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Former Theranos COO Found Guilty of Federal Fraud

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(CNN) — Ramesh “Sunny” Balwani, the former COO of failed blood testing startup Theranos and ex-boyfriend of founder Elizabeth Holmes, was found guilty of defrauding investors and patients.

Jury deliberations stretched for four full days following a lengthy trial that got underway in March with opening statements. A jury of five men and seven women determined that Balwani had defrauded both patients and investors, finding him guilty on all 12 charges he faced, which included ten counts of federal wire fraud and two counts of conspiracy to commit wire fraud.

During Holmes’ trial, a separate jury acquitted her on charges pertaining to defrauding patients, and were not able to reach a unanimous verdict on three of the charges concerning defrauding investors. She was found guilty on four charges relating to investors.

Balwani, the former president and COO at the failed blood testing startup, was indicted four years ago alongside Holmes, the founder and former CEO, for allegedly defrauding investors and patients. Their trials were severed after Holmes’ legal team outlined in legal filings that she planned to make accusations about their relationship as part of her defense.

Balwani showed little emotion as his fate was read aloud. Afterward, he briefly huddled with a small support system present in the courtroom. The verdict comes roughly six months after Holmes’ trial concluded.

In a statement read outside the courthouse Thursday, US Attorney Stephanie Hinds thanked jurors for “dutifully navigating through the complex issues presented by this case.”

“We appreciate the verdict and look forward to sentencing proceedings,” Hinds said.

In a written statement to CNN Business, Balwani defense attorney Jeffrey Coopersmith of Orrick, Herrington & Sutcliffe said: “We are obviously disappointed with the verdicts. We plan to study and consider all of Mr. Balwani’s options including an appeal.”

Balwani’s verdict marks an end to a rare criminal fraud case against two Silicon Valley startup executives and the final chapter of a company, and a founder, once viewed as a posterchild for the entrepreneurial dream of building a disruptive product with the potential to change the world.

“Balwani is a reminder that she, like everyone, didn’t do it by herself,” Margaret O’Mara, a historian of the tech industry and professor at the University of Washington told CNN Business. “He still had a significant role running the company.”

Holmes founded Theranos when she was 19 years old in an effort to create a cheaper, more efficient alternative to traditional blood testing, a goal she said was inspired by her own fear of needles. The startup later claimed to have developed technology capable of testing for a range of conditions, including cancer and diabetes, using just a few drops of blood. Theranos ultimately raised $945 million from investors, including well-known figures such as media mogul Rupert Murdoch and Walmart’s Walton family. It also struck up partnerships with prominent retailers.

Then it all came crashing down, beginning with a 2015 Wall Street Journal investigation into the startup that revealed holes in its testing methods and technological capabilities.

Balwani’s trial took place in the same San Jose, California courtroom where Holmes was convicted. His case, also presided over by Judge Edward Davila, was pushed back several times due to delays in Holmes’ trial and later by a surge in Covid-19.

To make its case against Balwani, the government called two dozen witnesses as it sought to convince jurors that he knowingly and intentionally lied to and deceived investors and patients in order to get money for Theranos. As with Holmes’ case, the government sought to untangle the layers of the alleged fraud for jurors, including concealing use of third-party manufactured machines, overstating financials, misrepresenting work with pharmaceutical companies and the military, and leveraging the media to perpetuate the scheme.

The defense, on the other hand, called two witnesses to testify. During opening and closing arguments, it portrayed Balwani as having acted in good faith and having believed in the company’s technology. It also argued prosecutors cherry-picked information to prove its case and cast doubt on whether the government had enough evidence for the jury to find Balwani guilty.

Balwani, 57, faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count of wire fraud and each conspiracy count.

Holmes, 38, is slated to be sentenced in late September. Balwani is scheduled to be sentenced in November.

Balwani’s road to Holmes, and Theranos

While Holmes’ stunning rise and fall is likely what most will remember about the story of Theranos in years to come, O’Mara said Balwani is actually “more representative of the Valley in terms of his career.”

