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How Sam Bankman-Fried compares to the greatest financial fraudsters in history, including Bernie Madoff


Sam Bankman-Fried is set to begin his trial on Oct. 3, and a 12-person jury likely will spend weeks deliberating over a slew of criminal charges—ranging from money laundering to wire fraud—leveled against the former CEO of FTX, which once was valued at $32 billion.

While his fate—and any prison sentence—may not be known for more than a month, the details of his spectacular arc are well-documented, from his rise as a billionaire crypto wunderkind and philanthropist to his downfall after allegedly using customer funds to save his empire and make extravagant purchases.

His case may become known as “the trial of the decade,” with government witnesses set to include members of his inner circle ranging from childhood friend Gary Wang to SBF’s one-time girlfriend and CEO of his trading firm, Alameda Research.

America has a rich history of financial fraudsters, with the past two decades particularly rife with enigmatic figures that have gripped the public’s attention. Bankman-Fried’s innocence may be intact until the conclusion of the trial, but the question still remains: How do his alleged crimes compare to those of peers? And, perhaps more important, do the outcomes of their trials provide any insight on what’s in store for Bankman-Fried?

Bernie Madoff

VIDEO: SBF: The Biggest Financial Fraud Since Bernie Madoff | 20 Sec Recap
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Besides Charlie Ponzi himself, Bankman-Fried’s most apt analog is Bernie Madoff, the one-time financial giant who defrauded investors out of billions of dollars.

Like Bankman-Fried, Madoff established himself as a leader in his industry. Along with serving as the chairman of his investment firm, he also at one time served as the head of the NASDAQ stock exchange and helped innovate strategies in the lucrative field of market making, where firms sit in the middle of traders executing transactions.

Madoff’s scheme was more overtly fraudulent than the alleged mechanics of FTX, where customer funds were used to plug holes after its associated trading firm made disastrous crypto bets. With Madoff, he would take capital from investors and claim to make trades with the funds, but instead deposit the money into a bank account, creating fake records of returns. As a classic pyramid scheme, his strategy relied on getting more customers to pay off the early investors, but not enough to raise suspicion.

After his sons told authorities in 2008 that Madoff’s asset management business was a lie, he was arrested by the FBI. The Department of Justice charged him with 11 federal felonies, including securities fraud and money laundering. Unlike Bankman-Fried, Madoff insisted he was the sole party responsible—Bankman-Fried has tried to shift blame to other FTX executives, including former Alameda Research CEO Caroline Ellison.

In another difference from Bankman-Fried, Madoff pleaded guilty, but that didn’t ultimately reduce his sentence in a meaningful way—a federal court still gave him 150 years in prison in 2009. Madoff died at a federal prison medical center in 2021.

Elizabeth Holmes

VIDEO: The Trial Against Sam Bankman-Fried: How Did We Get Here?
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The Theranos founder may not have committed financial crimes like Bankman-Fried and Madoff, although the criminal charge that ultimately sunk her was defrauding investors.

As has been well-documented by the investigative reporting book Bad Blood and the Hulu series The Dropout, Holmes was part of the Silicon Valley legacy of prodigy tech founders that Bankman-Fried would later claim, albeit from Hong Kong and the Bahamas (Alameda did get its start in Berkeley).

After dropping out of Stanford, Holmes founded Theranos with the radical claim that the company had developed the technology to collect comprehensive medical data from a drop or two of blood. The innovation was hailed as a medical revolution, with investors and backers rushing in, from the venture capitalist Tim Draper to the former Secretary of State George Shultz.

Largely due to the reporting of Wall Street Journal reporter John Carreyrou and ex-employee whistleblowers, it became apparent that Theranos’s technology was ineffective and the company had been using commercially available products to fabricate test results. Despite Holmes denying the claims, Theranos collapsed from 800 employees in 2015 to a few dozen in 2018. Later that year, it shut down operations.

After a lengthy investigation, Holmes—along with Theranos COO and one-time romantic partner Ramesh “Sunny” Balwani—pled not guilty to charges related to criminal schemes to defraud investors, patients, and doctors. Her trial began in 2021, and a jury found her guilty on four counts of defrauding investors in 2022. She was found not guilty of defrauding patients.

A federal judge last year sentenced Holmes to just over 11 years. After unsuccessful appeals, she was sent to a minimum-security prison in May 2022, and it was reported this year that the Bureau of Prisons projected her sentence could be reduced by two years for good behavior.

Martin Shkreli

VIDEO: Sam Bankman-Fried takes the stand in his criminal fraud trial
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Famed “pharma bro” Martin Shkreli has become an SBF whisperer, largely because he also was held at Metropolitan Detention Center—the notorious Brooklyn jail where Bankman-Fried finds himself.

While he’s rebuffed attempts from Fortune to detail his experiences at MDC as a white-collar criminal, Shkreli’s loud presence on social media has kept him in the spotlight all these years later.

Another youthful iconoclast, Shkreli burst onto the scene in 2015 when his pharmaceutical company, Turing, bought the license for an antiparasitic medicine, used in one application to treat AIDS-related complications, and raised its price by over 5,000%.

Despite widespread criticism over the move, and his other antics like purchasing a single-issue Wu Tang Clan album, he was arrested for securities fraud allegations related to the management of his hedge fund empire. Prosecutors said that he ran his business like a Ponzi scheme, founding new companies to pay off defrauded investors from previous companies.

Shkreli’s trial was punctuated by stunt behavior, including goading prosecutors by referring to them as “junior varsity” and offering $5,000 for a strand of Hillary Clinton’s hair. Like Bankman-Fried, Shkreli’s bail was revoked and he was sent to the MDC to await sentencing, although he didn’t tamper with any witnesses, which prosecutors have alleged Bankman-Fried did.

A federal judge sentenced Shkreli to seven years in 2018, with the pharma bro losing his appeal the next year and ordered to forfeit millions in assets, including his Wu-Tang Clan album. After just four years at a low-security facility, Shkreli was sent to a Bureau of Prisons halfway house, and he was released in 2022.

Razzlekhan

VIDEO: Sam Bankman-Fried defends social posts during cross-examination in fraud trial
NBC News

This list would be incomplete without a crypto criminal, and—other than perhaps Ruja Ignatova, aka “The Missing Crypto Queen”—who better than Heather “Razzlekhan” Morgan.

A serial entrepreneur, Forbes contributor, and TikTok rapper performing under the alias Razzlekhan, Morgan pulled off one of crypto’s largest heists in 2016 with her husband Ilya Lichtenstein. In 2016, they hacked nearly 120,000 Bitcoins from the crypto exchange Bitfinex, worth about $72 million. When they were charged by federal authorities for conspiring the launder the proceeds in 2022, the Bitcoins were worth more than $3 billion, although they only managed to cash out a small portion of it.

Both pled guilty to the crime, with Morgan released on bail and Lichtenstein detained due to flight risk. They entered a plea deal in July 2023 and could face decades in prison. Her cringey TikTok videos will likely be her enduring legacy—a distinction that Bankman-Fried’s short-lived foray into Substack could never match.

Learn more about all things crypto with short, easy-to-read lesson cards. Click here for Fortune's Crypto Crash Course.

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