1106Joined May 2015


Thank you, this is exactly what I was hoping for! I have several questions.

Could you expand on how lawyers can create costs for 3rd parties, even without depositions?

I don't understand why you're using the exact same number as the Madoff clawbacks. I looked at it more for ratios: out of 40,000 investors (another source says 37k), 2,000 were net positive, and ~half of those were sued.* Your intuitions about where lines might be drawn were really helpful here, although I don't feel like I have the level of clarity I want yet.

Suppose someone gets on a list: what happens next?  how much of that is set in stone? What changes could someone induce by talking publicly? Some guesses I have are getting deposed versus not, deposition takes n% longer,  personal records get subpoenaed where they otherwise wouldn't have. 


*Note that it's not 1000+ cases that went to trial, it's 1,000 lawsuits filed (apologies for leaving the citation out earlier, I meant to include it).  I have yet to find any that went to trial, although some clearly got far enough to be prepping witnesses. That's about what the trustee initially estimated- that out of 2000 net beneficiaries of Madoff, he'd go after about half of them.  It's not clear to me anyone gave back money without a lawsuit being filed. 

I agree the systemic effort is likely not worth it. 

I think part of the problem is that, almost by definition, the people who have any expertise at all in law have also been inculcated in a culture that is extremely averse to both risks and quantified estimates. That leaves people without expertise but higher tolerance for risk and quantification (like Habryka) to come up with their own numbers and perhaps not respect the expertise behind the caution enough. I was hoping to unstick that log jam by introducing specifics that could be discussed at the object level.  And I consider your suggestion to look at fee applications in bankruptcy court to be a success on that front, although the problem is very far from resolved.

Would you be willing to sit down with me and operationalize or parameterize some beliefs, which we can then send a legal researcher after? Or something like a double crux collaboration.

I find it completely plausible that there are a ton of hidden costs I could never find as an amateur, but I do want to have hard data instead of merely taking your word for it. I think using your guidance to figure out the right questions to get hard data on might be a huge win.

Habryka has confirmed he's happy to pay for  your time. Given that and the fact that he's currently paying an expensive non-expert researcher (me), I'm extremely confident that if we find questions with the right level of tractability and meaning,  he'll cover the eventual legal researcher as well, although I didn't wait for answer before posting this.

I 100% agree that processing everyone who'd been touched by any Madoff case would be a massive undertaking and not worth the time. Which is why I didn't ask for it. Right now I'm just asking for a single example of people in the reference class this post is discussing, being involved in the case. That's definitely not the last question I'm going to ask, but it seems like a good starting place.

Maybe this is one of those dumb questions that's so obvious to everyone with any expertise that they are laughing at me, and it takes a minute think of a specific example because it's so common an expert would never bother to remember specifics. In that case, I expect experts to still be able to produce  an example with a tiny amount of work once they stop laughing. And given legal advices' reputation for overcaution in general, I think asking for examples and eventually numbers for a particular piece of advice is a fair request. 

Alternately, I'd love to see legal experts replace Habryka's guesstimate with more informed ones. My understanding from your comment here is that you're not comfortable with that because the question isn't well-defined. I think defining different scenarios and providing numbers for those (including some that are obviously materially different from this case, both to signal that the numbers can't be applied directly and because it's useful for teaching principles). Or add error bars until comfortable.


Oh I had indeed forgotten that.  

I don't see anyone analogous to him, or even to someone who actually works at anthropic, the Enron witness list. Can you point to examples of analogous people in other cases?

I don't think this supports any conclusions yet, it's two cases and I only got a full witness list for one of those. I would love to see any examples of witnesses who were in roughly the position EA leadership or members (allegedly) are- people who received money for charitable purposes, from someone who earned it through fraud and needs to pay it back, but weren't close relatives or could otherwise be considered tightly aligned with their funder. Or someone like Holden, whose org AFAIK didn't receive any FTX money at all. 

(FTR I think Holden waiting until his takes are cold is entirely reasonable, I think the speed of response on the EAF is overheated, but given the trials could take over a decade, establishing the risks of speaking candidly before they are entirely resolved seems valuable).

Full disclosure: habryka is paying me for this research. He didn't review either comment before publication but I did talk to him about my findings as I was working. I meant to include this in the first comment but the "(paid)" in "At Oliver's (paid) request" got lost in an edit somewhere.

