Enlarge/ Residents line up for COVID-19 testing on November 30, 2020 in Chicago.
The co-owner of a Chicago-based lab has pleaded guilty for his role in a COVID testing scam that raked in millions—which he used to buy stocks, cryptocurrency, and several luxury cars while still squirreling away over $6 million in his personal bank account.
Zishan Alvi, 45, of Inverness, Illinois, co-owned LabElite, which federal prosecutors say billed the federal government for COVID-19 tests that were either never performed or were performed with purposefully inadequate components to render them futile. Customers who sought testing from LabElite—sometimes for clearance to travel or have contact with vulnerable people—received either no results or results indicating they were negative for the deadly virus.
The scam, which ran from around February 2021 to about February 2022, made over $83 million total in fraudulent payments from the federal government’s Health Resources and Services Administration (HRSA), which covered the cost of COVID-19 testing for people without insurance during the height of the pandemic. Local media coverage indicated that people who sought testing at LabElite were discouraged from providing health insurance information.
The list included five vehicles: a 2021 Mercedes-Benz, a 2021 Land Rover Range Rover HSE, a 2021 Lamborghini Urus, A 2021 Bentley, and a 2022 Tesla X. There was also about $810,000 in an E*Trade account, approximately $500,000 in a Fidelity Investments account, and $245,814 in a Coinbase account. Last, there was $6,825,089 in Alvi’s personal bank account.
On Monday, the Department of Justice announced a deal in which Alvi pleaded guilty to one count of wire fraud, taking responsibility for $14 million worth of fraudulent HRSA claims. He now faces up to 20 years in prison and will be sentenced on February 7, 2025.
Enlarge/ Caroline Ellison, former chief executive officer of Alameda Research LLC, was sentenced Tuesday for helping Sam Bankman-Fried cover up FTX’s fraudulent misuse of customer funds.
Addressing the judge at sentencing, Ellison started out by explaining “how sorry I am” for concealing FTX’s lies, Bloomberg reported live from the hearing.
“I participated in a criminal conspiracy that ultimately stole billions of dollars from people who entrusted their money with us,” Ellison reportedly said while sniffling. “The human brain is truly bad at understanding big numbers,” she added, and “not a day goes by” that she doesn’t “think about all of the people I hurt.”
Assistant US Attorney Danielle Sassoon followed Ellison, remarking that the government recommended a lighter sentence because it was important for the court to “distinguish between the mastermind and the willing accomplice.” (Bankman-Fried got 25 years.)
US District Judge Lewis Kaplan noted that he is allowed to show Ellison leniency for providing “substantial assistance to the government.” He then confirmed that he always considered the maximum sentence she faced of 110 years to be “absurd,” considering that Ellison had no inconsistencies in her testimony and fully cooperated with the government throughout their FTX probe.
“I’ve seen a lot of cooperators in 30 years,” Kaplan said. “I’ve never seen one quite like Ms. Ellison.”
However, although Ellison was brave to tell the truth about her crimes, Ellison is “by no means free of culpability,” Kaplan said. He called Bankman-Fried her “Kryptonite” because the FTX co-founder so easily exploited such a “very strong person.” Noting that nobody gets a “get out of jail free card,” he sentenced Ellison to two years and required her to forfeit about $11 billion, Bloomberg reported.
The judge said that Ellison “can serve the sentence at a minimum-security facility,” Bloomberg reported.
Ellison was key to SBF’s quick conviction
Ellison could have faced a maximum sentence of 110 years, for misleading customers and investors as the former CEO of the cryptocurrency trading firm linked to the FTX exchange, Alameda Research. But after delivering devastatingly detailed testimony key to exposing Bankman-Fried’s many lies, the probation office had recommended a sentence of time served with three years of supervised release.
Kaplan’s sentence went further, making it likely that other co-conspirators who cooperated with the government probe will also face jail time.
Both Ellison and the US government had requested substantial leniency due to her “critical” cooperation that allowed the US to convict Bankman-Fried in record time for such a complex criminal case.
Partly because Ellison was romantically involved with Bankman-Fried and partly because she “drafted some of the most incriminating documents in the case,” US attorney Damian Williams wrote in a letter to Kaplan, she was considered “crucial to the Government’s successful prosecution of Samuel Bankman-Fried for one of the largest financial frauds in history,” Williams wrote.
