Nassau County Legislator Josh Lafazan (D-Woodbury) said in a statement to Blank Slate Media that his campaign never received contributions from a PAC funded by Sam Bankman-Fried, the founder of FTX, who is charged with wire fraud and money laundering in the cryptocurrency exchange’s multibillion-dollar collapse.
Bankman-Fried, 30, is a former billionaire who was detained in the Bahamas and extradited to the United States after federal prosecutors filed charges following FTX’s implosion in November that revealed an $8 billion hole in its accounts.
Paolo Pironi, a Republican who in 2021 ran against Lafazan for the county’s 18th Legislative District and lost by 220 votes, called on Lafazan to return funds he received from Bankman-Fried.
“I call on Josh Lafazan to return the more than half-million dollars in stolen funds he received from Sam Bankman-Fried during his failed congressional campaign,” Pironi said. “To secure these contributions, Lafazan abused his position in the county Legislature to curry favor by encouraging donors to invest in this ponzi-scheme,” Pironi said in a Facebook post.
FTX, the cryptocurrency exchange Bankman-Fried founded, was established in 2019 and is currently bankrupt after becoming the third-largest cryptocurrency exchange by volume at one point.
“From creating a taxpayer funded “cryptocurrency” task force, to writing op-eds, and lobbying elected officials, Lafazan focused on delivering for himself – not his constituents, Prioni said. “It’s time this fraud is held accountable for his actions.”
Lafazan said the funds in question were independent expenditures that did not go to his campaign.
“By its nature as an independent expenditure regulated by federal law, my campaign never received a dollar from this entity,” Lafazan said in a statement to Blank Slate Media. “Because of that, no campaign contributions exist to be returned. Any implication to the contrary is ignorant at best, and at worst, a bald-faced lie designed to deceive the public.”
Independent expenditures are used for communication that expressly advocates for the election or defeat of a candidate. They are not contributions and cannot be made in consultation, cooperation or at the request of a candidate or their committee.
Lafazan was a candidate in the Democratic primary for the 3rd Congressional District but eventually lost to Robert Zimmerman.
Bankman-Fried is currently awaiting trial on multiple charges of wire fraud and conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering and conspiracy to defraud the United States.
One of the charges Bankman-Fried faces is violating campaign finance laws. Federal prosecutors alleged that Bankman-Fried sourced donations from his cryptocurrency hedge fund, Alameda Research, and falsely reported them as coming from other people.
In 2022, Bankman-Fried donated roughly $40 million to mostly Democrat politicians either personally or via political action committees.
Of the $38,837,000 from Bankman-Fried, 99.6% of it went to liberal politicians, according to Open Secrets.
Of the total, $27 million was contributed to the Protect Our Future Pac, which was founded in 2022.
Protect our Future is an “organization designed to help elect candidates who will be champions for pandemic prevention” according to its website.
The organization gave $710,849 worth of independent expenditures to Screen Strategies Media, a for-profit media placement company to buy and produce advertisements supporting Lafazan.
Protect our Future also gave $250,662 to Screen Strategies to buy and produce advertisements supporting former Hempstead Supervisor Laura Gillen, a Democrat who lost to Republican Anthony D’Esposito in the race for the 4th Congressional District, according to ProPublica.
Earlier this year, Lafazan amended his 2021 and 2022 Nassau financial disclosure forms to reflect a “student loan” from billionaire investor Bryan Lawrence and his wife Elizabeth. The loan given to Lafazan in 2020 totaled between $50,001 to $100,000.
Both candidates were endorsed by a nonprofit called Guarding Against Pandemics, which was founded by Gabe Bankman-Fried, Sam’s brother.
In response to the recent scandal revolving around Congressman-elect George Santos, Lafazan introduced the “Campaign Honest Bill” that makes it a misdemeanor for a candidate to lie about registered addresses, employment history, education and income sources.