One Other Footnote, For The June 11 Arguments, In San Francisco…

In even more trivia — Ms. Holmes’ counsel argues, based on later decided cases (since the briefs were filed) that at least one Circuit feels there must be a greater quantum of evidence for what was proof of defrauded investors’ “reliance” — that caused losses… before it may be considered in sentencing calculations.

Of course, this makes no logical sense.

A very capable trial judge took EVERYTHING into account, in the person of the able USDC Judge Davila — and in the end, he sentenced her WELL UNDER the maximums for which she was eligible, and even well under the recommended “minimum” sentence.

So — the idea that he was too harsh (due to a lack of strong enough proof of investor losses — as to five of the ten investors that without serious dispute all suffered massive losses)… is completely contradicted by the record in this case.

As a cynical, but practical matter — I might opine that she clearly got “credit” for having toddlers/children who would miss her mothering for ten long years (instead of twenty!), while Mr. Balwani will do about 15 years, on just about the same predicate facts. [It is also true that only a small portion of all defrauded investors testified. The spreadsheets established nearly $700 million of losses — and that put her in the 20 year sentencing range. Geez.]

Game. Set. Match.

None of this will change… anything, in Condor’s experienced opinion.

Onward, into a sunny Friday, for a mountain bike ride, by the lake’s clear waters… smile.

[U, X2] Minor Update: Ms. Holmes Seeks To Argue Separately, And For More Time — From Mr. Balwani, On June 11…

UPDATED — 05.10.2024 @ 9 AM PDT: Her motion has been granted, by the Ninth Circuit panel. End, update.

I imagine she will be allowed the time she seeks (or more precisely, her counsel seeks — as she will not be transported from Texas for the arguments). She will — like Mr. Balwani, have to wait for a phone call, as to how the arguments went. [They will remain incarcerated, throughout.]

And yet, to be fair — there were… two trials. Not one.

But… recall that the Ninth Cir. panel earlier suggested it might not hear argument at all, from either Holmes or Balwani — and decide instead solely on the written briefs. The panel was plainly implying that on first blush, it seems no weighty or novel issues — in either appeal.

So I suppose it is still possible (though rather unlikely, since it won’t want to appear to have given the short shift to such a press-worthy case — a case of two felons serving over a decade each, in a criminal matter) that the penalty will just waive off all oral argument. In any event, here’s how she puts it:

…On March 31, 2024, the Court notified the parties to these three appeals that it has scheduled oral argument for June 11, 2024. The Court’s current argument calendar indicates — and the Clerk’s Office confirmed by telephone — that it intends to hear the appeals in a single argument, with 30 minutes allocated to the two Defendants jointly, 30 minutes allocated to the government, and rebuttal for the time reserved by the Defendants.

Because these appeals arise from separate trials, each of which yielded its own sprawling record evidence and distinct, complex appellate issues, the Defendants jointly move to revise the argument schedule. The Defendants respectfully request that the Court conduct the argument in three parts, corresponding to the three distinct sets of briefs and arguments before the Court.

The Defendants also respectfully request that the Court grant additional time to each of the parties for presenting their arguments. Undersigned counsel has conferred with counsel for the government, and was informed that the government takes no position as to the relief sought in this motion….

The Court sensibly has ordered that these appeals be heard in a single Court session by the same panel. Given the divergence in the issues presented in each appeal, the Defendants propose that the Court hear each of the three appeals sequentially: First, from Ms. Holmes’ counsel and the government on her merits appeal. Second, from Mr. Balwani’s counsel and the government on his merits appeal. And third, from Ms. Holmes’ counsel and the government on the consolidated restitution appeal….

As I’ve repeatedly predicted, here — none of it will matter. Both were convicted on avalanches of documentary evidence. Much of it from their own hands — much like Martin Shkreli. But Mr. Greebel (Mr. Shkreli’s former counsel) did get separate argument time when he appealed his separate felony conviction — from Martin’s. That was in the Second Circuit… and not a one for one, but it was… close.

Now you know.

Now June 11, 2024 Is Likely Argument Date, In Ninth Cir. Appeal Of Ms. Holmes’ Convictions…

Here are the details, though the panel could still decide to just let the briefs speak for themselves, in this and Mr. Balwani’s appeal.

We shall see. But here with Ms. Holmes’ one year “jail-i-versary” approaching (May 30 — first of ten, or so…) we may be assured of one thing: the ultimate outcome won’t change. She will do all her time. So will Mr. Balwani.

