The cherry blossoms in Washington, D.C., are at peak bloom at the beginning of spring. “CBS Evening News” anchor and managing editor Norah O’Donnell takes a look at the iconic flowering trees.
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The measure disapproving of a D.C. Council bill to revise criminal penalties in the nation’s capital received bipartisan support in both chambers of Congress. The bill to declassify information about the origins of the coronavirus, including any connection to a lab in Wuhan, China, passed both chambers unanimously. Both were adopted earlier this month.
Earlier in the day, Mr. Biden issued the first veto of his presidency, rejecting a Republican-led measure regarding a Department of Labor rule for investment managers.
The president took many Democrats by surprise when he voiced his support for the Republican-introduced criminal code resolution. D.C. Mayor Muriel Bowser, a Democrat, had vetoed the D.C. Council’s bill, and the council overrode her veto. House Republicans then crafted a resolution to block the measure. Congress has oversight of the district under the Constitution and federal law.
The D.C. Council’s measure sought to shorten maximum sentences for some crimes, like carjacking, burglary and robbery, while lengthening them for others. It also would have eliminated nearly all mandatory minimum sentences, except for first-degree murder. Supporters of the congressional disapproval resolution suggested that shortening any sentences while crimes like carjacking have been on the rise sends the wrong message.
The president told Senate Democrats that he would not veto the Republican-backed resolution, should it reach his desk. The vote in the Senate in early March was 81-14, after 31 House Democrats joined all House Republicans in passing the resolution.
“I support D.C. statehood and home-rule — but I don’t support some of the changes D.C. Council put forward over the mayor’s objections — such as lowering penalties for carjackings,” the president tweeted on March 2. “If the Senate votes to overturn what D.C. Council did — I’ll sign it.”
White House press secretary Karine Jean-Pierre explained in a press briefing that “the president wants to make sure that communities, even in D.C., Americans in D.C., feel safe.”
The president’s support of the GOP-backed resolution took some House Democrats aback because the White House had previously issued a statement of administration policy saying it opposed the congressional disapproval resolution.
“The administration opposes H.J. Res. 24, Disapproving the Action of the District of Columbia Council in Approving the Local Resident Voting Rights Amendment Act of 2022 and H.J. Res. 26, Disapproving the Action o the District of Columbia Council in Approving the Revised Criminal Code Act of 2022,” the White House’s statement in February said.
The bill regarding COVID-19 requires Director of National Intelligence Avril Haines to declassify any information about links between the origins of the pandemic and the Wuhan Institute of Virology, the controversial viral research laboratory in the city where the SARS-CoV-2 virus first emerged.
The intelligence community has not definitively agreed on the origins of the pandemic. A report in 2021 reflecting the findings of intelligence community was inconclusive, and determined two theories were “plausible” to explain how the virus emerged: “natural exposure to an infected animal and a laboratory-associated incident.” The Department of Energy recently concluded, with “low confidence,” that it was plausible that the virus originated from a lab, a theory supported by the FBI.
The White House had not previously indicated whether the president would sign the bill on COVID origins.
In December 2022, $1,981 was the typical monthly rent in the United States — a 7.4% increase from the year prior. But while rent has begun to stabilize nationwide, rent affordability remains difficult for many Americans.
“There’s literally nowhere in the country where a tenant is not burdened by their rent,” according to Leah Simon-Weisberg, an adjunct professor of law at UC San Francisco.
In response, support for rent control policies has gained traction.
But this isn’t the first time such policies have had widespread support. After the massive economic disruption caused by World War II, the federal government imposed rent control on roughly 80% of rental housing between 1941 and 1964.
Over time, it was abandoned because prominent economists unanimously argued against the policy. That sentiment mostly continues today.
“There are various surveys of economists. One done by IMG showed that only 2% thought that rent controls in places like New York and San Francisco were having a positive impact on affordable housing,” said Jay Parsons, chief economist at RealPage.
Economists argue that rent control would deter developers from building more homes, which would only worsen the housing supply crisis in the United States.
America already suffers from a deficit of 3.8 million homes, especially at low-income price points, according to Habitat for Humanity.
“We have not invested as a nation in building the supply of housing in a variety of communities, in a variety of different price points. We’ve instead relied on the private sector to do so,” said Sharon Wilson Géno, president of the National Multifamily Housing Council. “But unless that money comes into the market and investors see that as a better investment than some other kind of equity or some other kind of investment, they’re not going to come.”
Watch the video to find out why so many economists are against the idea of widespread rent control.
Jeff Glor reports on a deadly shooting in Germany, Senate Minority Leader Mitch McConnell’s condition after suffering a fall, and why fewer Americans are going to college.
