Also, please note that bail and bond mean different things.
Bail is the amount of money set by a judge that you must pay to be released from jail while your case is pending. A bond is a contracted financial pledge between you and the bondsman or bonding company under which you promise to obey the terms of the court and appear for trial.
How does bail work?
If a defendant cannot post the full bail amount, many turn to bail bond companies to make up any shortfall. The bail bond company charges a fee in exchange for posting the bail. The fee usually amounts to 10% of the total security deposit and is non-refundable.
Once the proceedings are over, the bail amount is returned to the defendant if no bond company was used. To get all the money back, the defendant must appear for the court date and not violate the bail conditions.
Sam Bankman-Fried’s record bail amount
Sam Bankman-Fried was extradited to the United States and posted $250 million bail. to a guy who admitted he only had $100,000 in his bank account after ftx collapseIt’s impressive that he was able to come up with this amount.
Apparently, Sam’s parents offered their $4 million Palo Alto house as collateral and the rest was secured by two individuals with “considerable” assets. Sam is now free to vacation like the rest of us until his trial.
Hooray for getting rich! Some petty criminals end up in jail because they can’t even post $1,000 bail.
It’s Unlikely Sam Bankman-Fried professor parent And the friends pay $250 million in cash to bail out Sam. So how exactly did Sam Bankman-Fried’s bail go?
Finding a Bonder to Post Bail
As mentioned, the most common way to post bail is to obtain the bond through a licensed bail bondsman. The defendant pays up to 10% of the bail amount to the bondsman.
In the case of Sam Bankman-Fried, the bail bondsman may charge up to $25 million (10%) to post the entire $250 million bail amount. This is a huge profit if Sam Bankman-Fried doesn’t flee and has collateral actually worth $225 million.
After paying the bail amount, the bondsman will make payments to the court to secure the defendant’s release.
How did Sam Bankman-Fried come up with the top 10% of the $250 million bail amount? Here’s a guess:
- $100,000 from Sam Bankman-Fried’s savings account
- $4 million from the primary residence of Sam Bankman-Fried’s parents in Palo Alto, CA
- $16 million from Bahamas vacation property of Sam Bankman-Fried’s parents
- $4.9 million from two mysterious wealthy friends or relatives
- $225 million from bailiffs
The $16 million Bahamas vacation property, however, is unlikely to be collateral as Sam’s parents are trying to give it back to FTX to avoid impropriety. Therefore, two mysterious wealthy friends or relatives likely had a vast majority of the up to $25 million.
Posting Adequate Collateral to the Bond Company
Is there a bail bondsman who has $225 million to cover the entire bail amount? Theoretically yes!
Would the bail bondsman be willing to take that much risk if Sam Bankman-Fried fled the country? Yes, if the bail bondsman receives $225 million worth of collateral, he can sell it to recover the money.
Now the question is, who are these two mysterious wealthy donors who made such collateral contributions? They must really love and trust Sam Bankman-Fried to have taken so much financial and reputational risk.
Collateral must include real property, such as real estaterare paintings, rare books, and other valuable collectibles. Guarantors can accept collateral such as stocks and cryptocurrencies. But the amount required to provide a financial buffer should be higher. As we all know, funny money assets can easily decline in value.
even the bond companies prefer to own real estate over stocks, This should give you an indication as to which asset class might be safer for long term wealth.
What if the defendant runs away?
If a defendant like Sam Bankman-Fried gets away, she and the people who posted her bail stand to lose $25 million. Assuming that a bond company has come up with the remaining $225 million, the bond company can then begin selling collateral assets.
If a defendant bails out on a court date and there is no collateral, the bond company may use a bounty hunter to seek the defendant. In the case of Sam Bankman-Fried, there’s likely no bounty hunter, as he had to post $225 million in collateral.
If the defendant is caught, the bounty hunter is paid a percentage of the bond. They have the authority to arrest the defendant and return them to the authorities in the jurisdiction from where the defendant fled.
There is also a time limit for returning the defendant. If the deadline is violated, the bond company must pay the full amount secured by the bond.
That said, a court has the discretion to terminate the bond if the defendant appears within 180 days of the date of forfeiture of bail. The defendant is only required to have a valid excuse such as illness or incapacity.
The irony of being rich enough to be a criminal
I am sure every defendant has considered running out on bail. The level of desire depends on the possible punishment.
In the case of Sam Bankman-Fried, he is looking at a minimum of 11.25 years in federal prison based on Elizabeth Holmes’ conviction. If convicted, perhaps a more reasonable estimate of Sam’s prison time is 25 years. His FTX co-founder Gary Wang and former Alameda Research co-CEO Carolyn Ellison already both pleaded guilty to federal charges,
Because Sam Bankman-Fried donated a total of $80 million to both political parties, he was able to buy two months of freedom before being arrested. And because Sam Bankman-Fried donated millions to various media outlets, he was also able to fend off media criticism for a similar period of time.
Now, by posting $250 million in bail, Sam buys himself even more time until his trial date. Therefore, the wealthier you are, the more crimes you can afford to commit. How unfortunate! Money really does buy freedom.
Why bother committing financial crime if you’re already rich?
Given that rich people don’t need more money should be the underlined driver to commit crime status, Prestigeand/or power.
Think of all the interviews Sam Bankman-Fried has done, carefully crafting her image as an effective philanthropist. He was buttered up by the press by calling him the next JP Morgan. Members of Congress loved him.
As FTX and Alameda Research lose money, Sam’s fear of losing his status grows. Therefore, Sam and his co-conspirators may have taken an illegal exposure to cover their company’s losses, which ultimately backfired in the bear market.
The unhealthy desire for more identity is everywhere. A personal finance blogger told me that he was so obsessed with fame that his wife left him. She was tired of always giving interviews to the media, spinning stories and drawing unwanted attention to her personal life.
In 2011, billionaire hedge fund manager, Raj Rajaratnam went to jail for seven years Insider trading, Even if you are worth more than a billion dollars, it may not be enough. Below is an interview where Raj explains what happened and why he doesn’t feel he did anything wrong.
Beware of lust for status, prestige and/or power. Your addiction may eventually lead you to destroy all that you have built.
Reader Questions and Recommendations
Any criminal lawyers want to share more on how bail works? What exactly happens to defendants who flee? Where do you think Sam Bankman-Fried came up with $225+ million in collateral?
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