Balwani and Holmes first crossed paths in the summer of 2002. The two met while attending a summer program in Beijing to learn Mandarin. Balwani, nearly 20 years older than Holmes, had already had a successful career in the software industry and as an entrepreneur.

Originally from South Asia, Balwani moved to the United States on a student visa in 1986 to attend college in Texas. After graduating, he came to Silicon Valley and worked for tech companies such as Lotus and Microsoft. He went on to start an e-commerce company, which he eventually sold. By 2002, he was back in school to get his MBA.

As Holmes testified in her own defense in her trial, the two forged a friendship. They kept in touch and their relationship ultimately turned romantic. By 2005, the year after Holmes dropped out of Stanford to work full-time on Theranos, the pair were living together.

Balwani took a formal role at Theranos in 2009, shortly after guaranteeing a $10 million loan to the company. At the recommendation of Theranos’ board, according to Balwani’s defense, he would eventually take on the role of COO and president. Their romantic relationship, however, was largely kept private from investors, employees and business partners.

Under the leadership of Holmes and Balwani, Theranos struck a major retail partnership with Walgreens, hit a $9 billion valuation and received glowing coverage in the press. Holmes was featured on multiple magazine covers and hailed as the rare female founder of a billion-dollar business, not to mention one said to be a paper billionaire.

But in 2015, the Journal reported that Theranos had only ever performed roughly a dozen of the hundreds of tests it offered using its proprietary blood testing device, and with questionable accuracy. The Journal also revealed Theranos was relying on third-party manufactured devices from traditional blood-testing companies rather than its own proprietary technology.

Balwani, who had been overseeing the lab that processed patient samples, departed the company in May 2016. (Their personal relationship also ended at that time.) Theranos voided two years of blood test results.

In 2018, following nearly two years of turmoil, Holmes and Theranos settled “massive fraud” charges with the US Securities and Exchange Commission, but did not admit to or deny any of the allegations as part of the deal. Balwani, on the other hand, is fighting the charges. Coopersmith, the attorney also representing him in his criminal trial, said in a statement at the time that he “accurately represented Theranos to investors to the best of his ability.”

Theranos dissolved soon after.

“Partners in everything”

While their trials were separated, each featured prominently in the other’s court proceedings.

As assistant US attorney Robert Leach told jurors during the prosecution’s opening arguments in Balwani’s trial, the government believes he and Holmes “were partners in everything, including their crimes.”

While Balwani was an integral part of Theranos and a confidante to Holmes throughout her time running the company, he was more of a behind-the-scenes force. In addition to the critical role of overseeing its patient lab, he also oversaw its key retail partnership with Walgreens and managing Theranos’ financial projections. Balwani, at times, also communicated directly with some investors to secure deals.

During her criminal trial, Holmes suggested that Balwani wielded even more power than she did at her own company in some ways. Taking the stand in her own defense, she testified that she was the victim of a decade-long abusive relationship with Balwani. She claimed Balwani exerted tremendous control over her, prescribing a restrictive lifestyle and image to become successful in the business world. At times, she alleged in testimony, he forced her to have sex with him. Balwani’s attorneys have strongly denied the allegations.

Holmes stopped short of saying Balwani directed her to mislead anyone. “He impacted everything about who I was, and I don’t fully understand that,” she testified.

Mark MacDougall, a white-collar defense lawyer and former federal prosecutor, said both the prosecution and the defense likely benefited by being able to see how evidence and witness testimony fared with jurors in Holmes’ trial. “Each side in Sunny’s trial would have made adjustments based on the outcome of the Holmes case, which could account for a different verdict,” he said.

While Balwani did not take the stand, his defense team’s strategy included pointing the finger back at Holmes. The defense highlighted to jurors that he, too, was a believer in Holmes and in Theranos, just as numerous other notable investors, business partners and employees had been.

The list of people who believed in Holmes and Theranos included Stanford University chemical engineering professor Channing Robertson, who served as the company’s first board member; former Defense Secretary James Mattis and former Secretary of State George Shultz, who also once served on the board.

“That was the board at Theranos that the investors were understandably impressed with, as was Mr. Balwani no doubt,” said Coopersmith, during closing arguments.