Williams explained that Ellison went above and beyond to help the government probe Bankman-Fried’s fraud. Starting about a month after FTX declared bankruptcy, Ellison began cooperating with the US government’s investigation. She met about 20 times with prosecutors, digging through thousands of documents to identify and interpret key evidence that convicted her former boss and boyfriend.
“Parsing Alameda Research’s poor internal records was complicated by vague titles and unlabeled calculations on any documents reflecting misuse of customer funds,” Ellison’s sentencing memo said. Without her three-day testimony at trial, the jury would likely not have understood “Alameda’s intentionally cryptic records,” Williams wrote. Additionally, because Bankman-Fried systematically destroyed evidence, she was one of the few witnesses able to contradict Bankman-Fried’s lies by providing a timeline for how Bankman-Fried’s scheme unfolded—and she was willing to find the receipts to back it all up.
“As Alameda’s nominal CEO and Bankman-Fried’s former girlfriend, Ellison was uniquely positioned to explain not only the what and how of Bankman-Fried’s crimes, but also the why,” Williams wrote. “Ellison’s testimony was critical to indict and convict Bankman-Fried, and to understanding both the timeline of the fraud schemes, and the various layers of wrongdoing.”
Further, where Bankman-Fried tried to claim that he was “well-meaning but hapless” in causing FTX’s collapse, Ellison admitted her guilt before law enforcement ever got involved, then continually “expressed genuine shame and remorse” for the harms she caused, Williams wrote.
A lighter sentence, Ellison’s sentencing memo suggested, “would incentivize people involved in a fraud to do what Caroline did: publicly disclose a fraud, immediately accept responsibility, and cooperate immediately with civil and criminal authorities.”
Williams praised Ellison as exceptionally forthcoming, even alerting the government to criminal activity that they didn’t even know about yet. He also credited her for persevering as a truth-teller “despite harsh media and public scrutiny and Bankman-Fried’s efforts to publicly weaponize her personal writings to discredit and intimidate her.”
“The Government cannot think of another cooperating witness in recent history who has received a greater level of attention and harassment,” Williams wrote.
In her sentencing memo, Ellison’s lawyers asked for no prison time, insisting that Ellison had been punished enough. Not only will she recover “nothing” from the FTX bankruptcy proceedings that she’s helping to settle, but she also is banned from working in the only industries she’s ever worked in, unlikely to ever repeat her crimes in finance and cryptocurrency sectors. She also is banned from running any public company and “has been rendered effectively unemployable in the near term by the notoriety arising from this case.”
“The reputational harm is not likely to abate any time soon,” Ellison’s sentencing memo said. “These personal, financial, and career consequences constitute substantial forms of punishment that reduce the need for the Court to order her incarceration.”
Kaplan clearly disagreed, ordering her to serve 24 months and forfeit $11 billion.
Enlarge/ An urn with ashes and a numbered cremation stone that is placed in the coffin of the deceased before the cremation.
A Colorado judge has ordered a couple to pay more than $950 million for allegedly giving grieving families urns full of fake ashes and running a bug-infested funeral home facility where 190 improperly stored bodies were found in various states of decay.
The judgment was issued in a civil class-action lawsuit against Jon and Carie Hallford, who owned the Return to Nature Funeral Home in Penrose, Colorado. It is the first high-profile case against the couple to return a ruling.
The bodies and the extent of the couple’s alleged fraud were discovered late last year after area residents reported a putrid stench emanating from the Penrose facility. The discovery sparked a massive investigation that came to include local, state, and federal investigators and responders. The FBI deployed a team of agents trained to respond to mass casualty events, such as airline crashes.
In addition to the class-action suit, the Hallfords face hundreds of state and federal criminal charges over their allegedly fraudulent funeral services. Specifically, the couple faces 286 charges at the state level, including felony charges of abuse of a corpse, theft, money laundering, and forgery, according to the Colorado Springs Gazette.
Further, federal prosecutors also accuse the couple of lying to the US Small Business Administration to obtain nearly $900,000 in COVID relief funds. The false information provided included “misrepresenting the fact that Jon Hallford owed back child support,” the DOJ noted. And the couple allegedly used the ill-gotten business funds to pay for vacations, cosmetic surgery, and jewelry, among other personal expenses, according to unsealed court documents. If convicted on the federal counts, they could both face around seven years in prison.