Here’s the text entry — on the docket in SF:

…Filed (ECF) Acknowledgment of hearing notice by Attorney Kelly Irene Volkar for Appellee USA. Hearing in San Francisco on 06/11/2024 at 9 a.m. (Courtroom: 1)….

Onward — instead of “May the Fourth“… somehow the “Revenge of the Sixth” day for 2024… seems slightly more apt, for this bit of news, no?

Tangent: I Should Note That This Supremes Decision Means A LOT LESS… That Some Will Say It Does: On Securities Law Liability, For “Pure Silence”

There will doubtlessly be some commentators who will say this is a big shift in the federal securities law jurisprudence announced this morning.

It isn’t. [In fact, it is not even worth naming the case. And to be clear, this is a defense Elizabeth Holmes tried to put forward — but she had created affirmative duties to disclose for herself, when speaking to her investors, because she had previously openly lied about so many of these material matters — like whether the device even worked. Smile.]

This new case merely holds that one may remain silent, where no special circumstances require affirmative speaking — speaking, to make the other statements made, not misleading by omitting context.

That’s all it holds. If someone buys a security without any disclosures, from someone else, without asking any questions, and without a disclosure document (in an exempt transaction, for example), there can be no 10b-5(b) liability — due to the failure of the buyers’ diligence.

Unsurprising, and that’s been understood to be the well settled law — for at least four decades. Since I practice M&A in the life sciences, this all comes up pretty often. Now you know. Onward, into the sunshiny Friday air.

Smile.

नमस्ते

SBF Asks To Remain In Rather Harsh Brooklyn MDC — During His Appeals…

Now that we all know he’s been sentenced to a quarter-century… we begin to focus on WHERE he might do that time…

And so, a rather smallish update here — but SBF has filed his appeal of the guilty verdicts, in the Second Circuit today. And with it, he’s asked the able USDC Judge Kaplan to allow him to remain in MDC Brooklyn, to be near his lawyers, as they prepare the appeal papers.

He’ll likely be granted that… grace.

But pretty soon (like mid-2025), he’s going to be headed to a Low Security federal prison to do his full bid. That will likely be nearer Central California, and with his parents in Palo Alto — the nearest suitable federal facility is probably FCI Mendota, not too far inland from Fresno.

But if that one is overly crowded, and Nevada doesn’t want him, he might end up on Terminal Island, with Sunny Balwani — down in the Port of Los Angeles.

I expect the living will be easier at either of those California facilities, than the relatively harsh Brooklyn one where he is now.

But at the MDC in Brooklyn, he’s likely figured out how to trade Mac for things he needs — like haircuts, snacks and instant coffee — when he runs short, from the canteen.

We shall see — but he will be a very gray old man, when he finally gets out now.

There is essentially zero chance he wins on appeal — same with Sunny Balwani, and Elizabeth Holmes, in fact.

Now you know. Onward.

Update: There May Be No Live Argument In The Ninth Cir.: Notice On Docket.

I’ve long said there are no remotely meritorious claims in Ms. Holmes’ appeal of her conviction. Same, Sunny Balwani’s.

Now the Ninth Circuit hints at much the same — suggesting while it might hear argument on June 10, it may also simply decide the appeal on the briefs alone. That is common in busy districts where no novel or particularly weighty issues are raised on an appeal, in a criminal case — like this one, despite the wall-to-wall, copious and generally very capable press coverage of the trials, and the aftermaths — as to both felons:

…NOTE: Although your case is currently scheduled for oral argument, the panel may decide to submit the case on the briefs instead. See Fed. R. App. P. 34. Absent further order of the court, if the court does determine that oral argument is required in this case, you are expected to appear in person at the Courthouse. If an in person appearance would pose a hardship, you must file a motion for permission to appear remotely by video, using the CM/ECF filing event “Motion for any relief (other than reconsideration or to seal)” and selecting the appropriate relief. Such a motion must be filed within 7 days of this notice, absent exigent circumstances. Everyone appearing in person must review and comply with our Protocols for In Person Hearings, available here. If the panel determines that it will hold oral argument in your case, the Clerk’s Office will contact you directly at least two weeks before the set argument date to review any requirements for in person appearance or to make any necessary arrangements for a remote appearance that has been approved or directed by the panel.

Please note however that if you do file a motion to appear remotely, the court strongly prefers video over telephone appearance. Therefore, if you wish to appear remotely by telephone you will need to justify that request in your motion and receive explicit permission to do so….

Now you know.

USDC Judge Kaplan In Manhattan Sentences SBF To 25 Years — A Quarter Century! — Rejects Claims That His Investors Suffered No Losses.