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Senate Minority Leader remains hospitalized after he tripped and fell while attending a private dinner at a Washington, D.C., hotel Wednesday evening. He has been diagnosed with a concussion and is expected to remain hospitalized for a few days, his office said. Scott MacFarlane has more.
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Federal agencies responsible for protecting the U.S. Capitol did not “fully process” or share critical information — including about militia groups arming themselves ahead of the Jan. 6, 2021, insurrection — a failure that stymied the response that day, according to a new 122-page report by the nonpartisan Government Accountability Office.
The FBI and the U.S. Capitol Police had seen “threats that were true or credible” days ahead of the assault on the Capitol building, the report said. But much as with the Sept. 11, 2001, attacks, a failure by multiple agencies to share information and connect dots left those securing the Capitol unprepared for the onslaught.
“Some agencies did not fully process information or share it, preventing critical information from reaching key federal entities responsible for securing the National Capital Region against threats,” the report said.
The GAO report also revealed specific tips that were obtained by some federal agencies ahead of the attack. For example, the Capitol Police obtained information “regarding a tip that a member of the Proud Boys had recently obtained ballistic helmets, armored gloves, vests, and purchased weapons, including a sniper rifle and suppressors for the weapons.”
The tip, which the Secret Service also obtained from its Denver Field Office, revealed the individual flew with others to Washington D.C. “on January 5, 2021” to incite violence. According to the report, the Secret Service interviewed the individual and his son when they arrived in Washington, D.C., and investigated whether they were traveling with “loaded weapons.” Capitol Police also attempted to locate the individual using “cell phone pings.”
According to the report, investigators from the U.S. Department of Homeland Security reviewed a tip a day before the Jan. 6 attacks about an individual who had “staked out parking lots of federal buildings to determine how to bring firearms into D.C. at January 6th events.”
The report also indicates there was a threat against the D.C. water system between Dec. 16, 2020 – Jan. 4, 2021. Information about the threat was obtained by the Architect of the Capitol and was shared with the Capitol Police.
In addition to the Capitol Police and the FBI, five other federal agencies including the Department of Homeland Security, United States Secret Service, Park Police, Senate Sergeant at Arms and Postal Inspection Service “developed a total of 27 threat products specific to the planned events of January 6 prior to the attack on the Capitol,” according to the obtained report. The GAO found that “14 products included an assessment of the likelihood that violence could occur.”
A tip shared by intelligence officials from New York State with their counterparts in Washington D.C., included a social media post where the user “described intent to conduct an attack in Washington D.C. on January 6 — targeting Democratic members of Congress.”
The report singled out the FBI, concluding the agency “did not consistently follow policies for processing tips.”
“FBI officials we spoke with said that from December 29, 2020 through January 6, 2021, they tracked domestic terrorism subjects that were traveling to Washington, D.C. and developed reports related to January 6 events,” said the report. “As of January 6, 2021, FBI officials noted that the Washington Field Office was tracking 18 domestic terrorism subjects as potential travelers to the D.C. area.”
In response to the GAO’s findings, the Justice Department said that the FBI would be working “diligently to address the recommendations in the GAO’s report,” and at the same time, the department would “incorporate GAO’s conclusion that, despite collecting and sharing significant pieces of threat reporting, the FBI did not process all relevant information related to potential violence on January 6.”
“The FBI continues to be introspective regarding its roles in sharing intelligence regarding the event of January 6,” Justice Department official Larissa Knapp said in a letter to the GAO.
U.S. Capitol Police Chief J. Thomas Manger told the GAO his department is “currently drafting policy that will provide guidance for sharing threat-related information agency-wide” and said this policy is “currently under executive review.”
The U.S. Park Police concurred with GAO’s findings, and an Interior Department official stated that the agency is working to update policy by March 2023, regarding the “collection, analysis, and distribution of intelligence information.”
In a town full of monuments, there’s one that stands above them all. Paul Goldberger, professor of design and architecture at the New School in New York, calls the Washington Monument, in our nation’s capital, “the tallest, the simplest, the most straightforward, the most direct. It’s very much like Washington himself in that way actually.”
In our nation’s capital one monument stands above them all: the 555-foot-tall Washington Monument.
CBS News
The monument’s iconic design was not, in fact, by design.
“Robert Mills, who designed the Washington Monument, originally envisioned a classical colonnade going around the bottom of columns, basically kind of like a round, classical temple,” said Goldberger. “They had all kinds of financial problems as well as political problems. And so, only the obelisk was built.”
An engraving of Robert Mills’ original design for the Washington Monument.
Library of Congress
Construction began in 1848 and was painfully slow due to the challenge of 19th century crowd-funding, according to Mike Litterst, spokesperson for the National Mall. “No one person could give more than a dollar to the Washington Monument, because they wanted it to be a monument of the people,” Litterst said. “But when everybody can only give a dollar, and you need 250,000-plus to finish the project, that’s going to be a problem over time.”
