Bankman-Fried fraud holds lesson for Vermont campaigns

The financial fraud case of Samuel Bankman-Fried, the disgraced founder of the cryptocurrency exchange FTX, should be a warning as to how easy it is in Vermont for our political campaigns to be bought by big money. To heed that warning requires us to understand the story, in depth, to talk about what went wrong, why, and how Vermont can shield itself going forward.

Mr. Bankman-Fried has been charged with a litany of financial crimes, and last week another four were added to the total. One of them was the “conspiracy to make unlawful political contributions.”

Mr. Bankman-Fried reportedly directed the donation of $40 million to Republicans and Democrats alike, using two of his employees as straw donors to disburse the money. 

On page 15 of last week’s 39 page indictment, Vermont becomes part of the story. Paragraph 36 reads: “…the defendant [Mr. Bankman-Fried], and others agreed that he and his co-conspirators should contribute at least a million dollars to a super PAC that was supporting a candidate running for a United States Congressional seat and appeared to be affiliated with pro-LGBTQ issues, and selected CC-1 to be the contributor. A political consultant working for Bankman-Fried asked CC-1 to make the contribution and told CC-1, ‘in general, you being the center left face of our spending will mean you giving a lot of woke shit for transactional purposes.’ CC-1 expressed discomfort with making the contribution in his name, but agreed there was not anyone ‘trusted at FTX’ [who was] bi/gay in a position to make the contribution. At the direction of Bankman-Fried and individuals working for him, CC-1 nonetheless contributed to the PAC.”

Vermonters know now that “CC-1” is Nishad Singh, who was head of engineering for FTX. We know Mr. Singh gave that million dollars to the LGBTQ Victory Fund. We know the money was then directly funneled into the Becca Balint campaign for the U.S. House roughly a month before the primary election in August. We also know it had an outsized effect on the campaign’s narrative. A million-dollar spend in the last month of a campaign will do that.

[Interestingly, it was the only example of unlawful campaign contributions listed in the indictment. Of the several hundred political “contributions”, the Balint campaign was the only one singled out. Why? Was it the most egregious? Was it to soften the ire of Sen. Bernie Sanders who was upset with the FTX coterie for spending a million bucks to defeat the Sanders-endorsed candidate, Nina Turner, for a House seat in Ohio?]  

To be clear, there is no reason to believe Ms. Balint knew the source of the funding. It’s also relatively safe to assume Ms. Balint would have won the primary regardless, given her margin of victory in the August primary.

The story here is about pretending Mr. Bankman-Fried’s one million dollar check was about LGBTQ issues. It wasn’t. It was about buying votes. Mr. Bankman-Fried wanted to be able to call in his chits if Congress ever moved to regulate the cryptocurrency industry, as the breadth and depth of his contributions show. Nothing else. It puts the LGBTQ Victory Fund in an awkward position. The fund can’t be too happy knowing its mission has been sullied by illegal campaign contributions.

We did not know who the person was who wrote the check before the primary election because it was purposefully written after June 1, which meant it would not become public until after the August primary. When Mr. Singh’s name was made public, along with the company he worked for [FTX], people were stunned. He’s likely the only person to ever donate a million dollars to a super PAC with the specific instruction to spend it in a Vermont primary on a campaign favoring LGBTQ issues.

The question being asked is why, after realizing who the person behind the check was, did the Balint campaign accept another $26,000 from the same actors for the general campaign?

The more important question is what we do going forward. If this issue is not addressed, if it is ignored, then the big money influence is easier to accept as the natural course of things to come. Think about that. Had Mr. Bankman-Fied’s scheme not been uncovered he would have a million reasons to be able to walk into Ms. Balint’s office and to ask for whatever help he needed. 

Courtesy of the U.S. Supreme Court our campaign laws are not about to made more rational, or to guard against this big money influence. The Citizens United decision of 2010 stipulates that the government cannot restrict independent expenditures by corporations, nonprofits, labor unions, etc. The fallout from that decision has been as damaging as critics feared. 

The Bankman-Fried indictment, and the million dollar contribution to the Balint campaign brings that truth to Vermont.

What happens next? Do we pretend there are good PACs and bad ones and march on?  Do we shrug our shoulders and confess that it is what it is?

Let’s hope not. That is the surest path to a weakened democracy.

We get it.  It is not easy to say no when the life of a campaign is at stake and money is the currency that matters most. When the candidates for the U.S. House race in Vermont first stepped into the ring, the issue of PAC money was raised, because they knew it would be an issue. The sought-after agreement was that the candidates would oppose outside PAC money and that they would join together to decry the money if used. 

Everyone agreed, but the agreement fell apart as the campaign heated up. The low point of the campaign was when Democratic candidate  Molly Gray pointed out the large contribution to the Balint campaign, asking Ms. Balint to oppose it.  The Balint campaign responded claiming the money was not “special interest.” The campaign suggested Ms. Gray was “very close to saying, you know, ‘We don’t want a gay agenda.’”

We know now that was not the case. It was special interest money. And it had little to nothing to do with LGBQ issues, which should make the LGBTQ Victory Fund furious.

We do not believe Ms. Balint had an inkling of the source of the money or the issues involved. But it happend to her campaign, which also gives her the opportunity and the responsibility to personally address it. No one else.

This happened. It had an impact. It was wrong. We need to hear from Ms. Balint as to how Vermont can shield itself from those willing and able to buy influence.

By Emerson Lynn