May 3, 2026

Welcome back to Dry Powder. I’m Bill Cohan.

Tonight, I am returning to the increasingly desperate saga of Sam Bankman-Fried, whose increasingly inventive and persistent attempts to escape his legal fate—filing appeals, requesting a new trial, trying to curry favor with the pardon-happy president—hit a wall this week when Judge Lewis Kaplan brutally shut him down. (You can’t knock a guy for trying…) Of course, that didn’t stop his mother, Barbara, a retired Stanford Law professor, from taking to Substack to launch a new defense.

Also mentioned in this issue: Bill Ackman, Warren Buffett, Michael Lewis, Tucker Carlson, and more…

But first…

Ackman’s $5 billion week: When I spoke to Bill Ackman on Friday, he was still buzzing from what, objectively, would have to be considered one of his most successful weeks as a professional. Bill had just completed an unusual dual I.P.O., raising some $5 billion for his new closed-end fund, Pershing Square USA, and taking his management company, Pershing Square Inc., public, thus also allowing retail investors to ride shotgun with the industry’s most outspoken activist investor. “This capitalism thing is good,” he told me, only a little bit tongue-in-cheek.

Most of the headlines weren’t quite so upbeat. Bill had hoped to raise as much as $10 billion for Pershing Square USA and ended up with half that. In the end, it appears, Bill’s legion of 2.1 million followers on X didn’t turn up, or perhaps didn’t grasp the peculiar dynamics of the I.P.O. process and sold out of their positions too quickly. Worse, the closed-end fund, with a $49 cash-per-share valuation, ended the week at about $43—below its net asset value (although trading at a discount to net asset value is typical of closed-end funds, which is why they are mostly out of favor).

The good news for Bill is that he now has another $5 billion in permanent capital to invest as he pleases—most likely by adding to his stakes in publicly traded companies such as Uber, Amazon, and Alphabet—bringing him one relatively small step closer to his ultimate ambition of being his generation’s Warren Buffett. Bill does not have to return the $5 billion; the only way for investors to get their money back is by selling their shares in the closed-end fund—which, if they did so now, would be at a loss.

Bill had enticed investors in the closed-end fund by offering them one share of Pershing Square Inc. for every five shares of Pershing Square USA they bought. That was a nice sweetener for the closed-end investors, but more importantly—at least for Bill, anyway—this would get his management company on the public markets, and by Wednesday Pershing Square Inc. stock started trading at around $24 per share. That wasn’t an underwritten deal; it was just floated off at whatever the market would bear. In any event, the early trades were at an 8.6 percent discount to the $26.25 per-share price that Bill sold to “strategic investors” two years ago.

Bill was not happy with the early prices of either stock, so to show his support, he bought 500,000 shares of the closed-end fund and another 800,000 shares of his management company. On Thursday, he was rewarded, as the shares of the management company traded up to near $30 after hours, a one-day increase of nearly 20 percent, and then another 30 percent on Friday, to close around $38 a share. Nice trade, Bill.

The new closed-end fund, which Bill will manage, allowed him to lock in an additional $100 million or so of annual management fees in perpetuity, which are valued at something like 17x in the new public market for his hedge fund management company. The market capitalization of the management company is close to $15.2 billion these days. Bill and his Pershing Square colleagues own around 85 percent of the management company, diluted for the public offering and the sale of shares to the strategic investors two years ago. Bill himself owns 180 million of those shares, now worth around $7.2 billion—and he retains voting control.

Naturally, Bill is still in proselytizing mode. He told me the two I.P.O.s were an “important step” on his road to creating what he hopes will become a Berkshire Hathaway–like enterprise with $1 trillion in assets under management in 20 years. Meanwhile, he boasted, Pershing Square Inc. is “an amazing business because it’s basically a royalty on the compounding of investing in three permanent capital assets. So if you believe we can generate anything close to the returns we’ve generated historically, the business will grow at a very rapid rate with compounding.” Unlike private equity, where the assets compound but then are returned to investors, and A.U.M. is reduced until a new fund is raised, “we retain substantially all of the capital,” he said, “and grow at 30 percent a year without having to raise money.” We’ll see…

Bill then rattled off all the other things he’s been doing while taking two entities public: caring for his daughter, closing an insurance deal for Howard Hughes, trying to buy the rest of Universal Music Group that he doesn’t already own, etcetera. “I don’t know if you can tell,” he said, “but I’ve got a fair amount of energy here.” Bill turns 60 on May 11.