An 1854 illustration of the incomplete Washington Monument, as published in Gleason’s Pictorial Drawing-Room Companion.
Library of Congress
Financial troubles aside, the monument had no shortage of groups who wanted to be associated with it. Litterst showed Salie some of the stones, engraved by the monument’s supporters (Masons, locomotive makers, temperance societies) that came from all corners of America, giving us a window into 19th century America – a time capsule of states that were tenuously united.
That theme is illustrated no better than by the Tennessee stone, on which is engraved the slogan, “Federal union, it must be preserved.”
“We’re talking mid-1850s here,” said Litterst. “This is a direct reference to the storm clouds gathering that will eventually erupt in civil war in 1861.”
Engraved stones, from the interior of the Washington Monument.
CBS News
Even foreign countries left their mark. And then there was a legendary stone from the Vatican. “Pope Pius IX sent a stone from the ruins of the Temple of Concord in the Forum in Rome,” Litterst said. “And this outraged a number of people in the country, specifically a political party called the Know-Nothings. Their platform was decidedly anti-Catholic and anti-foreigners.”
The Know-Nothings threw the so-called Pope Stone into the Potomac, then staged a coup, taking over the society charged with building the monument, in 1855. Construction ground to a halt.
For more than twenty years the obelisk was a stump. Cows were kept on the site during the Civil War, almost as if to symbolize the United States’ unrealized ideals.
Litterst said, “The centennial of American Independence comes in 1876. That’s the renewed interest, not to just finish it; we’re either going to finish it or we’re going to tear it down, because this is a complete embarrassment.”
And it’s one of the reasons that, if you look closely at the monument today, you can see a difference in its marble cladding.
When it was finally finished in 1885, it stood at 555 feet and 5 1/8 inches tall, and was the world’s tallest structure.
Goldberger said, “The Washington Monument is just a pure shape, and it suggests that Washington is an idea as much as a man. An idea of singularity, an idea of clarity and perfection and heading for the sky.”
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Story produced by Anthony Laudato. Editor: Remington Korper.
In 2015, my family and I took a vacation to Lisbon, Portugal. We immediately fell in love with the beautiful weather, the rattle of cable cars, and the welcoming locals.
Just two days in, we decided to leave the U.S. and retire in Portugal — and it was one of the best decisions we’ve made. We spend far less money on necessities in Lisbon than we did in Washington, D.C. We’ve also found that fun leisure and food experiences are just as, if not more, affordable.
On weekends when I’m out and about, I spend less than $40 a day:
Lisbon is paradise for breakfast lovers. When my wife and I are in the mood for something light, our favorite spot is the Copenhagen Coffee Lab in Principé Real, a lively neighborhood in Lisbon.
For a bigger breakfast, we go to the nearby Seagull Method Café, where we order cottage cheese and fruit pancakes for $6.31 a plate.
A one-hour train ride from Lisbon’s historic Cais do Sodré station to the fishing village of Cascais costs $4.92 (round trip).
Cascais is picturesque, with tiled buildings and black and white cobblestone plazas. It’s a gorgeous place to spend the morning.
Downtown Cascais has plenty to look at, including beautiful tilework and architecture.
Photo: Alex Trias
Near the center of town is the Jardim dos Frangos (translated to the “chicken garden”) where peacocks, roosters and hens, followed by their chicks, wander freely through the pine and shaggy eucalyptus trees.
After walking around, my wife and I rent bicycles for $6.42 and ride alongside the ocean.
The bike path to Guincho Beach offers amazing views of the region’s cliffs and the Atlantic Ocean.
Photo: Alex Trias
The bike path is relatively flat and takes us past the scenic cliffs of Boca do Inferno and a collection of shops and restaurants to the rough waters of Guincho Beach.
From there, we hike through the dunes and rocky cliffs, or sit and read a book. We might also pack food and have a picnic.
Once an old industrial complex for textiles, LX Factory is now a collection of shops, restaurants and open-air kiosks. We like to stop by on weekends, and it is conveniently located on the train ride back from Cascais.
The LX factory is the perfect place to shop for Portuguese craftsmanship, or just to sit and have lunch.
Photo: Alex Trias
You won’t find brand name items at LX. From clothing to furniture, most things for sale are designed and produced in Portugal.
Our daughter loves bargain hunting at the Feira da Ladra, a popular flea market located within the Alfama district of Lisbon. The area is built on a steep hill filled with narrow, winding cobblestone streets, and it’s the perfect place to shop for antiques.
My favorite market in Principe Real is a cornucopia of antiques and art.
Photo: Alex Trias
I also enjoy the weekend flea market in Principé Real, where you’ll find plenty of delicious artisanal honey, cheese and cured sausages.
