How Sam Bankman-Fried’s 25-year prison sentence compares to Bernie Madoff and Elizabeth Holmes’ prison sentences

By | March 29, 2024

Sam Bankman-Fried’s 25-year sentence puts him in the same league as other known financial fraudsters, including, clockwise from top left, Bernie Madoff, Lawrence Duran, Bernie Ebbers, Allen Stanford and Jeffrey Skilling. – MarketWatch Photo Illustration/Getty Images

With a 25-year prison sentence, Sam Bankman-Fried joins a list of notorious white-collar criminals such as Bernie Madoff and Jeffrey Skilling who have received harsh sentences for financial fraud.

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The sentence imposed by a federal judge puts Bankman-Fried’s failed cryptocurrency exchange FTX alongside Enron and WorldCom as a defining example of corporate greed.

The sentence also closes a chapter in the spectacular fall of Bankman-Fried, who went from crypto wunderkind to convicted felon in just two years after FTX’s collapse, amid allegations that he stole billions of dollars from the exchange’s clients.

Prosecutors had sought a prison sentence of 40 to 50 years, saying in court filings that the “enormous scale of Bankman-Fried’s fraud calls for severe sentences.”

In their sentencing motion, they wrote: “The loss – at least $10 billion – makes this one of the largest financial frauds of all time.”

A presentation report prepared by the U.S. Probation Office went even further, recommending a 100-year prison sentence. That would have meant that 32-year-old Bankman-Fried would never see freedom again.

Bankman-Fried’s lawyers had asked for a much milder sentence, of between five years, three months and six and a half years, asking the court to “resist the temptation to compare Sam’s case with some of the more infamous scandals of the recent past. .”

They argued that most of FTX’s customers would be cured through a bankruptcy proceeding with much of the money recovered, meaning Bankman-Fried’s actions were essentially a victimless crime, an idea rejected by Judge Lewis Kaplan rejected.

In court filings, Bankman-Fried’s lawyers said his case is more closely aligned with that of Theranos founder Elizabeth Holmes, who was sentenced to 11 years for fraud, than that of Bernie Madoff, who was sentenced to 150 years for stealing billions from investors in the US. a huge Ponzi scheme.

An even better comparison, they argued, was that of Michael Milken, the 1980s Wall Street investment giant who served two years in prison for securities fraud and later became a noted philanthropist. Bankman-Fried, they said, also planned to devote his life to charity work after serving his sentence.

Prosecutors responded by saying that Bankman-Fried actually distinguished himself from known fraudsters.

“Unlike other white-collar offenders, the losses for which the suspect is responsible are not borne solely by sophisticated investors or extrapolated based on a decline in stock price. The victims, on the other hand, include tens of thousands of ordinary people. People who entrusted the defendant with their money,” they wrote in the court documents.

“The fact that victims may get some money back through FTX’s bankruptcy two years later offers little comfort to the victims who needed the money in November 2022. “The suffocating sense of fear and despair that victims felt when they were unable to withdraw their money, their shame and embarrassment, and the resulting damage to lives and businesses, cannot be undone,” prosecutors wrote.

During his sentencing hearing, Bankman-Fried acknowledged the reality of his situation.

“My useful life is probably over. It’s been over for a while,” he said, according to reports.

Here’s how Bankman-Fried’s sentence compares to some of the largest corporate fraud cases in history.

Sholam Weiss, 845 years old

In 1999, Sholam Weiss reportedly received the longest sentence ever for a white-collar crime, following his conviction in absentia for stealing $450 million in a complex mortgage and stock fraud scheme. The scam bankrupted the National Heritage Life Insurance Company and wiped out the life savings of thousands of elderly victims.

Shortly before the trial, Weiss rejected a plea deal that would have put him behind bars for five years. After his conviction and before his sentencing, Weiss fled the country and remained on the run for three years before being arrested in Austria.