Last month, the Gazette reported that state authorities offered the Hallfords a plea deal, in which they would plead guilty to 190 counts of abuse of a corpse, Jon would then serve a mandatory sentence of 20 years in prison, and Carie would serve between 15 and 20 years. Affected family members were reportedly upset by the offer, saying they were not informed of the proposed deal ahead of time and did not feel it reflected the egregiousness of the alleged crimes. It’s unclear if the Hallfords have or will take the deal.
As for the nearly $1 billion payout in the class-action case, the judgment is largely symbolic with the expectation that the Hallfords do not have such money.
“I’m never going to get a dime from them, so, I don’t know, it’s a little frustrating,” Crystina Page told the Associated Press. Page paid the Hallfords to cremate her son’s remains in 2019 and received an urn they claimed held his ashes. She carried the urn around the country until his body was discovered in the Penrose location amid the investigation late last year.
On top of the financial disappointment, affected families did not get the opportunity to face the Hallfords in court as they had hoped. Both Hallfords refused to cooperate with the case or show up for hearings.
Jon Hallford is currently in custody pending the outcome of his federal case. Carie Hallford is out on a $100,000 bond.
Just before the Fourth of July holiday, Elon Musk moved to dismiss a lawsuit alleging that he intentionally misled Twitter investors in 2022 by failing to disclose his growing stake in Twitter while tweeting about potentially starting his own social network in the weeks ahead of announcing his plan to buy Twitter.
Allegedly, Musk devised this fraudulent scheme to reduce the Twitter purchase price by $200 million, a proposed class action filed by an Oklahoma Firefighters pension fund on behalf of all Twitter investors allegedly harmed claimed. But in another court filing this week, Musk insisted that “all indications”—including those referenced in the firefighters’ complaint—”point to mistake,” not fraud.
According to Musk, evidence showed that he simply misunderstood the Securities Exchange Act when he delayed filing a Rule 13 disclosure of his nearly 10 percent ownership stake in Twitter in March 2022. Musk argued that he believed he was required to disclose this stake at the end of the year, rather than within 10 days after the month in which he amassed a 5 percent stake. He said that previously he’d only filed Rule 13 disclosures as the owner of a company—not as someone suddenly acquiring 5 percent stake.
Musk claimed that as soon as his understanding of the law was corrected—on April 1, when he’d already missed the deadline by about seven days—he promptly stopped trading and filed the disclosure on the next trading day.
“Such prompt and corrective disclosure—within seven trading days of the purported deadline—is not the stuff of a fraudulent scheme to manipulate the market,” Musk’s court filing said.
As Musk sees it, the firefighters’ suit “makes no sense” because it basically alleged that Musk always intended to disclose the supposedly fraudulent scheme, which in the context of his extraordinary wealth, barely saved him any meaningful amount of money when purchasing Twitter.
The idea that Musk “engaged in intentional securities fraud in order to save $200 million is illogical in light of Musk’s eventual $44 billion purchase of Twitter,” Musk’s court filing said. “It defies logic that Musk would commit fraud to save less than 0.5 percent of Twitter’s total purchase price, and 0.1 percent of his net worth, all while knowing that there would be ‘an inevitable day of reckoning’ when he would disclose the truth—which was always his intent.”
It’s much more likely, Musk argued, that “Musk’s acknowledgement of his tardiness is that he was expressly acknowledging a mistake, not publicly conceding a purportedly days-old fraudulent scheme.”
Arguing that all firefighters showed was “enough to adequately plead a material omission and misstatement”—which he said would not be an actionable claim under the Securities Exchange Act—Musk has asked for the lawsuit to be dismissed with prejudice. At most, Musk is guilty of neglect, his court filing said, not deception. Allegedly Musk never “had any intention of avoiding reporting requirements,” his court filing said.
The firefighters pension fund has until August 12 to defend its claims and keep the suit alive, Musk’s court filing noted. In their complaint, the fighterfighteres had asked the court to award damages covering losses, plus interest, for all Twitter shareholders determined to be “cheated out of the true value of their securities” by Musk’s alleged scheme.
Ars could not immediately reach lawyers for Musk or the firefighters pension fund for comment.
Hoau-Yan Wang, 67, a medical professor at the City University of New York, was a paid collaborator with the Austin, Texas-based pharmaceutical company Cassava Sciences. Wang’s research and publications provided scientific underpinnings for Cassava’s Alzheimer’s treatment, Simufilam, which is now in Phase III trials.
