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FTX founder Sam Bankman-Fried allegedly used $100 million in funds he stole from his customers to make political campaign contributions ahead of the 2022 midterm elections, federal prosecutors wrote in a superseding indictment on Monday, The Hill reported. The prosecutors allege that Bankman-Fried embezzled customer deposits to, among other accusations, “help fund over a hundred million dollars in campaign contributions to Democrats and Republicans to seek to influence cryptocurrency regulation.” This comes just days after Judge Lewis A. Kaplan revoked Bankman-Fried’s bail and sent him to jail, saying that there was probable cause to suggest he had attempted to “tamper with witnesses at least twice” since his December arrest. He had previously been under house arrest as he awaits trial over allegations that he defrauded his investors and unlawfully diverted millions of dollars’ worth of cryptocurrency from FTX customers. The new charges in the superseding indictment allege that Bankman-Fried also directed two FTX executives to avoid political contribution limits and conceal where the money was coming from.

Prosecutors in the criminal case against Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, on Monday provided the most detailed account to date of the evidence they plan to use to convict him at trial in October, the New York Times reported. In a 70-page court filing, the prosecutors said they would draw on testimony from some of Bankman-Fried’s closest advisers, as well as an expert witness and other employees of FTX and Alameda Research, a crypto hedge fund he also founded. The prosecutors also said that they planned to use notes that Caroline Ellison, one of Bankman-Fried’s top lieutenants, took after conversations with him, including a memo titled “Things Sam Is Freaking Out About.” And they said that they would introduce a recording of a meeting in which Ms. Ellison told Alameda employees that she had worked with Mr. Bankman-Fried to siphon funds from FTX customers’ accounts. Bankman-Fried, a onetime crypto mogul who built FTX into one of the world’s largest virtual currency exchanges, was arrested in December and charged with orchestrating a sweeping scheme to use customer deposits to finance real estate purchases, charitable giving and donations to politicians. Ellison and two other top FTX executives, Gary Wang and Nishad Singh, have pleaded guilty to participating in the effort and agreed to cooperate with prosecutors. Bankman-Fried faces seven charges of wire fraud, securities fraud, commodities fraud and money laundering. He has pleaded not guilty and is scheduled to go on trial on Oct. 2. Last week, he was sent to jail after the judge overseeing the case revoked his bail over allegations that he was trying to intimidate witnesses.

A durable medical equipment and supply company with a long history in the Tri-Cities has filed for chapter 11 protection, the Tri-City Business Journal reported. But Washington Medical Supplies Inc., known as Densow’s Medical Supplies, remains open for business and in fact has tripled its revenue in recent years, its co-owner said. “I’m hopeful for the future. I have an amazing team and we work as hard as we can every single day to ensure the success of the business,” co-owner Lisa Lewis said. “I’m looking forward to, in the next year, this being in the rear view. It will be a little blip as we move forward.” Lewis said that she and her business partner filed for bankruptcy as costs piled up dealing with billing errors made by the business’ former owners as well as ongoing litigation with those former owners. The COVID-19 pandemic also played a role, she said. Lewis and Paul Protzman bought Densow’s Medical Supplies at 1019 Wright Ave. in Richland in 2018. In making the purchase, “we brought some money to the table for the initial closing,” she said. In a move typical with those types of deals, “we did a holdback because we knew there were going to be some invoices that should have been paid by them that we’d have to pay on their behalf, and things like that. So then, at the one-year mark, we would work out what the difference is,” she said. But then they discovered billing errors, including patients without prescriptions on file, Lewis said. They hired auditors and had to pay back “tens of thousands” of dollars to Medicare, she said. In 2019, former owners Jonathan and Joelle Reynolds sued Lewis and Protzman in Benton County Superior Court, saying they still were owed $90,160 for the business, plus a 5% late fee and interest. They eventually were awarded more than $488,000 including those costs and attorney fees. Lewis and Protzman filed their own suit in 2022, alleging breach of contract, negligent misrepresentation and fraud. That case was dismissed; Lewis said it was because of legal errors, and they plan to re-file. In that case, the Reynoldses were awarded about $39,000 in attorney fees and interest.

After years of litigation to hold the pharmaceutical industry accountable for the deadly abuse of prescription painkillers, payments from what could amount to more than $50 billion in court settlements have started to flow to states and communities to address the nation’s continuing opioid crisis. But though the payments come with stacks of guidance outlining core strategies for drug prevention and addiction treatment, the first wave of awards is setting off heated debates over the best use of the money, including the role that law enforcement should play in grappling with a public health disaster, the New York Times reported. States and local governments are designating millions of dollars for overdose reversal drugs, addiction treatment medication, and wound care vans for people with infections from injecting drugs. But law enforcement departments are receiving opioid settlement money for policing resources like new cruisers, overtime pay for narcotics investigators, phone-hacking equipment, body scanners to detect drugs on inmates and restraint devices. “I have a great deal of ambivalence towards the use of the opioid money for that purpose,” said Chester Cedars, chairman of Louisiana’s advisory opioid task force and president of St. Martin Parish. The state’s directives say only “law enforcement expenditures related to the opioid epidemic,” added Mr. Cedars, a retired prosecutor. “That is wide open as to what that exactly means.” On Monday, 133 addiction medicine specialists, legal aid groups, street outreach groups and other organizations released a list of suggested priorities for the funds. Their recommendations include housing for people in recovery and expanding access to syringe exchange programs, personal use testing strips for fentanyl and xylazine, and medication that treats addiction. Groups that monitor opioid settlements use various criteria to estimate the total payout. But even employing the most conservative tabulation, the final amount could be well north of $50 billion when pending lawsuits are resolved, notably the multibillion-dollar Purdue bankruptcy plan, which the Supreme Court temporarily paused last week. At first glance, that looks like a trove of money. In reality, it will be parceled out over 18 years and is already dwarfed by the behemoth dimensions of the opioid crisis, now dominated by illicit fentanyl and other drugs.

