Michael Liedtke, The Associated Press
Published Friday, November 18, 2022 5:52AM EST
Last Updated Friday, November 18, 2022 7:06PM EST
Disgraced Theranos CEO Elizabeth Holmes was sentenced Friday to more than 11 years in prison for duping investors in the failed startup that promised to revolutionize blood testing but instead made her a symbol of Silicon Valley ambition that veered into deceit.
The sentence imposed by U.S. District Judge Edward Davila was shorter than the 15-year penalty requested by federal prosecutors but far tougher than the leniency her legal team sought for the mother of a year-old son with another child on the way.
Holmes, who was CEO throughout the company’s turbulent 15-year history, was convicted in January in the scheme, which revolved around the company’s claims to have developed a medical device that could detect a multitude of diseases and conditions from a few drops of blood. But the technology never worked, and her claims were false.
Theranos was dashed “by misrepresentations, hubris and just plain lies,” the judge said.
“This case is so troubling on so many levels,” he said. “What was it that caused Ms. Holmes to make the decisions she did? Was there a loss of a moral compass?”
Holmes’ meteoric rise once landed her on the covers of business magazines that hailed her as the next Steve Jobs. And her deception drew in a list of sophisticated investors that included software magnate Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.
She sobbed as she told the judge she accepted responsibility for her actions.
“I regret my failings with every cell of my body,” Holmes said.
The sentencing in the same San Jose, California, courtroom where Holmes was convicted on four counts of investor fraud and conspiracy in January marked another climactic moment in a saga that has been dissected in an HBO documentary and an award-winning Hulu series about her meteoric rise and mortifying downfall.
Holmes, 38, faced a maximum of 20 years in prison, but her legal team asked the judge for a sentence of no more than 18 months, preferably served in home confinement.
Her lawyers argued that Holmes deserved more lenient treatment as a well-meaning entrepreneur who is now a devoted mother with another child on the way. Their arguments were supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.
Prosecutors also wanted Holmes to pay $804 million in restitution. The amount covers most of the nearly $1 billion that Holmes raised from investors.
While wooing investors, Holmes leveraged a high-powered Theranos board that included former Defense Secretary James Mattis, who testified against her during her trial, and two former secretaries of state, Henry Kissinger and the late George Shultz, whose son submitted a statement blasting Holmes for concocting a scheme that played Shultz “for the fool.”
Holmes must report to prison on April 27.
After giving birth to a son shortly before her trial started last year, she became pregnant at some point while free on bail this year. Although her lawyers didn’t mention the pregnancy in an 82-page memo submitted to the judge last week, the pregnancy was confirmed in a letter from her current partner, William “Billy” Evans, that urged the judge to be merciful.
If Holmes’ pregnancy had a role in determining her sentence, the decision could prove controversial. A 2019 study found that more than 1,000 pregnant women entered federal or state prisons over a 12-month study period; 753 of them gave birth in custody.
According to a 2016 survey by the Bureau of Justice Statistics, more than half of women entering federal prison – 58% – reported being mothers of minor children.
Federal prosecutor Robert Leach declared that Holmes deserves a severe punishment for engineering a scam that he described as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Leach told the judge he has an opportunity to send a message that curbs the hubris and hyperbole unleashed by the tech boom.
Holmes “preyed on hopes of her investors that a young, dynamic entrepreneur had changed healthcare,” Leach wrote. “And through her deceit, she attained spectacular fame, adoration and billions of dollars of wealth.”
Even though Holmes was acquitted by a jury on four counts of fraud and conspiracy tied to patients who took Theranos blood tests, Leach also asked Davila to factor in the health threats posed by Holmes’ conduct.
Holmes’ lawyer Kevin Downey painted her as a selfless visionary who spent 14 years of her life trying to revolutionize health care.
Although evidence submitted during her trial showed the blood tests produced wildly unreliable results that could have steered patients toward the wrong treatments, her lawyers asserted that Holmes never stopped trying to perfect the technology until Theranos collapsed in 2018.
They also pointed out that Holmes never sold any of her Theranos shares – a stake valued at $4.5 billion in 2014.
Defending herself against criminal charges has left Holmes with “substantial debt from which she is unlikely to recover,” Downey wrote, suggesting that she is unlikely to pay any restitution that Davila might order as part of her sentence.
“Holmes is not a danger to society,” Downey wrote.