Simufilam is a small-molecule drug that Cassava claims can restore the structure and function of a scaffolding protein in the brain of people with Alzheimer’s, leading to slowed cognitive decline. But outside researchers have long expressed doubts and concerns about the research.
In 2023, Science magazine obtained a 50-page report from an internal investigation at CUNY that looked into 31 misconduct allegations made against Wang in 2021. According to the report, the investigating committee “found evidence highly suggestive of deliberate scientific misconduct by Wang for 14 of the 31 allegations,” the report states. The allegations largely centered around doctored and fabricated images from Western blotting, an analytical technique used to separate and detect proteins. However, the committee couldn’t conclusively prove the images were falsified “due to the failure of Dr. Wang to provide underlying, original data or research records and the low quality of the published images that had to be examined in their place.”
In all, the investigation “revealed long-standing and egregious misconduct in data management and record keeping by Dr. Wang,” and concluded that “the integrity of Dr. Wang’s work remains highly questionable.” The committee also concluded that Cassava’s lead scientist on its Alzheimer’s disease program, Lindsay Burns, who was a frequent co-author with Wang, also likely bears some responsibility for the misconduct.
In March 2022, five of Wang’s articles published in the journal PLOS One were retracted over integrity concerns with images in the papers. Other papers by Wang have also been retracted or had statements of concern attached to them. Further, in September 2022, the Food and Drug Administration conducted an inspection of the analytical work and techniques used by Wang to analyze blood and cerebrospinal fluid from patients in a simufilam trial. The investigation found a slew of egregious problems, which were laid out in a “damning” report obtained by Science.
In the indictment last week, federal authorities were explicit about the allegations, claiming that Wang falsified the results of his scientific research to NIH “by, among other things, manipulating data and images of Western blots to artificially add bands [which represent proteins], subtract bands, and change their relative thickness and/or darkness, and then drawing conclusions” based on those false results.
Wang is charged with one count of major fraud against the United States, two counts of wire fraud, and one count of false statements. If convicted, he faces a maximum penalty of 10 years in prison for the major fraud charge, 20 years in prison for each count of wire fraud, and five years in prison for the count of false statements, the Department of Justice said in an announcement.
In a statement posted to its website, Cassava acknowledged Wang’s indictment, calling him a “former” scientific adviser. The company also said that the grants central to the indictment were “related to the early development phases of the Company’s drug candidate and diagnostic test and how these were intended to work.” However, Cassava said that Wang “had no involvement in the Company’s Phase 3 clinical trials of simufilam.”
Those ongoing trials, which some have called to be halted, are estimated to include over 1,800 patients across several countries.
Enlarge/ Ten milligram tablets of the hyperactivity drug, Adderall, made by Shire Plc, is shown in a Cambridge, Massachusetts pharmacy Thursday, January 19, 2006.
The Centers for Disease Control and Prevention on Thursday warned that a federal indictment of an allegedly fraudulent telehealth company may lead to a massive, nationwide disruption in access to ADHD medications—namely Adderall, but also other stimulants—and could possibly increase the risk of injuries and overdoses.
“A disruption involving this large telehealth company could impact as many as 30,000 to 50,000 patients ages 18 years and older across all 50 US states,” the CDC wrote in its health alert.
The CDC warning came on the heels of an announcement from the Justice Department Thursday that federal agents had arrested two people in connection with an alleged scheme to illegally distribute Adderall and other stimulants through a subscription-based online telehealth company called Done Global. The company’s CEO and founder, Ruthia He, was arrested in Los Angeles, and its clinical president, David Brody, was arrested in San Rafael, California.
“As alleged, these defendants exploited the COVID-19 pandemic to develop and carry out a $100 million scheme to defraud taxpayers and provide easy access to Adderall and other stimulants for no legitimate medical purpose,” Attorney General Merrick Garland said in a statement. “Those seeking to profit from addiction by illegally distributing controlled substances over the Internet should know that they cannot hide their crimes and that the Justice Department will hold them accountable.”
Deadly consequences
According to the Justice Department, Done Global generated $100 million in revenue by arranging for the prescription of over 40 million pills of Adderall and other stimulants, which are addictive medications used to treat ADHD (attention-deficit/hyperactivity disorder). Done Global allegedly eased access to the drugs by limiting the information available to prescribers, instructing prescribers to prescribe Adderall and other stimulants even if the patient didn’t qualify, and mandating that the prescribing appointments last no longer than 30 minutes. The company also discouraged prescriber follow-up appointments and added an “auto-refill” feature.
