotted and carried out executions of San Francisco City Supervisor Harvey Milk and Mayor George Moscone. Instead of getting a first-degree murder conviction, which carries 25 to life, Dan White received a voluntary manslaughter conviction and only served five years in prison.

Before we dive in-depth into my observations as a criminal defense attorney, a few disclaimers. Everyone deserves a fair trial, even, especially, the most despised. Sam Bankman-Fried is still presumed innocent under the law, and will remain so unless and until proven guilty. Further, I am not an FTX customer, and hold less than $2,000 of crypto in Coinbase, a competitor to the FTX platform. I have no connection to FTX or SBF, no special insider knowledge. I only know what I have seen in news articles and what I have researched to provide legal commentary to news programs.

For the backstory and timeline of events related to SBF and FTX, leading to the bankruptcy of FTX and criminal charges filed against SBF in late 2022, check out this coverage from CNET. 

TWINKIE 2.0

To prove fraud, the Federal prosecutors must show that Sam Bankman-Fried made false representations with the intent to deceive, and that the victims relied on that representation to their detriment. The specific elements of the fraud charge will depend on the specific laws that the defendant is accused of violating.

It can be challenging to prove fraudulent intent, as it is a state of mind that can be difficult to discern. The prosecution may rely on various types of evidence to try to demonstrate that the defendant had the necessary intent, such as emails or other communications, witness testimony, or financial records.

Building a criminal defense often begins before an arrest. If someone believes their arrest is inevitable, as SBF did, they can seek private counsel and start building the best possible defense for their case based upon the law and the facts. One of advantages of hiring private counsel, and of having parents who are both lawyers like SBF, is that private counsel can be proactive long before the court case begins. 

It is possible that SBF's defense team, using the press, is dropping breadcrumbs that could be used to establish a new version of the “Twinkie defense,” version 2.0. The “Twinkie Defense,” a derisive term invented by the press, was used by Dan White's attorney Douglas Schmidt, to argue that Dan White suffered diminished capacity as a result of depression, a symptom of which was a shift from a healthy diet to Twinkies and other junk food. To clarify, the defense argued that depression created diminished capacity and one of the symptoms of White's depression was a change in diet from healthy food to junk food. Twinkies were only mentioned in passing in trial.

Here, SBF is surrounded by lawyers. Both of his parents are legal scholars at Stanford, and he has some of the best corporate lawyers available on retainer. SBF and his lawyers have had months to start building a defense. Yet, despite all those attorneys in his circle, SBF persisted in talking about his case. Was this a fluke or was it by design?

SBF has been talkative and forward about his role and his circumstances. Many legal observers expressed concern over his speaking about his situation and the collapse of FTX and Alameda Research. Of course, one should never speak to authorities without the advice of a lawyer. Media interviews, tweeting about the matter; talking publicly on TV and to the press is the same as talking to cops, since cops and prosecutors read the news too. 

Everyone knows, “Anything you say can and will be used against you.” If you make a statement that can be twisted to be used against you, it will be. However, most people don't know the flip side to this rule; if you say something good about your case, the prosecutors and judge will keep it out of court. So anything said that is bad or could be twisted to be bad comes into court to be used against you and anything good will be kept out. Therefore, there is no advantage to talking publicly about your case.

SBF knows better than to talk about his case. His legal team certainly knows better. But could SBF's plethora of public statements and revelations be part of a strategy? 

SBF: THE MAN, THE MYTH, THE MEDIA

Spending billions of dollars attracts attention. SBF attracted media attention throughout the rise and fall of FTX. The glowing articles about his quirks as a young billionaire CEO before the insolvency of FTX turned to tawdry gossip and speculation after SBF's fall from grace. Consider the “facts” that “everybody knows” about SBF, the rumors that the media keep repeating. They are interesting, salacious, quirky personal things. 

Sam Bankman-Fried is:

• A billionaire crypto wunderkind (who lost it all)
• An effective altruist out to save the world
• Sexually polyamorous 
• A pharmaceutical enthusiast

The media takes a story and spins it to get the most clicks. Salacious clickbait drives too much of the news media these days. SBF lost control of the narrative early on. Even though most people with an insider view of the FTX executives' lifestyles described them as nerdy, hardworking, undersexed geeks, the media knows stories about board game parties and cargo shorts don't sell.