My wife and I love to cook. We find gourmet ingredients at the Comida Independente outdoor market, which is open on Saturdays, and the Time Out Mercado.
Both are located near Lisbon’s Cais Sodre train station.
Lisbon’s Time Out Market, the Mercado da Ribeira, is situated near the Cais Sodre train station and the banks of the Tagus river.
Photo: Alex Trias
For a quick and easy meal of gourmet mushrooms and eggs, I buy:
A quarter kilo of freshly picked chanterelle mushrooms: $7.49
Farm fresh organic eggs: $3.19
A spray of truffle oil: $3.19
Seaweed caviar: $4.28
I’ll serve the meal with a loaf of fresh bread from Gleba, a nearby bakery. Their loaves are made with home-grown heirloom strains of wheat for $5.29 per loaf.
For an interesting twist, I’ll create a special bread topping. I mix butter ($2.30) with white miso paste ($5.23) and seaweed crisps ($1.60).
And a bottle of Portuguese white wine for $4.80 goes well with virtually any meal.
Our favorite dessert spot, the Gelateria Nannarella, is a short walk from our apartment. It is well-known for its exceptional sorbets and gelatos. A small serving costs $3.21, with flavors like lemon and basil, stracciatella and, of course, chocolate.
In Lisbon, gelato is eaten throughout the day as a snack as well as a dessert, so there is almost always a line. But, like most good things in life, it’s well worth the wait.
Alex Trias is a retired attorney. He and his wife and daughter have been living in Portugal since 2015. He is the author of the “Investment Pancake” series on SeekingAlpha.com and has published nearly 500 articles about tax planning, investing, early retirement, and where to find the best meals in Lisbon.
The man who killed a transit worker and injured multiple people in a Washington, D.C. subway station spoke threateningly to his victims, charging documents reveal. Multiple bystanders were integral in disarming the alleged attacker, the documents said.
Isaiah Trotman, 31, was arrested on charges of first-degree murder while armed, kidnapping while armed and assault with a dangerous weapon after the shooting spree on Feb. 1, police said.
Police said in a press conference on that day that Trotman was riding a bus and “brandishing” a weapon while “engaging” with other passengers. According to the charging document, Trotman told one passenger, “Look at me in the face, I’m a prophet. You’re going to die with me today.”
Trotman then shot and wounded that passenger, then got off the bus and went into the Potomac Avenue Metro station, where he shot and wounded a person buying fare. He then went down to the subway platform, where he confronted a woman and ordered her to get off her phone.
According to the charging documents, Trotman said, “I am God,” and told the woman not to “bat (her) pretty eyelashes” at him. He then pointed his gun at her foot.
During that interaction, Metro employee Robert Cunningham, an 64-year-old mechanic, intervened. According to a witness, Cunningham tried to disarm Trotman, but was shot at close range and died at the scene. All other injured parties were stable.
The same witness said that Trotman then said “I’m a killer, and this is what I do,” then stomped on Cunningham’s chest. CCTV footage shows that Trotman kicked or stomped Cunningham at least three times, according to the charging documents.
Trotman then boarded a train, still holding his weapon. According to another witness on the train, Trotman said “don’t leave, don’t run” and asked a passenger “Where do you think you’re going?” when the man stood up. Trotman continued to make erratic statements, according to charging documents, and finally sat down in a seat with his gun next to him.
A passenger, identified in charging documents as V-4, grabbed the gun and attempted to run off the train with it. Trotman tackled V-4, documents say, but another person pulled him off, allowing V-4 to get the gun again and run off the train. He hurled it across the platform, where it landed on another set of train tracks.
Trotman left the train and went onto those tracks. CCTV footage shows him briefly searching for the gun before leaving the tracks and approaching the escalators, where he was stopped by officers from the Metropolitan Police Department.
A transit worker was killed and three others were injured when a gunman opened fire Wednesday morning during the morning commute in Washington, D.C. Authorities said the incident began on a city bus and ended when the suspect was disarmed by bystanders in a Metro station. Scott MacFarlane has the details.
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The men and women of the United Ukrainian Ballet company will make their U.S. debut Wednesday night at the Kennedy Center in Washington, D.C.
The company of 60 relative strangers formed with the help of professional dancers who found housing and rehearsal space in The Hague.
Last February, Oleksii Knyazkov was about to star in “Romeo and Juliet” at the Kharkiv National Opera House. Instead, he found himself at the center of a different tragedy when Russia invaded Ukraine.
Dancers of the United Ukrainian Ballet perform during rehearsal for Swan Lake at ICC Sydney Theatre on Oct. 27, 2022, in Sydney, Australia.
Don Arnold/WireImage via Getty Images
“You don’t think about performing or something like this when the aircraft go over your house, or you hear explosions,” Knyazkov told CBS News.