Prosecutors further allege that He and Brody continued with their scheme after becoming aware that patients had overdosed and died.
The CDC cautioned that the disruption from lost access to Done Global prescriptions comes amid a long-standing, nationwide shortage of Adderall and other stimulant medications. For patients with ADHD, the disruption could be harmful. “Untreated ADHD is associated with adverse outcomes, including social and emotional impairment, increased risk of drug or alcohol use disorder, unintentional injuries, such as motor vehicle crashes, and suicide,” the CDC warns. Further, a loss of access could drive some to seek illicit sources of the drugs, which could turn deadly.
“Patients whose care or access to prescription stimulant medications is disrupted, and who seek medication outside of the regulated healthcare system, might significantly increase their risk of overdose due to the prevalence of counterfeit pills in the illegal drug market that could contain unexpected substances, including fentanyl,” the CDC said. Fentanyl is a synthetic opioid that is up to 50 times stronger than heroin and 100 times stronger than morphine.
The Drug Enforcement Administration recently reported that seven out of every 10 pills seized from the illegal drug market contain a potentially lethal dose of illegally made fentanyl, the CDC noted.
This post was updated to clarify that the DEA’s data indicated that 70 percent of illicit pills seized contained “potentially” lethal doses, which was not included in the CDC’s warning.
Enlarge/ Dr. Craig Wright arrives at the Rolls Building, part of the Royal Courts of Justice, on February 06, 2024, in London, England.
“Overwhelming evidence” shows that Australian computer scientist Craig Wright is not bitcoin creator Satoshi Nakamoto, a UK judge declared Thursday.
In what Wired described as a “surprise ruling” at the closing of Wright’s six-week trial, Justice James Mellor abruptly ended years of speculation by saying:
“Dr. Wright is not the author of the Bitcoin white paper. Dr. Wright is not the person that operated under the pseudonym Satoshi Nakamoto. Dr. Wright is not the person that created the Bitcoin system. Nor is Dr. Wright the author of the Bitcoin software.”
Wright was not in the courtroom for this explosive moment, Wired reported.
In 2016, Wright had claimed that he did not have the “courage” to prove that he was the creator of bitcoin, shortly after claiming that he had “extraordinary proof.” As debate swirled around his claims, Wright began filing lawsuits, alleging that many had violated his intellectual property rights.
A nonprofit called the Crypto Open Patent Alliance (COPA) sued to stop Wright from filing any more lawsuits that it alleged were based on fabricated evidence, Wired reported. They submitted hundreds of alleged instances of forgery or tampering, Wired reported, asking the UK High Court for a permanent injunction to block Wright from ever making the claim again.
As a result of Mellor’s ruling, CoinDesk reported that Wright’s lawsuits against Coinbase and Twitter founder Jack Dorsey’s Block would be halted. COPA’s lawyer, Jonathan Hough, told CoinDesk that Wright’s conduct should be considered “deadly serious.”
“On the basis of his dishonest claim to be Satoshi, he has pursued claims he puts at hundreds of billions of dollars, including against numerous private individuals,” Hough said.
On Thursday, Dorsey posted a “W” on X (formerly Twitter), marking the win and quoting Mellor’s statements clearly rejecting Wright’s claims as false. COPA similarly celebrated the victory.
“This decision is a win for developers, for the entire open source community, and for the truth,” a COPA spokesperson told CoinDesk. “For over eight years, Dr. Wright and his financial backers have lied about his identity as Satoshi Nakamoto and used that lie to bully and intimidate developers in the bitcoin community. That ends today with the court’s ruling that Craig Wright is not Satoshi Nakamoto.”
Wright’s counsel, Lord Anthony Grabiner, had argued that Mellor granting an injunction would infringe Wright’s freedom of speech. Grabiner noted that “such a prohibition is unprecedented in the UK and would prevent Wright from even casually going to the park and declaring he’s Satoshi without incurring fines or going to prison,” CoinDesk reported.
COPA thinks the injunction is necessary, though.
“We are seeking to enjoin Dr. Wright from ever claiming to be Satoshi Nakamoto again and in doing so avoid further litigation terror campaigns,” COPA’s spokesperson told Wired.