Here is a sampling of SBF headlines from late 2022:

• Partner-swapping, pills & playing games: Inside Sam Bankman-Fried's FTX party house
• INSIDE FTX FRATHOUSE: Dropping speed, sex swaps and video games
• SEX, DRUGS AND GEEKDOM: FTX lovebirds ready to rat each other out? | Toronto Sun
• FTX was fueled by drugs, sex, and poker fraud
• Polyamory, penthouses and plenty of loans: inside the crazy world of FTX | Cryptocurrencies | The Guardian
• Sam Bankman-Fried talks about FTX collapse, drug use and criminal liability in wild NYT appearance

This is what “everyone”, including the jury pool, knows about Sam. SBF and his defense team did little to correct the record. In fact, the opposite; SBF and his attorneys seem to have thrown gas on the fire by reinforcing some of the stories directly.

INITIAL INGREDIENTS FOR SBF'S TWINKIE DEFENSE 2.0

My legal “Spidey-sense” went off reading reports of SBF's initial court appearance in the Bahamas on Dec 13th, 2022. I don't have actual superpowers, but I do take note when my initial response to evidence, or a news report is, “Gee, that's weird.”

That Bahamas hearing included an extensive discussion of Bankman-Fried's medication, which his lawyer said was for conditions including depression, insomnia, and attention deficit disorder (“ADD”). At the start of the proceedings, Bankman-Fried asked to change an Emsam patch, a medical strip applied to the skin that is used to treat adult depression. He also asked to briefly leave the courtroom to apply this medication. 

Gee, that's weird, to publicly address a medical issue, on the record, using the brand name of the prescription, and explaining why it was prescribed. 

On that same day, Dec 13th, Forbes published SBF's 20-page Congressional testimony transcript that was “leaked” to Forbes. Forbes has not explained how they “obtained” the script for SBF's aborted appearance before Congress. 

The “testimony” document begins with SBF's statement, “I would like to start by formally saying, under oath: I fucked up.” However, this document is not actually his testimony under oath. It is twenty pages of what SBF wants the world to know. It is presented as fact, without cross-examination, or under penalty of perjury. The transcript reads like an online fanfiction rant promoting a retconned FTX history where everyone except Sam is responsible. 

In “Section 7b” of the document comes Sam's prominent discussion of his Emsam prescription:

“I have a prescription for Emsam, and have for roughly a decade. I use it, daily, for its only on-label use as an antidepressant. It is not generally the case that people are expected to talk about their private medical conditions, but enough paparazzi have snapped photos of my belongings and theorized about it online that I guess I have no choice.”

Sam is highlighting his prescription for Emsam's on-label use for depression. “On-label” means he had a doctor's prescription for Emsam to be used as the manufacturer intended, and not for other purposes. This is important to differentiate his use from recreational, self-medication, or abuse.

On Nov 30, 2022, speaking via teleconference from the Bahamas at The New York Time's Dealbook Summit, SBF started the apology tour, and explaining his “on-label” use of pharmaceuticals.

“It has all just been totally on-label use of medications and I think things on the margin have helped me focus a little bit. I wish I had been a lot more focused in the last year.” He added, “I have been prescribed various things at various times to help in focus and concentration.”

The “paparazzi” reference may be to a tweet that analyzed an undated candid office photo of Sam at his desk at FTX, which showed several packages of medicines. In November 2022, twitter sleuths dissected the undated photo and identified a box of Emsam patches on Sam's desk amongst the clutter. 

Was the identification of Emsam in the photo good detective work, or was somebody tipped off?

EMSAM, EMSAM, EMSAM!

The active ingredient in the Emsam patch SBF claimed he wore for managing depression is Selegiline. It was approved by the FDA in 2006, and is commonly prescribed to treat Parkinson's disease and other neurological disorders. Selegiline is a dopamine agonist that works by increasing the levels of a neurotransmitter called dopamine, which is responsible for movement, memory, and cognitive processing. It can also help to reduce symptoms of depression and anxiety. 

One argument to be made in SBF's defense, to try to mitigate his intent and responsibility in the frauds of which he is accused, is that the Emsam patch was treating a condition, and that underlying condition played a role in the fraud. At the bare minimum, claiming diminished capacity due to an illness in this non-violent crime could be helpful in his sentencing if SBF reaches a plea agreement or is found guilty after trial.

“Diminished capacity” is a legal defense that can be used to argue that a defendant was not fully capable of forming the specific intent required for a particular crime. This defense is based on the idea that the defendant's mental capacity was impaired at the time of the crime due to a mental defect, disease, or other psychological condition.

Per the United States Sentencing Commission, a part of the judicial branch of government: ‘Significantly reduced mental capacity' means the defendant, although convicted, has a significantly impaired ability to (A) understand the wrongfulness of the behavior comprising the offense or to exercise the power of reason; or (B) control behavior that the defendant knows is wrongful. 