Vladyslava Ihnatenko fled Odessa with dance clothes and a single pair of pointe shoes.
“We didn’t dance for a long time, because the most important thing was to save yourself,” Ihnatenko said.
“Of course, we all wanted to come back to Ukraine to see our families, friends,” she added.
In October, CBS News also spoke with members of the Kyiv City Ballet company while they were on tour in Chicago. According director Ivan Kozlov, the dance company left Ukraine last February to perform in Paris, and were only supposed to be gone for three weeks; then Russia invaded Ukraine the day after they left.
“You can’t plan anything,” Ihnatenko said. “Maybe tomorrow everything will change…Will we have our home tomorrow? You don’t know.”
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A drone strike was carried out on an Iranian military plant late Saturday night. The Wall Street Journal and New York Times quoted anonymous intelligence officials saying Israel appears to be responsible for the attack. The Pentagon is denying playing any part in the strike. CBS News anchors Tony Dokoupil and Lilia Luciano spoke with Eric Lob, an associate professor of politics and international relations at Florida International University, about the significance of the attack.
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Two suspects accused of carrying out a string of armed carjackings in the Washington, D.C., area were found and arrested on Tuesday after they hid in the outdoor freezer of a restaurant, the U.S. Capitol Police said.
Shortly before noon, a police patrol tried to pull over a white BMW sedan on E Street believed to be linked to the carjackings, but the car sped off.
The BMW clipped a Capitol police van before it crashed into a Capitol police SUV, officials said. The two suspects, who were considered armed and dangerous, ran out of the vehicle and hid inside the freezer behind a restaurant along Pennsylvania Avenue before they were located and arrested.
Capitol police identified the suspects as 18-year-old Cedae Hardy and 18-year-old Landrell Jordan. A gun and high-capacity magazine were seized, officials said.
Hardy and Jordan have been charged with unauthorized use of a vehicle, carrying a pistol without a license, reckless driving and assault with a deadly weapon, among other charges.
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Ukraine is celebrating its first Christmas since the country was invaded by Russia nearly ten months ago. But even during the holidays, Moscow is maintaining its assault on various Ukrainian cities. Ian Lee has more on the Ukrainians’ resolve.
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Ukrainian President Volodymyr Zelenskyy arrived in Washington, D.C. to a hero’s welcome. He urged Congress to continue to support Ukraine, calling it “an investment in the global security and democracy.” Ian Lee has more.
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John Dickerson reports on Ukrainian President Volodymyr Zelenskyy’s address to Congress, new information released by the House Jan. 6 committee, and warnings that people in the western U.S. could run out of water in just a few years.
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President Biden hosted Ukrainian President Volodymyr Zelenskyy at the White House Wednesday, and said the U.S. will stand for Ukraine for “as long as it takes.” He also announced a nearly $2 billion support package that includes more sophisticated, lethal weapons for Ukraine. Ed O’Keefe has more.
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Maxwell Frost made history last month when he won election in Florida’s 10th Congressional District, becoming the first Gen Z member of Congress at just 25 years old. But that historic win didn’t come easy — and now, the financial toll of the campaign is making it difficult for him to secure a home near the House.
In a Twitter thread on Thursday, Frost said that he had just applied to rent an apartment in Washington, D.C. During that process, he told the person taking his application that his “credit was really bad.”
Just applied to an apartment in DC where I told the guy that my credit was really bad. He said I’d be fine. Got denied, lost the apartment, and the application fee.
This ain’t meant for people who don’t already have money.
“He said I’d be fine,” Frost said. “Got denied, lost the apartment, and the application fee. This ain’t meant for people who don’t already have money.”
He went on to say that he has bad credit because he “ran up a lot of debt running for Congress for a year and a half.”
During his campaign, Frost told Politico that he had quit his job to focus on campaigning. He drove for Uber to pay his bills, a “sacrifice” he said he made because “I can’t imagine myself not doing anything but fixing the problems we have right now.”
But that money didn’t go far enough, Frost said on Thursday, saying he “didn’t make enough money from Uber itself to pay for my living.”
“It isn’t magic that we won our very difficult race. For that primary, I quit my full time job cause I knew that to win at 25 yrs old, I’d need to be a full time candidate. 7 days a week, 10-12 hours a day. It’s not sustainable or right but it’s what we had to do,” he tweeted. “As a candidate, you can’t give yourself a stipend or anything till the very end of your campaign. So most of the run, you have no $ coming in unless you work a second job.”
Members of the House and Senate earn $174,000 a year, but that salary will not begin until Frost is sworn in on January 3. In the meantime, he needs to find a place to live in D.C.’s pricey housing market. According to Apartment List, the median rent for a one-bedroom apartment in the city is $1,786, well above the national average. Zillow shows an even higher cost of living, with a median rent of more than $2,300 for a one-bedroom apartment, slightly over $300 more than what the price was last year.