And that’s not all that COPA wants. COPA has also petitioned for Wright’s alleged forgeries—some of which Reuters reported were allegedly produced using ChatGPT—to be review by UK criminal courts, where he could face fines and/or prison time. Hough alleged at trial that Wright “has committed fraud upon the court,” Wired reported, asking Britain’s Crown Prosecution Service to consider prosecuting Wright for “perjury and perverting the course of justice,” CoinDesk reported.
Wright’s counsel argued that COPA would need more evidence to back such a claim, CoinDesk reported.
Mellor won’t issue his final judgment for a month or more, Wired reported, so it’s not clear yet if Wright will be enjoined from claiming he is bitcoin’s creator. The judgement will “be ready when it’s ready and not before,” Mellor said.
Popular apps like Venmo, Zelle, and Cash App aren’t doing enough to protect consumers from fraud that occurs when unauthorized users gain access to unlocked devices, Manhattan District Attorney Alvin Bragg warned.
“Thousands or even tens of thousands can be drained from financial accounts in a matter of seconds with just a few taps,” Bragg said in letters to app makers. “Without additional protections, customers’ financial and physical safety is being put at risk.”
According to Bragg, his office and the New York Police Department have been increasingly prosecuting crimes where phones are commandeered by bad actors to quickly steal large amounts of money through financial apps.
This can happen to unwitting victims when fraudsters ask “to use an individual’s smartphone for personal use” or to transfer funds to initiate a donation for a specific cause. Or “in the most disturbing cases,” Bragg said, “offenders have violently assaulted or drugged victims, and either compelled them to provide a password for a device or used biometric ID to open the victim’s phone before transferring money once the individual is incapacitated.”
But prosecuting crimes alone won’t solve this problem, Bragg suggested. Prevention is necessary. That’s why the DA is requesting meetings with executives managing widely used financial apps to discuss “commonsense” security measures that Bragg said can be taken to “combat this growing concern.”
Bragg appears particularly interested in Apple’s recently developed “Stolen Device Protection,” which he said is “making it harder for perpetrators to use a phone’s passcode to steal funds when the user’s phone is not at home or at work.”
Apple just rolled out “Stolen Device Protection” for iOS 17.3. On its website, Apple explained that when “Stolen Device Protection” is enabled, “some features and actions have additional security requirements when your iPhone is away from familiar locations such as home or work.”
For users taking advantage of this enhanced security layer, biometric or FaceID would be required to access devices, with no option to bypass with a passcode. This alone could help deter crimes that Bragg described, potentially stopping thieves from rifling through someone’s passwords to get instant access to a cash app. “Stolen Device Protection” also sets up a security delay that could stop thieves from immediately changing the account password and locking an owner out of their device. To change a password in this more secure mode, thieves would need to wait one hour—perhaps giving time for the owner to report that the phone is stolen or missing—and then must provide a biometric or FaceID.
Bragg wants financial apps like Zelle or Venmo to follow Apple’s lead and build similar safeguards. He suggested that Apple’s release makes it clear that the technology exists where apps could detect when a user is attempting to send a large transaction from an unknown location and perhaps block or delay sending that transaction for up to a day without secondary verification. This could afford victims more time to discover and cancel fraudulent transfers before they go through, instead of after the theft, when it’s usually harder to claw back funds.
This problem goes well beyond Manhattan, Bragg wrote, pointing to “similar thefts and robberies” that have been “publicly reported” in major cities like Los Angeles and Orlando, as well as in West Virginia, Louisiana, Illinois, Kansas, Tennessee, Virginia, and “elsewhere across the United States.”
Overall, the DA traced a pattern showing that the more people were using financial apps, the more fraud claims spiked, “tripling between 2020 and 2022” and “costing consumers hundreds of millions of dollars each year.”
“While cash apps, like Cash App, offer consumers an easy and fast method to transfer funds, they also have made these platforms a favorite of fraudsters because consumers have no option to cancel transactions, even moments after authorizing them,” Bragg wrote to Cash App CEO Brian Grassadonia. “I am concerned about the troubling rise in illegal behavior that has developed because of insufficient security measures connected with your software and business policy decisions.”