Two big opioid cases suggest the U.S. bankruptcy process is unjustly providing relief for some while inflicting pain unnecessarily on others, according to a Reuters commentary. The first involves Mallinckrodt Pharmaceuticals, which may be headed for insolvency a second time. Between 2006 and 2014, it manufactured roughly 30 billion opioid pills. When states, Native American tribal governments and thousands of localities started suing all involved in the addictive medicine’s supply chain, from Johnson & Johnson to CVS Health, creditors decided the drugmaker would be better off resuscitated than sold off for parts. It emerged from chapter 11 in June 2022, agreeing to pay plaintiffs some $1.7 billion over eight years and warrants equal to a 20% stake in the company while sheltering executives including former CEO Mark Trudeau from legal liability. More notoriously, as recounted in multiple media outlets, books and TV series, closely held Purdue Pharma became a leader in the opioid market. Its attempt to climb out of bankruptcy has been stalled multiple times, most recently on Thursday by the U.S. Supreme Court. It agreed to let the Department of Justice make its case against attempts to grant protections to members of the Sackler family, who owned the company. As a result, the $6 billion they are contributing to a settlement is on hold.
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*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Wisconsin's Department of Justice is asking to see sealed records from the Milwaukee branch of the Catholic Church as part of the attorney general's investigation into sexual abuse by faith leaders, Wisconsin Public Radio reported. Those records were shielded from public view after the Milwaukee Archdiocese filed for bankruptcy in 2011. In 2015, that bankruptcy case resulted in a $21 million settlement between the archdiocese and hundreds of sexual abuse survivors. In a motion field this week, DOJ attorneys asked to confidentially review sealed claims and documents related to those claims that were filed as part of the case in U.S. District Court for the Eastern District of Wisconsin. Access to those documents could help the DOJ file charges against additional perpetrators, Attorney General Josh Kaul said.

Manhattan federal district court Judge Lewis Kaplan revoked the bail of FTX founder Sam Bankman-Fried just months before his scheduled trial, a decision that placed the former crypto exchange executive in handcuffs on Friday, YahooFinance.com reported. Federal prosecutors had alleged Bankman-Fried violated his bail agreement by communicating with a New York Times reporter about his former girlfriend and primary witness for the prosecution, Caroline Ellison. A gag order is not “a workable solution longer term particularly with someone who has shown a willingness and a desire to risk crossing the line in an effort to get right up to it no matter where the line is,” Judge Kaplan said. Ellison previously served as CEO of Alameda Research, an FTX-affiliated hedge fund, which prosecutors claim Bankman-Fried used to misappropriate FTX customer funds. Ellison has plead guilty to multiple fraud charges and entered a plea deal to testify against Bankman-Fried. "Mr. Bankman-Fried’s contact with the New York Times reporter was not an attempt to intimidate Ms. Ellison or taint the jury pool," the fallen crypto executive's lawyers wrote in a letter to Judge Kaplan. "It was a proper exercise of his rights to make fair comment on an article already in progress, for which the reporter already had alternate sources."

Barry Silbert and Digital Currency Group asked a U.S. court to throw out a lawsuit by the Winklevoss twins’ crypto exchange Gemini Trust Inc. that accuses the company and its leader of fraud, Bloomberg News reported. DCG and Silbert filed a motion to dismiss in Manhattan federal court Thursday, claiming Gemini fails to properly claim fraud and accusing the company and founders Cameron and Tyler Winklevoss of engaging in a “character assassination campaign” against DCG and Silbert. Gemini sued DCG and Silbert last month in New York, alleging they engaged in “fraud and deception.” The dispute stems from DCG crypto lending unit Genesis Global Holdco’s decision in November to freeze withdrawals, which left hundreds of millions of dollars worth of Gemini customer assets trapped. Through the Gemini Earn program, its clients could earn interest on their crypto deposits by lending them out through Genesis Global. When Genesis filed for bankruptcy in January, Gemini became one of its biggest creditors. After months of trying to negotiate a settlement with Genesis and DCG, Gemini filed its lawsuit in state court in July. The case has since been moved to federal court.

Legacy Cares Inc., the non-profit owner of a bankrupt Phoenix-area sports complex, won a court fight to keep the venue’s planned sale on track after an Arizona judge rejected a federal monitor’s plea to appoint a trustee for the site, Bloomberg News reported. The decision is a victory as well for holders of $280 million in municipal bonds, unsecured creditors and the landlord of the 320-acre complex. The trustee for Vanguard Group, AllianceBernstein Holding LP and other bondholders and other creditors opposed the federal monitor’s request. Judge Daniel Collins of the U.S. Bankruptcy Court for the District of Arizona ruled that naming a trustee for the complex would “gravely jeopardize” the sale of the facility and it’s ability to continue as a going concern. Legacy Cares asked the court to set a Sept. 18 deadline for bids on the venue and to complete the sale in early October. “All parties appear to agree on one thing — this estate is losing money at an alarming rate and the estate’s assets must be sold sooner than later,” Judge Collins wrote in an order on Wednesday.