Downey also asked Davila to consider the alleged sexual and emotional abuse Holmes suffered while she was involved romantically with Ramesh “Sunny” Balwani, who became a Theranos investor, top executive and eventually an accomplice in her crimes.
Balwani, 57, is scheduled to be sentenced Dec. 7 after being convicted in a July trial on 12 counts of fraud and conspiracy.
FTX founder Bankman-Fried objects to tighter bail, says prosecutors 'sandbagged' him – Reuters
NEW YORK, Jan 28 (Reuters) – Lawyers for Sam Bankman-Fried on Saturday urged a U.S. judge not to ban the indicted FTX cryptocurrency executive from communicating with former colleagues as part of his bail, saying prosecutors “sandbagged” the process to put their client in the “worst possible light.”
The lawyers were responding to a Friday night request by federal prosecutors that Bankman-Fried not be allowed to talk with most employees of FTX or his Alameda Research hedge fund without lawyers present, or use the encrypted messaging apps Signal or Slack and potentially delete messages automatically.
Bankman-Fried, 30, has been free on $250 million bond since pleading not guilty to charges of fraud in the looting of billions of dollars from the now-bankrupt FTX.
Prosecutors said their request was in response to Bankman-Fried’s recent effort to contact a potential witness against him, the general counsel of an FTX affiliate, and was needed to prevent witness tampering and other obstruction of justice.
But in a letter to U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried’s lawyers said prosecutors sprung the “overbroad” bail conditions without revealing that both sides had been discussing bail over the last week.
“Rather than wait for any response from the defense, the government sandbagged the process, filing this letter at 6:00 p.m. on Friday evening,” Bankman-Fried’s lawyers wrote. “The government apparently believes that a one-sided presentation – spun to put our client in the worst possible light – is the best way to get the outcome it seeks.”
Bankman-Fried’s lawyers also said their client’s efforts to contact the general counsel and John Ray, installed as FTX’s chief executive during the bankruptcy, were attempts to offer “assistance” and not to interfere.
A spokesman for U.S. Attorney Damian Williams in Manhattan declined to comment.
Bankman-Fried’s lawyers proposed that their client have access to some colleagues, including his therapist, but not be allowed to talk with Caroline Ellison and Zixiao “Gary” Wang, who have pleaded guilty and are cooperating with prosecutors.
They said a Signal ban isn’t necessary because Bankman-Fried is not using the auto-delete feature, and concern he might is “unfounded.”
The lawyers also asked to remove a bail condition preventing Bankman-Fried from accessing FTX, Alameda or cryptocurrency assets, saying there was “no evidence” he was responsible for earlier alleged unauthorized transactions.
In an order on Saturday, Kaplan gave prosecutors until Monday to address Bankman-Fried’s concerns.
“The court expects all counsel to abstain from pejorative characterizations of the actions and motives of their adversaries,” the judge added.
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Gold declines in light of the report that revealed inflation continues to decline – Kitco NEWS
As of 6:00 PM EST, the February contract of gold futures has fallen for the second time in the last seven trading days. Currently, gold futures are fixed at $1927.60, a decline of $2.40 or 0.12%. Gold traded to a high of $1935.40, and a low of $1916.50.
The key takeaway from today’s PCE inflation index report was that the core PCA index declined in December by 0.3%. The preferred inflation index used by the Federal Reserve was at 4.7% year-over-year in November and declined to 4.4% year-over-year last month.
Both reports will influence decisions made by the Fed at next week’s FOMC meeting.
They will be critical components used by the Federal Reserve next week and will most likely strengthen the conviction of hawkish Fed officials to maintain their extremely aggressive monetary policy. Currently, the Federal Reserve’s forward guidance is composed of additional rate hikes and maintaining elevated rates for a longer time.
The most likely outcome is that the Fed will raise the rate by ¼% at the next two meetings. The Federal Reserve has stated they continue to work to reach its inflation target of 2%. A vast majority of market participants continue to believe that the Fed will backpedal on its commitment to keep rates elevated through 2023.
I will be speaking at the VRIC 2023 (Sunday, January 29-30) at the Vancouver Convention Center. Both Kitco News and I wish to welcome you if you’re available.
For those who would like more information simply use this link.
Wishing you as always good trading,
Afraid to check a bag? Canada's missing baggage woes explained – CBC News
Deborah Cleary was exasperated.