In the original “Twinkie Defense,” attorney Douglas Schmidt does not recall ever hearing Twinkies specifically mentioned in the litany of sugary sweets Dan White ate while in the throes of his depression. The point of the defense was to demonstrate diminished capacity due to the underlying illness of depression. The argument was never that Twinkies actually drove White to kill. 

That said, SBF and his lawyers are not crying “depression” repeatedly. Depression is mentioned regarding the Emsam Selegiline patch, but not on its own. Depression could be used to mitigate or lessen a sentence, but not absolve SBF of a specific intent to commit fraud.

Remember, to prove fraud, the prosecution must prove specific intent to commit that fraud. Could diminished capacity be used as a “complete defense?” If diminished capacity could be established, then it could be said that SBF was not capable of understanding the nature of his actions or the consequences of those actions. For example, if a defendant was suffering from side-effects of a medically prescribed on-label pharmaceutical that impaired their ability to understand right and wrong, they might be able to use the defense of diminished capacity to argue that they had no intent to commit fraudulent actions.

Emsam, Selegiline, and Impulse Control Symptoms – the New Twinkie Defense?

According to WebMD's MedecineNet: 

Selegiline can affect the mental status and cause hallucinations, and abnormal thinking and behavior, including paranoid ideation, delusions, agitation, aggressive behavior, confusion, disorientation, and psychotic-like behavior.

Patients on selegiline therapy may experience intense urges to gamble, increased sexual urges, intense urges to spend money, binge eating, and/or other intense urges, and an inability to control these urges. Specifically ask patients and caregivers about such urges, because patients may not recognize these urges as abnormal. Consider reducing the dose or stopping selegiline if such urges develop or worsen.

Common side effects of selegiline include:

• Psychotic-like behavior
• Depression
• Confusion
• Disorientation
• Delusion
• Mood changes
• Aggressive behavior
• Agitation
• Delirium
• Activation of mania
• Compulsive behaviors such as uncontrolled binge eating, gambling and sexual urges

Let's return to the SBF narrative that was well established before FTX began to crumble. For the past few years, since FTX rose to prominence in the crypto space, the media portrayed Sam as a sexed-up polyamorous billionaire with a spending problem that wanted to grow FTX large enough to buy Goldman Sachs so he could save the world via effective altruism. That portrayal ticks several side-effects in one sentence: psychotic, delusional, manic, grandiosity with uninhibited compulsive behaviors.

It does not matter if the public perception of SBF is true or not. The narrative for a complete defense of diminished capacity is right there if one looks for it.

YOU HAVE THE RIGHT TO REMAIN SILENT

After the bankruptcy was declared, and even after prosecutors started circling, Sam Bankman-Fried kept talking, tweeting, explaining, and apologizing. With all those attorneys beside him, around him, counseling him, at the Nov 30, 2022 NYT Dealbook Summit, Sam persisted. 

SBF blabbed to interviewer Andrew Ross Sorkin of the NYT: that he indeed used Emsam, “made a lot of mistakes,” “didn't ever try to commit fraud on anyone,” “I was shocked by what happened a month ago,” admitted to “a massive failure of oversight of risk management, and of a huge diffusion of responsibility from, from myself running FTX,” and explaining, “I wasn't running Alameda. I didn't know exactly what was going on.”

Whatever the reason, diminished capacity or not, it seems a case is being made openly that Sam lacked intent. Openly on Twitter, on TV, and in the press, Sam pleads his case to FTX customers, the world, and especially his prospective jury pool. Without intent, there can be no fraud.

What if Sam Bankman-Fried is not responsible for the FTX-related fraud charges he faces? 

About California Criminal Defense Attorney Joseph Tully

Author and Lawyer Joseph Tully brings a passion to law practice rarely seen among criminal defense lawyers and it drives his spectacular record. Tully & Weiss Attorneys at Law, his California criminal defense law firm, covers the entire state with offices in Martinez, San Francisco, Redding, Fresno, and LA/OC. Mr. Tully and team outwork and out-prepare prosecutors to combat the California's massive law enforcement and judicial advantages over an individual. This imbalance of power against the innocent is the topic of Mr. Tully's book California: State of Collusion.

Joseph Tully is a Certified Criminal Law Specialist, an elite certification awarded to less than 1% of California lawyers by the California State Bar Board of Legal Specialization. In addition, he serves as a legal analyst for TV news programs, and as a guest on Court TV. He has an extraordinary record of victories in high profile trials from Redding to LA to Contra Costa County and multiple precedent-setting wins in self-defense trials. His diligence and meticulous preparation resulted in scores of great outcomes for cases others declared impossible. Contact Tully & Weiss here for legal help in California and at the Federal level.