The caliber of Theranos’ backers was reflected in the witnesses called by the government. Among those who testified in both trials were investor Chris Lucas, whose uncle Don Lucas was a well-known Silicon Valley investor and onetime chairman of Theranos’ board; Lisa Peterson, who helped vet a deal for the billionaire family of former US Education Secretary Betsy DeVos, and Daniel Mosley, a prominent lawyer who was introduced to Theranos through his longtime client Henry Kissinger, the former Secretary of State who once served on the board of the company. (Mosley went on to introduce several of his clients to Holmes and Theranos, including the DeVos family.)

“This is what Elizabeth was able to do…the charisma, the drive, the vision, the goal to change diagnostic testing, and he bought into that vision,” added Coopersmith.

Balwani’s attorneys also emphasized a missing database as reason for jurors to be skeptical of the prosecution’s case. The database contained the company’s testing records but the prosecution was never ultimately able to retrieve access before it was destroyed.

“It’s important to the process and to your deliberations that you focus on what actually is in evidence and not speculate about things that are not before you,” said assistant US attorney John Bostic in the prosecution’s rebuttal to the defense’s closing arguments shortly before case went to jurors.

Source: wsvn.com

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GEM Helps Residents of Miami Gardens Apartments Destroyed in Fire Amid Investigation

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A South Florida nonprofit is lending a helping hand to the nearly 200 people left without a home after a fire destroyed dozens of units at a Miami Gardens apartment building.

7News cameras captured fire marshals with Miami-Dade Fire Rescue inspecting the remains of one of the units at the New World Condominium Apartments that was razed, as they tried to determine what sparked the flames.

Also on hand were volunteers with Global Empowerment Mission.

“We’ve got towels, blankets, pillows and some cash cars to provide their immediate needs,” said Kimberly Bentley’s, GEM’s Director of Field Missions.

Saturday morning, Miami Gardens Police and more than 40 MDFR units responded to the scene of the blaze along the 39500 block of Northwest 177th Street.

“We’re getting numerous calls of people panicking in the building, unknown where the smoke or fire is coming from,” said a dispatcher in radio transmissions.

The flames ripped through 75 apartments and caused part of the roof to collapse, officials said.

“My wife was here. I was at my job,” said a resident who identified himself as Antonio.

Dozens of families were forced out with nothing but the clothes on their back. The building has since been deemed uninhabitable.

Antonio said he has not been able to return to his unit to grab what he can.

“I have to speak with somebody to get us something, I don’t know,” he said.

Antonio was among dozens of residents who returned on Sunday to see what they could salvage as they try and restart.

“Very, very difficult. I need to move, I need tomorrow to find an apartment for rent. Very difficult time,” said Antonio.

Cameras captured Bentley and others with GEM as they took out boxes of supplies out of a truck.

Residents who showed up said they’re happy and thankful, and they acknowledged that the outcome could have been a lot worse.

Fire officials said they suspect roof repairs taking place at the building may have sparked the fire, but the official cause remains under investigation.

Original Post: wsvn.com

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‘Dangerous’ Arctic Air Returns Across Northern Plains, Upper Midwest After Month-long Hiatus

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(CNN) — What has been a mild start to 2023 came crashing to a halt this weekend as winter makes a roaring comeback across the Northern Plains and Upper Midwest.

Minneapolis residents have seen a mild January so far — at least by their standards — with temperatures failing to fall below zero this month and averaging about 7 degrees above normal.

“Dangerously cold temperatures and wind chills are forecast across the Northern Plains and Upper Midwest through early next week,” the Climate Prediction Center said. “Expect much below normal temperatures across the central/northern Plains to interior portions of the Pacific Northwest for the weekend into early next week.”

High temperatures will be in the single digits or even subzero range across much of the northern tier of the United States — between 25 to 40 degrees below normal. Overnight lows will be downright frigid, resulting in wind chill advisories being issued for portions of Minnesota, North Dakota, Colorado, Nebraska, Kansas and Montana.

“This would be the coldest weather since Christmas for this region, with locations from eastern Montana to northern Minnesota likely remaining below zero for highs Saturday through Monday, and perhaps into Tuesday,” the prediction center said.