Frost noted that Rep. Alexandria Ocasio-Cortez faced something similar when she was elected in 2018.
“I have three months without salary before I’m a member of Congress. So, how do I get an apartment? Those little things are very real,” she told The New York Times. “…I’ve really been just kind of squirreling away and then hoping that gets me to Janaury.”
Four years later, “it’s still a problem,” Frost said Thursday.
FTX CEO Sam Bankman-Fried attends a press conference at the FTX Arena in downtown Miami on Friday, June 4, 2021.
Matias J. Ocner | Miami Herald | Tribune News Service | Getty Images
Sam Bankman-Fried, the disgraced former CEO of FTX — the bankrupt cryptocurrency exchange that was worth $32 billion a few weeks ago — has a real knack for self-promotional PR. For years, he cast himself in the likeness of a young boy genius turned business titan, capable of miraculously growing his crypto empire as other players got wiped out. Everyone from Silicon Valley’s top venture capitalists to A-list celebrities bought the act.
But during Bankman-Fried’s press junket of the last few weeks, the onetime wunderkind has spun a new narrative – one in which he was simply an inexperienced and novice businessman who was out of his depth, didn’t know what he was doing, and crucially, didn’t know what was happening at the businesses he founded.
It is quite the departure from the image he had carefully cultivated since launching his first crypto firm in 2017 – and according to former federal prosecutors, trial attorneys and legal experts speaking to CNBC, it recalls a classic legal defense dubbed the “bad businessman strategy.”
At least $8 billion in customer funds are missing, reportedly used to backstop billions in losses at Alameda Research, the hedge fund he also founded. Both of his companies are now bankrupt with billions of dollars worth of debt on the books. The CEO tapped to take over, John Ray III, said that “in his 40 years of legal and restructuring experience,” he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” This is the same Ray who presided over Enron’s liquidation in the 2000s.
In America, it is not a crime to be a lousy or careless CEO with poor judgement. During his recent press tour from a remote location in the Bahamas, Bankman-Fried really leaned into his own ineptitude, largely blaming FTX’s collapse on poor risk management.
At least a dozen times in a conversation with Andrew Ross Sorkin, he appeared to deflect blame to Caroline Ellison, his counterpart (and one-time girlfriend) at Alameda. He says didn’t know how extremely leveraged Alameda was, and that he just didn’t know about a lot of things going on at his vast empire.
Bankman-Fried admitted he had a “bad month,” but denied committing fraud at his crypto exchange.
Fraud is the kind of criminal charge that can put you behind bars for life. With Bankman-Fried, the question is whether he misled FTX customers to believe their money was available, and not being used as collateral for loans or for other purposes, according to Renato Mariotti, a former federal prosecutor and trial attorney who has represented clients in derivative-related claims and securities class actions.
“It sure looks like there’s a chargeable fraud case here,” said Mariotti. “If I represented Mr. Bankman-Fried, I would tell him he should be very concerned about prison time. That it should be an overriding concern for him.”
But for the moment, Bankman-Fried appears unconcerned with his personal legal exposure. When Sorkin asked him if he was concerned about criminal liability, he demurred.
“I don’t think that — obviously, I don’t personally think that I have — I think the real answer is it’s not — it sounds weird to say it, but I think the real answer is it’s not what I’m focusing on,” Bankman-Fried told Sorkin. “It’s — there’s going to be a time and a place for me to think about myself and my own future. But I don’t think this is it.”
Comments such as these, paired with the lack of apparent action by regulators or authorities, have helped inspire fury among many in the industry – not just those who lost their money. The spectacular collapse of FTX and SBF blindsided investors, customers, venture capitalists and Wall Street alike.
Bankman-Fried did not respond to a request for comment. Representatives for his former law firm, Paul, Weiss, did not immediately respond to comment. Semafor reported earlier that Bankman-Fried’s new attorney was Greg Joseph, a partner at Joseph Hage Aaronson.
Both of Bankman-Fried’s parents are highly respected Stanford Law School professors. Semafor also reported that another Stanford Law professor, David Mills, was advising Bankman-Fried.
Mills, Joseph and Bankman-Fried’s parents did not immediately respond to requests for comment.
Bankman-Fried could face a host of potential charges – civil and criminal – as well as private lawsuits from millions of FTX creditors, legal experts told CNBC.
For now, this is all purely hypothetical. Bankman-Fried has not been charged, tried, nor convicted of any crime yet.
Richard Levin is a partner at Nelson Mullins Riley & Scarborough, where he chairs the fintech and regulation practice. He’s been involved in the fintech industry since the early 1990s, and has represented clients before the Securities and Exchange Commission, Commodity Futures Trading Commission and Congress. All three of those entities have begun probing Bankman-Fried.