While building tech like Apple’s “Stolen Device Protection” seems to be the most extreme step that Bragg recommended, he also pushed “commonsense solutions” that he claimed that financial apps currently overlook. These include steps like requiring multifactor authentication to help keep thieves locked out and lowering limits on daily transfers to make the scam less appealing to thieves looking for a big payday.
Enlarge/ The Dana-Farber Cancer Institute in Boston.
The Dana-Farber Cancer Institute, an affiliate of Harvard Medical School, is seeking to retract six scientific studies and correct 31 others that were published by the institute’s top researchers, including its CEO. The researchers are accused of manipulating data images with simple methods, primarily with copy-and-paste in image editing software, such as Adobe Photoshop.
The accusations come from data sleuth Sholto David and colleagues on PubPeer, an online forum for researchers to discuss publications that has frequently served to spot dubious research and potential fraud. On January 2, David posted on his research integrity blog, For Better Science, a long list of potential data manipulation from DFCI researchers. The post highlighted many data figures that appear to contain pixel-for-pixel duplications. The allegedly manipulated images are of data such as Western blots, which are used to detect and visualize the presence of proteins in a complex mixture.
DFCI Research Integrity Officer Barrett Rollins told The Harvard Crimson that David had contacted DFCI with allegations of data manipulation in 57 DFCI-led studies. Rollins said that the institute is “committed to a culture of accountability and integrity,” and that “Every inquiry about research integrity is examined fully.”
The allegations are against: DFCI President and CEO Laurie Glimcher, Executive Vice President and COO William Hahn, Senior Vice President for Experimental Medicine Irene Ghobrial, and Harvard Medical School professor Kenneth Anderson.
The Wall Street Journal noted that Rollins, the integrity officer, is also a co-author on two of the studies. He told the outlet he is recused from decisions involving those studies.
Amid the institute’s internal review, Rollins said the institute identified 38 studies in which DFCI researchers are primarily responsible for potential manipulation. The institute is seeking retraction of six studies and is contacting scientific publishers to correct 31 others, totaling 37 studies. The one remaining study of the 38 is still being reviewed.
Of the remaining 19 studies identified by David, three were cleared of manipulation allegations, and 16 were determined to have had the data in question collected at labs outside of DFCI. Those studies are still under investigation, Rollins told The Harvard Crimson. “Where possible, the heads of all of the other laboratories have been contacted and we will work with them to see that they correct the literature as warranted,” Rollins wrote in a statement.
Despite finding false data and manipulated images, Rollins pressed that it doesn’t necessarily mean that scientific misconduct occurred and the institute has not yet made such a determination. The “presence of image discrepancies in a paper is not evidence of an author’s intent to deceive,” Rollins wrote. “That conclusion can only be drawn after a careful, fact-based examination which is an integral part of our response. Our experience is that errors are often unintentional and do not rise to the level of misconduct.”
The very simple methods used to manipulate the DFCI data are remarkably common among falsified scientific studies, however. Data sleuths have gotten better and better at spotting such lazy manipulations, including copied-and-pasted duplicates that are sometimes rotated and adjusted for size, brightness, and contrast. As Ars recently reported, all journals from the publisher Science now use an AI-powered tool to spot just this kind of image recycling because it is so common.
Elizabeth Holmes—the disgraced and incarcerated founder of the infamous blood-testing startup Theranos—is barred from participating in federal health programs for nine decades, according to an announcement from the health department Friday.
The exclusion means that Holmes is barred from receiving payments from federal health programs for services or products, which significantly restricts her ability to work in the health care sector. It also prevents her from participating in Medicare, Medicaid, and other federal health care programs. With a 90-year term, the exclusion is lifelong for Holmes, who is currently 39.
The exclusion was announced by Inspector General Christi Grimm of the Department of Health and Human Services’ Office of Inspector General.
Holmes is serving an 11-year, three-month sentence for defrauding investors of her blood-testing startup, Theranos, which she founded in 2003. At the time, Holmes claimed to have developed proprietary technology that could perform hundreds of medical tests using just a small drop of blood from a finger prick. The remarkable claim helped her drive the company’s valuation to a stunning $9 billion in 2014, and set up lucrative partnerships. But, in reality, the technology never worked. The company collapsed in 2018, and she was convicted of fraud in 2022.
In today’s announcement, the health department noted that the statutory minimum on exclusions for convictions like Holmes’ is just five years. But other factors are considered when determining the term, including how long the fraud took place, the length of the prison sentence, and the amount of restitution ordered. In addition to her 11-year prison sentence, Holmes was ordered to pay approximately $452,047,200 in restitution, the HHS-OIG noted.