And now, the final reckoning for Sam Bankman-Fried…

S.B.F. Is Out of Options

This week, a thoroughly annoyed Judge Lewis Kaplan rejected, with prejudice, Sam Bankman-Fried’s long-shot bid for a new trial. That leaves his fate in the hands of the Second Circuit—which will almost certainly rule against him—or worse… in the hands of Donald Trump.

William D. Cohan

Sam Bankman-Fried is running low on cards to play. Two weeks ago, the imprisoned FTX founder abandoned his do-it-yourself motion for a new trial—reasoning, somewhat belatedly, that Judge Lewis Kaplan, who conducted the trial resulting in Sam’s conviction and 25-year sentence for fraud and conspiracy, would probably not give him a mulligan. Sam asked to withdraw his motion “without prejudice,” essentially reserving his right to ask for a new trial at a later date. But Kaplan, as I’ve reported, seems to have had it with S.B.F.—his lack of contrition, P.R. campaigns, meddling family members, and insistence that the trial was rigged. And on Tuesday, he threw the book at him.

A MESSAGE FROM OUR SPONSOR

INSPIRE AWE

Revered by all. Driven by those who lead by example. Elevate every move you make in a Range Rover.

EXPLORE

Normally, a judge might allow a defendant to change his mind regarding such a motion. But Sam is not a normal defendant, and his relationship with Judge Kaplan is quite frayed, to put it mildly. Not only did Kaplan deny Sam’s request to withdraw his motion for a new trial, he decided to rule on that motion anyway, and then denied it with prejudice—meaning that Sam will not be getting a new trial in the Southern District of New York. Yes, there is still Sam’s federal appeal, which has been languishing in the Second Circuit since 2023. But that’s likely as long a putt for Sam as securing a pardon from Donald Trump.

In his 11-page order, Judge Kaplan gushed that the government’s opposition to Sam’s request for a new trial was “so thorough, so well documented, and so well taken” that “it would suffice to express the Court’s substantial agreement with the government’s entire response and simply deny the motion.” But Kaplan wasn’t done. He noted that while federal rules of criminal procedure bar him, in this circumstance, from ruling on the request for a new trial in the affirmative until the Second Circuit has ruled on Sam’s appeal, no rule prevents him from denying Sam’s request for a new trial. He also dismissed Sam’s argument for a new trial—that he had identified three “newly discovered” witnesses who were prepared to testify on his behalf until the federal prosecutors got to them—on the merits, calling it “baseless on multiple independently sufficient levels.”

But Kaplan seemed particularly irritated by Sam’s attempts to rehabilitate himself in the media. The judge cited two Google docs that Sam had written in the weeks following the FTX bankruptcy, in November 2022, shortly before he was taken into custody in the Bahamas. According to the documents, Sam wanted to “start a large P.R. push” to “get as much support as possible.”

According to Judge Kaplan, Sam thought up a list of—in Sam’s words—“random probably bad ideas,” such as having author Michael Lewis interview him on the news, or taking to Twitter to engage in “radical honesty” by explaining “what happened, in detail.” Also among the 19 ideas on his list were to “go on Tucker Carlsen [sic]”; “come out as a Republican”; “come out against the woke agenda”; demonstrate that while his public donations were to Democrats, his private contributions were to Republicans; and to talk “about how the cartel of lawyers is destroying value and throwing entrepreneurs under the bus in order to cover up the incompetence of lawyers.”

Incredibly, Sam has succeeded in ticking off most of the items on his image-rehab punch list, albeit from prison. He gave a jailhouse interview to Carlson (a move the Bureau of Prisons found so offensive that it shipped him off to California); he charmed Lewis (who portrayed him mostly sympathetically in his book Going Infinite); he blamed the lawyers at Sullivan & Cromwell for his predicament; and he all but came out as a Republican, on X. “Time and time again, Bankman-Fried has sought to promote his narrative, which he previously described as ‘this is the reality, here are never before seen [sic] facts,’” Judge Kaplan wrote. “A fatal flaw of that spin … is that Bankman-Fried’s so-called ‘facts’ have been seen before. Many times.”

Kaplan also did not appreciate Sam’s request that he be replaced as the trial judge should there be a second trial, a possibility that has now been foreclosed. He directed his clerk to mail a copy of his ruling to the Lompoc Federal Correctional Complex, in Southern California, where Sam is likely to remain for the next 20-odd years.