His supporters argued that Weiss’ sentence was excessive and was imposed only because he rejected the plea offer and then fled. The sentence was later reduced to 835 years on appeal.

In 2021, after serving 18 years, Weiss, who was 66 at the time, had his sentence commuted by then-President Donald Trump on his last day in office. Trump cited the “excessively harsh” length of the sentence and Weiss’ poor health.

Bernie Madoff, 150 years old

If there’s one poster boy for financial crime, it’s Bernie Madoff.

Once a respected titan of Wall Street, Madoff’s web of lies was undone during the 2008 financial crisis, when it emerged that his popular investment fund had been a Ponzi scheme all along.

At the time, it was believed that approximately $65 billion had disappeared, devastating tens of thousands of people, including celebrities and sophisticated investors. Once his plan failed, Madoff quickly admitted his guilt and was sentenced to 150 years in prison at the age of 71.

In 2021, Madoff died in prison at the age of 82 after serving eleven years.

The amount Madoff allegedly stole was eventually revised to around $18 billion, after false paper winnings were deducted from the total. After years of lawsuits and asset seizures, more than $14.7 billion has been recovered.

Allen Stanford, 110 years old

The second largest case of investor fraud in history – after Bernie Madoff – was that of Allen Stanford.

Stanford’s rags to riches story was impressive. Born into poverty in rural Texas, he had built a financial empire from nothing, become a billionaire and even received a knighthood.

In 2009, just months after Madoff’s empire collapsed, investigators raided the Stanford Financial Group headquarters in Houston. The raid was based on Securities and Exchange Commission charges alleging that Stanford defrauded thousands of investors by issuing more than $7 billion in fraudulent certificates of deposit as part of an elaborate Ponzi scheme.

Criminal charges followed, and in 2012, Stanford was convicted of fraud and sentenced to 110 years in prison. Stanford, now 74, remains behind bars.

Lawrence Duran, 50 years old

In what is believed to be the longest prison sentence ever related to Medicare fraud, Lawrence Duran was sentenced to 50 years in 2011 for orchestrating a scheme that netted $205 million.

Prosecutors said Duran, who ran a national chain of mental health centers, preyed on patients with advanced dementia by submitting false claims for expensive therapies they never received.

In some cases, prosecutors said elderly and sick patients were left in rooms for hours under the guise of expensive treatment, even though they did not know where they were or what was happening around them.

Duran and several co-conspirators pleaded guilty and were ordered to pay tens of millions of dollars in restitution. Duran, who is now 62, remains behind bars.

Bernie Ebbers, 25 years old

Ebbers, sometimes called the “Telecom Cowboy,” presided over WorldCom’s 2002 collapse, which resulted from widespread accounting irregularities related to loans Ebbers obtained from the company.

Ebbers, who had helped build WorldCom into the second-largest telecom company in the US after AT&T, blamed his subordinates for the questionable accounting practices, but he was convicted of fraud and conspiracy in 2005 and sentenced to 25 years in prison.

In 2019, after serving 13 years, Ebbers was released due to declining health and died a month later at the age of 78.

Jeffrey Skilling, 24 years old

Jeffrey Skilling was CEO of Enron during the ill-fated energy company’s collapse in 2001, amid accusations that the company blatantly cooked its books.

When the company filed for Chapter 11 that year, it was the largest bankruptcy proceeding in history, costing more than 20,000 people their jobs. The accounting scandal was so widespread that it led to the dissolution of Arthur Andersen, then one of the Big Five global accounting firms.

Skilling and Enron Chairman Ken Lay were both criminally charged and convicted in 2006 of fraud, conspiracy and insider trading. Lay died awaiting sentencing. Skilling was sentenced to 24 years in prison.

Over the course of several appeals, Skilling’s sentence was reduced to 14 years and in 2019 he was released from prison. After his release, Skilling, now 70, returned to Texas and tried to get back into the oil and gas business.

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