Court orders to reveal names of non-parent sureties who posted bail for Samuel Bankman-Fried

From yesterday’s opinion in USA v. Bankman-FriedJudge Lewis Kaplan (SDNY) decided:

At the defendant’s arraignment on December 22, 2022, the government and defense jointly proposed a series of bail conditions. These necessary conditions, Among others, for the defendant to sign a personal bond of 250 million dollars, which will be co-signed by the defendant’s parents. The joint motion also required two additional guarantors, one of whom must be a non-family member, to sign separate bonds in smaller amounts to be agreed upon by the government and the defendant (“Individual Bonds”)…. Government and defense [later] they agreed that the sureties would sign separate appearance bonds in the amounts of $500,000 and $200,000 respectively….

Pursuant to my order dated January 3, 2023, news organizations have filed four separate requests to intervene seeking access to the names of the guarantors….

In this case, Individual Bonds – with or without the names of non-parent sureties – did not exist when the magistrate judge approved the bail package. In fact, neither their amounts nor the identity of the guarantors had been agreed upon yet. Accordingly, it is at least arguable that the Individual Bonds, under the facts of this case, are not court documents. [that are subject to a presumptive right of public access]. However, no one disputes that these are court documents. So I assume that for the purposes of this proposal. Accordingly, I assume that the presumption of availability applies here and turn to the question of the weight to which she is entitled in this case….

“[T]The weight given to the presumption of access must be guided by the role of the material in question in the exercise of judicial authority under Article III. and the resulting value of such information to those overseeing the federal courts. In general, the information will fall somewhere on a continuum from matters that directly affect the decision to matters that are within the jurisdiction of the court solely to ensure their irrelevance.”

The presumption of access is strong for “documents that ‘directly affect the judgment’ and play a significant role in ‘determining the substantive rights of litigants'”. Moreover, documents that are “customarily filed in court and generally available” enjoy a stronger presumption of public access than documents for which “filing in court is unusual or generally under seal.” In contrast, “documents that ‘play only a negligible role in the discharge of Article III duties’ are accorded only a low presumption that ‘reduces to little more than anticipating public access without a countervailing reason.'”

As noted above, neither the Individual Bonds nor the names of the non-parent sureties played any role in the misdemeanor judge’s approval of the defendant’s release pending trial. Those bonds did not exist then and the names of the guarantors were not known, at least to the magistrate. The fact that the identity of the non-parental sureties played no role in the bail decision “significantly” weakens the strength of the presumption. On the other hand, the fact that bonds signed by sureties and co-sureties, which include their names, are routinely filed in this court and made available to the public, veers in the other direction.

Finally, the strength of the presumption in this case, as it relates to the identities of guarantors other than parents, is not strong. The benefit to the public of knowing the identity of non-parent guarantors for the purpose of “following the federal courts” is extremely limited at best despite the fact that there appears to be a great deal of public interest in who they are. Nevertheless, the presumption exists even though it is entitled to only limited weight….

The conclusion that there is a modest presumption in favor of public access to this information is not the end of the analysis. Courts must consider whether the presumption has been overcome. Relevant factors include, but are not limited to (i) “danger of impairing law enforcement or judicial efficiency” and (ii) “privacy interests of those resisting disclosure,” including “the nature and degree of injury” resulting from disclosure.

It seems that in this case there is no danger of jeopardizing the implementation of the law. The identities of non-parental guarantors have no bearing on the government’s investigation, as evidenced by the fact that the government has taken no position on the proposals.

Second, the privacy interests of non-parent guarantors are limited. On the one hand, given the widespread public interest in this case, it seems that many people want to know the names of guarantors who are not parents. If the names of guarantors who are not parents are published, it is reasonable to assume that these individuals will become the subject of publicity they would not want to attract. This deserves some consideration, especially in a case with the notoriety this one has attracted. But that alone doesn’t help.

More serious is the defendant’s claim that he and his parents “became the target of … harassment[ ] and threats … including communications expressing a desire to suffer physical harm.” Although there is no evidence to that effect before me, I have no reason to doubt the claim. But it does not follow that non-parent guarantors would “face similar . .. threats and harassment ….” The defendant’s parents were the subject of intense public scrutiny because of their close relationship with the defendant and their involvement in FTX long before the bail was co-signed. Indeed, the defendant’s father “was a paid employee of the company for almost a year before the collapse of FTX- and, connected FTX to at least one major investor and participated in FTX meetings with policymakers and officials.” In contrast, the individual bond amounts—$500,000 and $200,000—do not suggest that the non-parent guarantors are or might to draw attention to the type and amount of what the defendant’s parents appear to have been exposed to. Thus, the defendant’s claim that odd-par ntal guarantees “would face with similar incursions” is speculative and carries only modest weight.

Moreover, the information sought – ie the names of the guarantors – is traditionally public information. Non-parent guarantors voluntarily entered the highly popular criminal process by signing individual bonds. Accordingly, they have no privacy interests on their behalf that the Court of Appeals has found require confidential treatment in relation to “[f]financial records of a wholly owned company, family affairs, illness, unsavory behavior without public consequences, and the like.”

Weighing in the scales, with the assumption of public access on one scale and compensating factors on the other, doesn’t weigh heavily on either side. The information in question is entitled to only a weak presumption of access, but the compensating factors are not compelling enough to overcome even that presumption. In my opinion, Individual Bonds should be on public record.

The court also concluded that the First Amendment right of access does not apply to these documents, although the common law right of access does apply to:

[A]Appearance bonds are neither “derived from” nor a “necessary corollary” of the ability to attend bail proceedings. As already stated, the names of non-parent sureties were not mentioned in that proceeding. Therefore, they are not “necessary to an understanding of the merits” of the bail proceeding and are therefore ” [not] covered by the presumptive First Amendment right of access.”

The names will be unsealed by February 7 at 5 p.m., unless an appeal is filed.

Congratulations to Lacy H. Koonce, III (Klaris Law PLLC), Jeremy A. Chase and Alexandra Settelmayer (Davis Wright Tremaine LLP), and Dana R. Green (NY Times), who represented the movants, and Matthew Russell Lee (Inner City) Press), who presented himself as the movant.

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