There are three different, possibly simultaneous legal threats that Bankman-Fried faces in the United States alone, Levin told CNBC.
First is criminal action from the U.S. Department of Justice, for potential “criminal violations of securities laws, bank fraud laws, and wire fraud laws,” Levin said.
A spokesperson for the U.S. Attorney’s Office for the Southern District of New York declined to comment.
Securing a conviction is always challenging in a criminal case.
Mariotti, the former federal prosecutor is intricately familiar with how the government would build a case. He told CNBC, “prosecutors would have to prove beyond a reasonable doubt that Bankman-Fried or his associates committed criminal fraud.”
“The argument would be that Alameda was tricking these people into getting their money so they could use it to prop up a different business,” Mariotti said.
“If you’re a hedge fund and you’re accepting customer funds, you actually have a fiduciary duty [to the customer],” Mariotti said.
Prosecutors could argue that FTX breached that fiduciary duty by allegedly using customer funds to artificially stabilize the price of FTX’s own FTT coin, Mariotti said.
But intent is also a factor in fraud cases, and Bankman-Fried insists he didn’t know about potentially fraudulent activity. He told Sorkin that he “didn’t knowingly commingle funds.”
“I didn’t ever try to commit fraud,” Bankman-Fried said.
Beyond criminal charges, Bankman-Fried could also be facing civil enforcement action. “That could be brought by the Securities Exchange Commission, and the Commodity Futures Trading Commission, and by state banking and securities regulators,” Levin continued.
“On a third level, there’s also plenty of class actions that can be brought, so there are multiple levels of potential exposure for […] the executives involved with FTX,” Levin concluded.
The Department of Justice is most likely to pursue criminal charges in the U.S. The Wall Street Journal reported that the DOJ and the SEC were both probing FTX’s collapse, and were in close contact with each other.
That kind of cooperation allows for criminal and civil probes to proceed simultaneously, and allows regulators and law enforcement to gather information more effectively.
But it isn’t clear whether the SEC or the CFTC will take the lead in securing civil damages.
An SEC spokesperson said the agency does not comment on the existence or nonexistence of a possible investigation. The CFTC did not immediately respond to a request for comment.
“The question of who would be taking the lead there, whether it be the SEC or CFTC, depends on whether or not there were securities involved,” Mariotti, the former federal prosecutor, told CNBC.
SEC Chairman Gary Gensler, who met with Bankman-Fried and FTX executives in spring 2022, has said publicly that “many crypto tokens are securities,” which would make his agency the primary regulator. But many exchanges, including FTX, have crypto derivatives platforms that sell financial products like futures and options, which fall under the CFTC’s jurisdiction.
“For selling unregistered securities without a registration or an exemption, you could be looking at the Securities Exchange Commission suing for disgorgement — monetary penalties,” said Levin, who’s represented clients before both agencies.
“They can also sue, possibly, claiming that FTX was operating an unregistered securities market,” Levin said.
Then there are the overseas regulators that oversaw any of the myriad FTX subsidiaries.
The Securities Commission of The Bahamas believes it has jurisdiction, and went as far as to file a separate case in New York bankruptcy court. That case has since been folded into FTX’s main bankruptcy protection proceedings, but Bahamian regulators continue to investigate FTX’s activities.
Court filings allege that Bahamian regulators have moved customer digital assets from FTX custody into their own. Bahamian regulators insist that they’re proceeding by the book, under the country’s groundbreaking crypto regulations — unlike many nations, the Bahamas has a robust legal framework for digital assets.
But crypto investors aren’t sold on their competence.
“The Bahamas clearly lack the institutional infrastructure to tackle a fraud this complex and have been completely derelict in their duty,” Castle Island Ventures partner Nic Carter told CNBC. (Carter was not an FTX investor, and told CNBC that his fund passed on early FTX rounds.)
“There is no question of standing. U.S. courts have obvious access points here and numerous parts of Sam’s empire touched the U.S. Every day the U.S. leaves this in the hands of the Bahamas is a lost opportunity,” he continued.
Investors who have lost their savings aren’t waiting. Class-action suits have already been filed against FTX endorsers, like comedian Larry David and football superstar Tom Brady. One suit excoriated the celebrity endorsers for allegedly failing to do their “due diligence prior to marketing [FTX] to the public.”
FTX’s industry peers are also filing suit against Bankman-Fried. BlockFi sued Bankman-Fried in November, seeking unnamed collateral that the former billionaire provided for the crypto lending firm.
FTX and Bankman-Fried had previously rescued BlockFi from insolvency in June, but when FTX failed, BlockFi was left with a similar liquidity problem and filed for bankruptcy protection in New Jersey.