These temperatures may come as a shock to many since most of January has been so mild. Chicago and Kansas City are both running more than 9 degrees above normal for the month, and Minneapolis and Oklahoma City are running at least 6 degrees above normal for January.

The dramatic shift from mild temperatures to bitter cold may catch people off guard.

Bozeman, Montana, for example, will go from a high of 33 degrees on Friday to a high of -3 on Sunday — with more than 40 straight hours below zero. Minneapolis will see a high of 33 degrees Friday plummet to a high of 3 degrees Monday. St. Louis will remain milder on Saturday, with a high temperature of 56. On Sunday, however, the high will fall to 36 degrees and eventually reach a low of 16 degrees Monday night.

Western cities will also witness dramatic drops. Denver will go from a high of 30 degrees on Saturday to a high of 7 degrees on Monday.

Add some wind, snow and ice

Air temperatures are not the only concern this weekend. Across much of the High Plains and Midwest, winds will be gusting 20 to 30 mph. While that may not seem very high, it doesn’t take much for frostbite to set in when the air temperature is already so cold.

“Wind chills could reach 40 below at times for these areas. Highs in the 0 to 10 degree range may extend as far south as northeast Colorado and northern Kansas,” the prediction center said.

At that range, exposed areas of skin can experience frostbite in just 10 to 15 minutes.

Another concern from that wind is its impact on snow storms. Blowing snow and reduced visibility will make travel difficult at times.

“The upper level wave train has another snow maker for us this weekend,” said the National Weather Service office in Milwaukee, Wisconsin. “There will be a good period of light to moderate snow for much of southern Wisconsin from midday Saturday through Saturday evening.”

Winter conditions started to affect travel in parts of the Midwest on Friday. A portion of Interstate 39/90 between the cities of Beloit and Janesville in Wisconsin was shut down due to an 85-car pileup Friday afternoon, according to the WIsconsin State Patrol.

At least 21 people were taken to area hospitals for non-life-threatening injuries, police said.

From Saturday into Sunday, snow is expected to spread from the Cascades to the Rockies and into the Great Lakes region. Winter weather advisories and winter storm warnings are in place for over 18 million people.

Generally speaking, in southern Wisconsin, northern Illinois and much of Iowa there will be 2 to 4 inches of snow, though these quick but intense snow burst events make it difficult to pinpoint who will see the highest snowfall amounts.

“An additional narrow swath of 4-6″ of snow, with locally higher totals, is forecast from northern Iowa through Lower Michigan by early Sunday,” the prediction center said.

While snow will be predominant a little farther south, along the Iowa/Missouri border, according to the National Weather Service office in Des Moines, the office warns that it will be possible to see “a brief period of freezing drizzle and very light glazing of ice Saturday afternoon.”

Snow will also fall this weekend across the Intermountain West. Most areas of Wyoming, Montana, Idaho, Colorado and northern Utah will see light to moderate snow through Monday. However, the heaviest snow will occur in the higher elevations of Wyoming and Colorado where multiple feet of snow are possible.

Original Article: wsvn.com

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AP Source: Dolphins Hire Vic Fangio As Defensive Coordinator

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(AP) — The Miami Dolphins have reached a deal with former Denver Broncos coach Vic Fangio to become their defensive coordinator, a person familiar with the hire told The Associated Press on Sunday.

The person spoke to The AP on condition of anonymity because the deal has not been finalized.

Fangio, who had been one of the most sought-after defensive coordinator candidates this offseason, was Denver’s head coach from 2019-21, going 19-30.

The Dolphins fired defensive coordinator Josh Boyer after three seasons with the team.

Miami finished the season ranked 18th in total defense, 27th in passing defense and tied for 24th on third downs as the team dealt with various injuries.

The 64-year-old Fangio, a respected defensive mind, figures to mesh well with Dolphins coach Mike McDaniel and the talent Miami has on defense.

Defensive tackle Christian Wilkins had a career year, totaling 98 tackles. Linebacker Jaelan Phillips and rookie cornerback Kader Kohou both had standout seasons.

Original Post: wsvn.com

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