When she landed in Montreal on Dec. 19, following a trip to Italy, she discovered her suitcase was missing. More than a month later, Air Canada still hadn’t found her bag.
“I’ve spent so much time thinking about it, worrying about it, checking online, calling Air Canada,” said Cleary from her home in Plattsburg, N.Y., on Tuesday. “I’m just sort of desperate to get my bag back.”
The post-pandemic return to travel has been turbulent, plagued by mass flight disruptions and missing baggage piling up at airports. That has led to calls for airlines to improve their baggage delivery systems.
“It’s broken, so I think they need to fix that,” said Cleary, who visited the Montreal airport two weeks ago to search for her bag amidst a sea of unclaimed luggage. She didn’t find it.
However, following a CBC News inquiry to Air Canada, Cleary learned on Friday that her suitcase is being shipped to her home.
“I’m very, very happy,” she said. “I had almost resigned myself, I was never going to see it again.”
Canada’s first round of missing baggage chaos erupted in the summer, largely sparked by staffing shortages as airports and airlines scrambled to ramp up operations.
There were high hopes the holiday travel season would go more smoothly — until severe winter storms hit much of Canada, causing hundreds of delayed and cancelled flights, plus a backlog of lost luggage.
“In the airline industry, a delay of greater than 15 minutes generally results in missed connections,” said former Air Canada executive Duncan Dee. “Delays equal missing bags.”
Dee said airlines need to do a better job keeping track of luggage, and the federal government also needs to invest more in airports.
In late December, cold weather caused a baggage belt to freeze at Toronto’s international airport; a fierce snow storm caused widespread flight delays and cancellations at Vancouver’s international airport.
“There’s obviously a need for better infrastructure, better resources for airports … to make them more resilient to these weather events,” said Dee.
What about the airlines?
When asked this week about recent travel chaos, Transport Minister Omar Alghabra said airports will get the tools they need, but did not elaborate.
On the baggage issue, he pointed the finger at airlines.
“I find it extremely frustrating when I hear stories of people not having their luggage for days on end,” he said during an event in Hamilton. “Airlines should be doing more.”
His comments follow several recent media reports about air passengers’ struggles to find their missing luggage
They include the saga of Nakita Rees and Tom Wilson of Cambridge, Ont., who battled with Air Canada for more than four months to retrieve Wilson’s missing suitcase.
The bag vanished during their flight home from Greece in September. Because the couple had put an air tag tracker inside the suitcase, they were able to track its journey to a storage facility in nearby Etobicoke, Ont.
Even though Rees shared with Air Canada the whereabouts of the bag, the airline deemed it lost.
“The most frustrating thing about it was we had no way of getting it, even though we knew the location and we told the airline so many times,” said Rees. “Because the air tags are newer, I just don’t think airlines know how to even use that information.”
The couple finally got the suitcase back this week — after their story was picked up by the media.
Other passengers have also complained about similar experiences when tracking their lost luggage with air tags.
Former Air Canada executive Dee said airlines typically track luggage by scanning their baggage tags and that their systems currently can’t accommodate air tracking technology.
“That’s something where airline processes have not caught up to the technology that’s available,” he said. “No airline in the world has the ability right now to accept information from travellers.”
Alghabra suggested airlines need to change with the times.
“We hear about how Amazon is able to identify where their items [are at] every moment,” he said. “It’s frustrating that airlines still have not modernized their luggage handling system.”
Air Canada told CBC News it’s constantly exploring new technologies. The airline added that its baggage delivery rate has returned to normal, following the stormy holiday weather.
Air Canada said that in Rees’ case, the baggage tag had fallen off the suitcase. The airline didn’t say how it eventually located the couple’s bag, but did indicate that they get to keep the $2,300 in compensation they received for lost luggage.
WestJet said it has launched a strategic review to fine-tune its baggage systems. “[We] are committed to working together with our third-party service partners … to ensure we improve in this area,” said spokesperson Madison Kruger in an email.
Travellers can claim up to approximately $2,350 for luggage that is lost or delayed on an international flight. For delayed baggage on domestic flights, the airlines design their own rules.
Alghabra’s office told CBC News this week the government is exploring ways to strengthen rights for air passengers, including for delayed and lost baggage.
As for passenger Cleary, she had applied for compensation for a lost bag, but said getting it back is a better outcome.
“I would much prefer to have my bag back than any money from Air Canada.”
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