Bankman-Fried has also been sued in Florida and California federal courts. He faces class-action suits in both states over “one of the great frauds in history,” a California court filing said.
The largest securities class-action settlement was for $7.2 billion in the Enron accounting fraud case, according to Stanford research. The possibility of a multibillion-dollar settlement would come on top of civil and criminal fines that Bankman-Fried faces.
But the onus should be on the U.S. government to pursue Bankman-Fried, Carter told CNBC, not on private investors or overseas regulators.
“The U.S. isn’t shy about using foreign proxies to go after Assange — why in this case have they suddenly found their restraint?”
Wire fraud is the most likely criminal charge Bankman-Fried would face. If the DOJ were able to secure a conviction, a judge would look to several factors to determine how long to sentence him.
Braden Perry was once a senior trial lawyer for the CFTC, FTX’s only official U.S. regulator. He’s now a partner at Kennyhertz Perry, where he advises clients on anti-money laundering, compliance and enforcement issues.
Based on the size of the losses, if Bankman-Fried is convicted of fraud or other charges, he could be behind bars for years — potentially for the rest of his life, Perry said. But the length of any potential sentence is hard to predict.
“In the federal system, each crime always has a starting point,” Perry told CNBC.
Federal sentencing guidelines follow a numeric system to determine the maximum and minimum allowable sentence, but the system can be esoteric. The scale, or “offense level,” starts at one, and maxes out at 43.
A wire fraud conviction rates as a seven on the scale, with a minimum sentence ranging from zero to six months.
But mitigating factors and enhancements can alter that rating, Perry told CNBC.
“The dollar value of loss plays a significant role. Under the guidelines, any loss above $550 million adds 30 points to the base level offense,” Perry said. FTX customers have lost billions.
“Having 25 or more victims adds 6 points, [and] use of certain regulated markets adds 4,” Perry continued.
In this hypothetical scenario, Bankman-Fried would max out the scale at 43, based on those enhancements. That means Bankman-Fried could be facing life in federal prison, without the possibility of supervised release, if he’s convicted on a single wire fraud offense.
But that sentence can be reduced by mitigating factors – circumstances that would lessen the severity of any alleged crimes.
“In practice, many white-collar defendants are sentenced to lesser sentences than what the guidelines dictate,” Perry told CNBC, Even in large fraud cases, that 30-point enhancement previously mentioned can be considered punitive.
Bankman-Fried could also face massive civil fines. Bankman-Fried was once a multibillionaire, but claimed he was down to his last $100,000 in a conversation with CNBC’s Sorkin at the DealBook Summit last week.
“Depending on what is discovered as part of the investigations by law enforcement and the civil authorities, you could be looking at both heavy monetary penalties and potential incarceration for decades,” Levin told CNBC.
In the most famous fraud case in recent years, Bernie Madoff was arrested within 24 hours of federal authorities learning of his multibillion-dollar Ponzi scheme. But Madoff was in New York and admitted to his crime on the spot.
The FTX founder is in the Bahamas and hasn’t admitted wrongdoing. Short of a voluntary return, any efforts to apprehend him would require extradition.
With hundreds of subsidiaries and bank accounts, and thousands of creditors, it’ll take prosecutors and regulators time to work through everything.
Similar cases “took years to put together,” said Mariotti. At FTX, where record keeping was spotty at best, collecting enough data to prosecute could be much harder. Expenses were reportedly handled through messaging software, for example, making it difficult to pinpoint how and when money flowed out for legitimate expenses.
In Enron’s bankruptcy, senior executives weren’t charged until nearly three years after the company went under. That kind of timeline infuriates some in the crypto community.
“The fact that Sam is still walking free and unencumbered, presumably able to cover his tracks and destroy evidence, is a travesty,” said Carter.
But just because law enforcement is tight-lipped, that doesn’t mean they’re standing down.
“People should not jump to the conclusion that something is not happening just because it has not been publicly disclosed,” Levin told CNBC.
Could he just disappear?
“That’s always a possibility with the money that someone has,” Perry said, although Bankman-Fried claims he’s down to one working credit card. But Perry doesn’t think it’s likely. “I believe that there has been likely some negotiation with his attorneys, and the prosecutors and other regulators that are looking into this, to ensure them that when the time comes […] he’s not fleeing somewhere,” Perry told CNBC.
In the meantime, Bankman-Fried won’t be resting easy as he waits for the hammer to drop. Rep. Maxine Waters extended a Twitter invitation for him to appear before a Dec. 13 hearing.
Bankman-Fried responded on Twitter, telling Waters that if he understands what happened at FTX by then, he’d appear.
Correction: Caroline Ellison is Bankman-Fried’s counterpart at Alameda. An earlier version misspelled her name.