The Mother Unloads

On the same day that Judge Kaplan ruled definitively that Sam could not have a new trial, his mother, Barbara Fried, a former Stanford Law School professor, took to Substack with a novel argument of her own. In essence, she wrote, her son had never actually committed a crime because of a provision in the business contract between FTX and its customers that allowed Sam to use loans from the funds in the FTX margin accounts however he saw fit.

A MESSAGE FROM OUR SPONSOR

INSPIRE AWE

Revered by all. Driven by those who lead by example. Elevate every move you make in a Range Rover.

EXPLORE

Barbara wrote that Sam had originally arranged for an expert witness to testify at his trial that the FTX terms of service permitted the loans to be made to Sam from margin accounts. But, she said, Judge Kaplan did not allow Sam’s expert to testify, ruling that he himself could decide whether the T.O.S. allowed such loans and whether that was even a relevant fact that should be shared with the jury. (In the end, Kaplan decided that it was not a relevant fact.)

Sam’s mother was fairly incredulous. “Why would Sam knowingly endanger a $40 billion company earning $1 billion a year by misappropriating customer funds, at a time when he and FTX could have borrowed whatever they needed from third-party lenders?” she wrote. “The answer is, he wouldn’t have. The lawyers who drafted the Terms of Service believed the relevant provision authorized the loans in question and Sam—not a lawyer and not spending his time combing through legal documents—had no reason to second-guess them. If Kaplan, hell-bent on forcing a conviction, truly believed that the Terms of Service didn’t authorize the loans in question, he would have given that instruction. Instead, he said nothing, and deflected the jury’s attention away from the Terms of Service to an alternate theory of the crime.”

Barbara went on to claim that Alameda, Sam’s hedge fund, ultimately lent far more money to FTX’s margin customers than it borrowed from them. And that the margin loan provision of the Terms of Service, as drafted by FTX’s lawyers, “presented a serious challenge to the prosecution’s argument that loans to Alameda were a misappropriation of other margin customers’ assets, since, on its face, it explicitly authorized them.” In any event, she argued, Sam was not a lawyer, had nothing to do with drafting that provision, and was told by FTX lawyers that such loans were permitted by the Terms of Service. Ipso facto, his use of such loans could not have been a premeditated decision to steal money from customers. In borrowing this money, she wrote, there was no “criminal intent” on Sam’s part.

If only Judge Kaplan had allowed this argument to be presented to the jury, Barbara wrote, “they wouldn’t have had much appetite to convict him based solely on the alleged misrepresentations.” After all, she claimed, “Sam’s only crime was that he deliberately downplayed the financial risks to customers posed by those perfectly legal arrangements.” His 25-year sentence, she continued, “would appear not just unwarranted, but a sign of collective madness.”

Barbara did not respond to my request for comment. (I think she’s had it with me.) She noted in her Substack post that the T.O.S. argument was not made as part of Sam’s Second Circuit appeal—and, of course, will never be heard as part of a new trial if he doesn’t get one. Maybe Sam can ask some of his new Republican friends to ask Trump’s pardon attorney to read the FTX terms of service? Otherwise, the first time we might see Sam again as a free man is in 2049. There is no parole in the federal prison system. A reduced sentence is possible for good behavior—around the order of 10 percent of the sentence, or so—assuming Sam stops tweeting about how much money he would have made his investors if only FTX had never been forced to file for bankruptcy.

Join Puck’s chief political columnist, John Heilemann, as he roams the corridors of power and influence in America on this twice-weekly interview show, taking you beyond the headlines with the people who shape our culture: icons and up-and-comers, incumbents and insurgents, moguls and machers in the overlapping worlds of politics, entertainment, tech, business, sports, media, and beyond. The conversations are rich and revealing, unrehearsed and unexpected… and reliably impolitic. A Puck-Audacy joint, new episodes drop every Wednesday and Friday.

Puck’s daily political newsletter from Washington on what’s really happening in this town, from the White House to the Pentagon to Capitol Hill, K Street, and the campaign trail.

Need help? Review our FAQ page or contact us for assistance. For brand partnerships, email ads@puck.news.

You received this email because you signed up to receive emails from Puck, or as part of your Puck account associated with {{customer.email}}. To stop receiving this newsletter and/or manage all your email preferences, click here.

Puck is published by Heat Media LLC. 107 Greenwich St., New York, NY 10006

SEE THE ARCHIVES