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Elizabeth Holmes’s Ex-Boyfriend Set to Go on Trial in Theranos Case

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Elizabeth Holmes was a star entrepreneur whose trial for defrauding investors in her blood-testing start-up became one of the biggest Silicon Valley spectacles since the introduction of the iPhone. Her conviction in January marked a rare moment in the boastful history of technology: A chief executive was held criminally responsible for lying.

For much of her trial, Ms. Holmes sought to blame her deputy and former boyfriend, Ramesh Balwani, for what went wrong at her company, Theranos. Now Mr. Balwani, who is known as Sunny, will have the opportunity to respond in his own fraud trial. Jury selection was scheduled to begin on Wednesday in the same federal courtroom in San Jose, Calif., where Ms. Holmes’s fate was determined.

The first trial offered, and the second trial promises, a close examination of an unusual relationship between a young woman and an older man. Ms. Holmes and Mr. Balwani had a secret romance that was also a professional alliance, an exciting promise to improve health care for millions that instead put patients at risk. Their blood testing did not work, even as they assumed new and better technology would rescue them from their reckless claims.

Mr. Balwani, 57, is a former software executive who made a fortune during the late 1990s dot-com boom. He befriended Ms. Holmes when they were studying in China the summer before her freshman year at Stanford University. Their romantic relationship eventually led him to join Theranos in 2009 as president and chief operating officer.

He was the opposite of a star, barely mentioned in the glowing cover stories about Ms. Holmes and Theranos. By all evidence, however, Mr. Balwani and Ms. Holmes, now 38, were a team that ruled the start-up tightly. Few knew they were in a relationship.

“She was the Wizard of Oz, dazzling the investors and media, but he was the one behind the curtain working the machinery,” said Reed Kathrein, a San Francisco lawyer who successfully sued Ms. Holmes and Theranos in 2016 on behalf of investors. He said he was confident the prosecution would show that “he knew she was lying and never put a stop to it.”

“He knew everything,” Mr. Kathrein said.

Mr. Balwani’s trial will go over familiar ground. He faces the same 12 charges that Ms. Holmes initially confronted. (One count was dropped after a procedural error by the government.) He has pleaded not guilty.

Ms. Holmes was found guilty on four counts of defrauding investors and acquitted on four counts of defrauding patients; the jury deadlocked on the remaining three investor counts. She will be sentenced in the fall.

The consensus among legal experts following the case is that the government’s successful prosecution of Ms. Holmes will give it a boost in Mr. Balwani’s trial.

“​​The government has had the opportunity to do a full run, so they will have learned what worked and what didn’t,” said James Melendres, a former federal prosecutor who represents corporate clients.

Prosecutors, Mr. Balwani and his lawyers declined to comment. Through her lawyers, Ms. Holmes declined to comment.

While Ms. Holmes’s background has been extensively documented, relatively little is known about Mr. Balwani, including why he is called Sunny.

An experienced software executive, he had the good luck to have his start-up purchased by a larger firm right before the 2000 stock market crash, yielding him about $40 million. He got a divorce, went back to school to get an M.B.A. and study computer science, and bought fancy cars. (His license plate, in a nod to Karl Marx, was DASKPTL.) When he joined Theranos, he invested millions of his own money in it, his lawyers have said.

At Theranos, he had a reputation for being a harsh, demanding boss who became increasingly paranoid that employees would steal trade secrets that would supposedly revolutionize blood testing. In an incident recounted by the journalist John Carreyrou, Mr. Balwani called the police to chase after a departing employee, explaining that the former worker “stole property in his mind.”

Mr. Balwani’s lawyers are expected to emphasize his lack of experience in biomedical devices, which were at the heart of Theranos’s claims. Legal experts said he was unlikely to testify. He’d most likely be less sympathetic on the witness stand than Ms. Holmes, a new mother who played up her youth and arrived in court holding hands with her mother and her partner.

“He doesn’t have those optics in his favor,” said Ann Kim, a former federal prosecutor who represents companies undergoing government investigations.

When Ms. Holmes took the stand in her defense, she tried to upend the narrative around her spectacular downfall, introducing bombshell allegations of abuse against Mr. Balwani. He denied the accusations, and text messages released during the trial depicted a relationship of more or less equals, especially as the company came under pressure from whistle-blowers and the media.

“The whole thing that we have to respond to liars is ridiculous,” Ms. Holmes fumed in one message. Mr. Balwani promised retaliation against their accusers: “We will also take legal action once this is behind us.”

At the heart of the government pursuit of both defendants is the argument that they stepped over the line from hype — as common in Silicon Valley as breathing — into deceit.

Ms. Holmes could conjure up an alternate reality with the effortless ease of her role model, the Apple co-founder Steve Jobs. Witnesses in her trial testified that she had made people believe she would change the world. Investors poured nearly $1 billion into Theranos.

Mr. Balwani, like most of dull humanity, possessed no such gifts. There is only one video of him online, but it is revelatory of his style.

In March 2014, when Theranos was rolling out its finger-prick blood testing system in Walgreens in Arizona, Mr. Balwani gave a presentation on “Healthcare Innovation” to the Arizona Senate’s Health and Human Services Committee. He wasn’t originally supposed to do it — Ms. Holmes had to cancel — and did not look like he was enjoying himself.

Mr. Balwani told the legislators that the company was working on “something that we believe is magical.” He talked about one particular patient, who “had no limbs.” When this man had to give blood, the needle went into his neck. At the Theranos clinic, however, “he had a small limb attached to his body” and “we were able to do a finger prick on him.”

How a limbless individual suddenly gained a limb was not explained. It was almost as if Mr. Balwani had dared the senators to point out that Theranos was literally magical thinking.

They did not. Instead, they saluted him.

“I love bringing the free market to our health care system,” said State Senator Kelli Ward, a Republican, who noted that she was a family doctor.

(Senator Ward is now the chair of the State Republican Party and was active in efforts to overturn local election results in favor of President Trump. “It’s even clearer now that we need to allow the free market to work,” she said in an email.)

Neither the prosecution nor the defense has filed its final list of witnesses for Mr. Balwani’s trial. In December, the lawyers filed their proposed questionnaires for potential jurors, including a preliminary witness list.

A handful of potential witnesses from the Holmes trial were struck for obvious reasons, including Ms. Holmes’s mother, Noel, and former Secretary of State Henry Kissinger, a Theranos board member. Mindy Mechanic, the Holmes team’s expert witness on domestic abuse who ultimately did not take the stand, was also removed. Mr. Balwani’s legal team named experts on forensic accounting, intellectual property and SQL databases.

One potential witness for the government would make headlines. Ms. Holmes is, however, exceedingly unlikely to testify, even if doing so might reduce her prison sentence.

“She seems likely to fight this to the end of the earth,” said Jen Kennedy Park, a white-collar defense lawyer.

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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