The main Enron trial was much more cooperative and provided full lists of witnesses, with profiles. 


Wall Street Journal profiles of prosecution witnesses:

  • Enron Employees and contractors: 20
  • Arthur Andersen Employes: 2
  • Criminal Investigators: 1
  • Other: 2
    • Rob Barone, managing director at S&P who previously oversaw an assessment of Enron
    • Glenn Ray, a stockbroker who managed a defendent’s sale of Enron stock



Wall Street Journal profiles of defense witnesses: 

  • Enron employees: 15
    • 11 material
    • 3 character witnesses (which is presumably voluntary)
    • 1 contractor
  • Defendants: 2
  • Expert Witnesses: 3
  • Non-enron character witnesses: 11


The prosecution also shared its  prospective witness list. It has 31 names, of which 23 testified, plus another 2 who weren’t on the original list. Of those two, one was an FBI agent for whom this was part of his job, and another was an Enron employee brought in as a rebuttal witness. 

Enron produced a lot of trials, of which this is only one. There were so many trials Wikipedia didn't even bother to list all of them (example), plus the senate hearings, extradition trials, appeals, etc. This is a very narrow slice of who had to testify about Enron.

But all of the witnesses either opted in (as character or expert witnesses, or investigators), worked for the company or person that committed crimes, or worked for the auditing firm that missed the crimes.  None of these seem equivalent to the people I imagine you are talking to or about here. Could you give some specific examples of witnesses in positions similar to those people, in cases similar to FTX's likely case? I'm happy with a very broad definition of similar, and I would absolutely believe they exist and I missed them. I'm a non-expert who has looked at two cases so far and both are missing crucial aspects of EA's relationship to FTX.  But I'm clearly not going to find them very fast.


At Oliver's request I dug into the Madoff case a little, to see if there was anything we could learn from.

Epistemic status: I am not a lawyer and I spent 2.5 hours on this, one of which was unproductively wrestling with the court records database, the worst database UI in the history of databases. 


The following are court cases I found related to Madoff Investments:

  • Bernie Madoff pled guilty and never went to trial. It wasn't even a negotiated plea bargain, just a straight guilty please (probably so he didn't have to testify against anyone)
  • His two top lieutenants took plea deals and never went to trial (but did testify elsewhere).
  • 5 other employees had a joint criminal trial. The Madoff case broke in 2008, they were indicted in 2010 (not all together),  the case went to trial in 2013, and took 8 months to complete. Appeals continued until 2016. 
  • The main trustee in charge of clawback filed "over 1,000" civil suits aimed at clawing back money. None of the ones I found in the news went to trial, although some got very close. I probably identified <20 cases, primarily the largest ones.
    • The lawsuits were (reportedly) aimed at people who took more money out than they had ever put in. The ones that made the news typically had a component of "knew or should have known Madoff was a fraud" and encouraging others to invest. However the money recovered went to a general fund, not the people they specifically were responsible for bringing to Madoff.
  • I found a handful of other lawsuits brought against the same entities from the large set of civil suits. None of these appear to have gone to trial, although they got very little coverage so it's hard to say. 

So that's one trial. I spent an hour trying to get a witness list and failing, and am now hoping someone reads this and Cunningham's laws me. You're looking for S.D.N.Y., No. 09-mag-2484 or 1:10-cr-00228,  transcripts are $6+ a page to get quickly. You might be able to do better going to the courthouse in NYC.

In the meantime:

That leaves 30+ witnesses unaccounted for, which isn't really enough to draw interesting conclusions, especially without knowing the denominator of who could have been called.

Yeah that's a good distinction- even if a decision should very clearly be public, it doesn't automatically follow that the decision making process should be.

I am broadly glad more concerns are coming out and more information is being shared. But I think that the following attitude makes things worse rather than better:

with rumours of secret Google docs and WhatsApp groups in which the leaders of the movement discuss how to position themselves and how to hide their more controversial views or make them seem palatable

Every organization and movement has private docs and group chats. That's normal and good for the same reason it is normal and good for people to have private thoughts. Banning organizations from having private discussions makes everyone dumber and less competent.

This description could be anything from "muahaha, how do we trick the rubes into funding our math contest" to "what among our interests is most relevant to this group?" We might make guesses from their public actions, but we could make those anyway. The fact that an org doesn't publish every single document isn't nefarious.

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