Obviously, Elizabeth Holmes can count herself lucky — that USDC Judge Davilla expressed some empathy about her toddling offspring… in only sentencing her to 12.6 years — and at a camp, no less. SBF didn’t have kids in tow, and admittedly stole more by far than Elizabeth — likely by an order of magnitude. Even so, both of them will be in their 50s before they are free again (he’ll be about a decade younger than she, as he enters prison).

Not terribly surprising — but SBF may end up in the same facility as Martin finished his sentence — FCI Allenwood, in Western Pennsylvania. [I offer this, while we wait for the answer from Akkadian.]

[But his sentence is about 20 percent longer than I had guessed — while using Elizabeth Holmes’ nearly $700 million of frauds as “Kentucky windage“, here.] Significantly, Judge Kaplan recommends a “medium security” FCI (like Allenwood or Ft. Dix or Canaan) — not a camp. But the final decision on placement falls to BoP, as we saw in Shkreli’s cases.

Sam Bankman-Fried, the son of two prominent Stanford Law School professors, and at one time, a billionaire — wielding wide influence in both Democratic and Republican US political races… will spend a quarter century behind bars.

And the forfeiture is over $11 billion. He will be every bit as broke as Martin Shkreli, when he finally leaves prison. And his parents (also former board members of various SBF affiliated companies) will not get to keep the $110 million Bahamas resort he purchased for them, with stolen FTX funds.

That estate, and several others, will be sold in bankruptcy — to repay jilted customers, creditors and investors. He will be in his late 50s before he leaves federal prison (even with a 15% reduction for good conduct, and completing various programs).

And so it goes.

नमस्ते

Tangent: Come Thursday, Highly Unlikely That SBF Gets Less Than 15 Years…

There is almost no chance he won’t see a sentence at least 20% longer than Elizabeth Holmes. He will learn his fate at a hearing this Thursday morning, in federal court, in Manhattan.

While I don’t think 50+ years is likely, I do think 25 is on the table.

I won’t repeat what the goofy prediction market bets at Polymarket say, but the betting is clustered between 20 and 50 years.

His complete lack of remorse — continuing to mislead — even on the stand… means the mere fact that there have been recoveries in bankruptcy… won’t count for much in reduction of sentence credits, I predict.

Onward.

The Oral Arguments — On Ms. Holmes’ Appeal Of Her Conviction Will Most Likely Fall…

…during the open windows of June 3-5 or 11-14, 2024.

Counsel for both the government, and Ms. Holmes, have indicated conflicts in July, and on June 7 and June 10 of 2024.

So there you have it — if you have any desire to be in San Fran on those dates, you might catch about an hour of oral advocacy in the Ninth Circuit.

I am scheduled to be in Oakland, those same days — so I might just pop in.

We shall see.

Onward.

Saw NY Post Photos This Morning — And, I Am Feeling Judgmental…

I was very much saddened — and deeply so — even though she and the kids and hubs are smiling in them.

It is… such a narcissist’s move — to have not one, but two babies — knowing full well (if she had possessed ANY ability to self reflect)… that the babies will be in / out of high school, before she might ever spend any real extended time with them.

[Yes she has the right to see her DNA live on — to procreate — but frozen eggs and sperm, and surrogacy — once she is out of prison… that would have been a more responsible option (from the point of view of the children). But when has she ever done a responsible… thing? The delay / surrogacy route would have given her kids a fair shake.

Nope. She chose this path both to garner sympathy from the judge — and to a slight degree, it reduced her sentence by about two years, compared to Balwani’s — but it is still more than a decade, either way. Damn.]

So yes, I have loads of judgment about her inflicting these horrific choices on her kids.

To be clear, the pair of toddlers look to be growing up with a loving nanny (in the pics) — and due to her spouse’s extremely high (but unearned) net worth/wealth, the kids will never know want for material things. And I trust he is a good father (he looks to be every bit the part) — so yes, very healthy, high achieving kids grow up in single parent homes, all the time.

I suppose… it is not unlike having a mom who works on an offshore oil rig, and is only seen for a half day a month, but even that would be in a… family home. [They will only know aged concrete institutional walls, and some sparse Texas parkways, with scrub brush, as their memories — surrounding their sporadic visiting times, with her, in the flesh.

Just… why, Elizabeth?

What makes her place her desires so radically, and so myopically, before all others’ in the Universe?

Why? Given her convictions, I suppose that question has already been answered. She possesses almost none of that “third person’s view” chip.

Out.