“Accurate and dependable diagnostic testing technology is imperative to our public health infrastructure. False statements related to the reliability of these medical products can endanger the health of patients and sow distrust in our health care system,” Grimm said. “As technology evolves, so do our efforts to safeguard the health and safety of patients, and HHS-OIG will continue to use its exclusion authority to protect the public from bad actors.”
HHS-OIG also excluded former Theranos President Ramesh Balwani from federal health programs for 90 years. Balwani was also convicted of fraud and is serving a nearly 13-year sentence.
Looking back, 2023 will likely be remembered as the year of the fallen crypto bro.
While celebrities like Kim Kardashian and Matt Damon last year faced public backlash after shilling for cryptocurrency, this year’s top headlines traced the downfalls of two of the most successful and influential crypto bros of all time: FTX co-founder Sam Bankman-Fried (often referred to as SBF) and Binance founder Changpeng Zhao (commonly known as CZ).
At 28 years old, Bankman-Fried made Forbes’ 30 Under 30 list in 2021, but within two short years, his recently updated Forbes profile notes that the man who was once “one of the richest people in crypto” in “a stunning fall from grace” now has a real-time net worth of $0.
Ultimately, Bankman-Fried’s former FTX/Alameda Research partners, including his ex-girlfriend Caroline Ellison, testified against him. Ellison’s testimony led to even weirder revelations about SBF, like Bankman-Fried’s aspirations to become US president and his professed rejection of moral ideals like “don’t steal.” By the end of the trial, it seemed like very few felt any sympathy for the once-FTX kingpin.
Bankman-Fried now faces a maximum sentence of 110 years. His exact sentence is scheduled to be determined by a US district judge in March 2024, Reuters reported.
While FTX had been considered a giant force in the cryptocurrency world, Binance is still the world’s biggest cryptocurrency exchange—and considered more “systemically important” to crypto enthusiasts, Bloomberg reported. That’s why it was a huge deal when Binance was rocked by its own scandal in 2023 that ended in its founder and CEO, Zhao, admitting to money laundering and resigning.
Arguably Zhao’s fall from grace may have been more shocking to cryptocurrency fans than Bankman-Fried’s. Just one month prior to Zhao’s resignation, after FTX collapsed, The Economist had dubbed CZ as “crypto’s last man standing.”
Zhao launched Binance in 2017 and the next year was featured on the cover of Forbes’ first list of the wealthiest people in crypto. Peering out from under a hoodie, Zhao was considered by Forbes to be a “crypto overlord,” going from “zero to billionaire in six months,” where other crypto bros had only managed to become millionaires.
But 2023 put an abrupt end to Zhao’s reign at Binance. In March, the Commodity Futures Trading Commission (CFTC) sued Binance and Zhao over suspected money laundering and sanctions violations, triggering a Securities and Exchange Commission lawsuit in June and a Department of Justice (DOJ) probe. In the end, Binance owed billions in fines to the DOJ and the CFTC, which Secretary of the Treasury Janet Yellen called “historic penalties.” For personally directing Binance employees to skirt US regulatory compliance—and hide more than 100,000 suspicious transactions linked to terrorism, child sexual abuse materials, and ransomware attacks—Zhao now personally owes the CFTC $150 million.
On the social media platform X (formerly Twitter), Zhao wrote that after stepping down as Binance’s CEO, he will be taking a break and likely never helming a startup ever again.
“I am content being [a] one-shot (lucky) entrepreneur,” Zhao wrote.
Enlarge/ Trevor Milton, founder of Nikola Corp., arrives at court in New York on Monday, Dec. 18, 2023. Milton is set to be sentenced on Monday after being found guilty of securities fraud and wire fraud in October 2022.
That’s a lighter sentence than prosecutors had requested after a jury found Milton guilty of one count of securities fraud and two counts of wire fraud in 2022. During the trial, Milton was accused of lying about “nearly all aspects of the business,” CNBC reported.
From 2016 to 2020, Milton’s “extravagant claims” were fueled by a desire to pump up the value of Nikola stock, The New York Times reported. He was accused of misleading investors about everything from fake prototypes of emission-free long-haul trucks to billions worth of supposedly binding orders for hydrogen fuel cells and batteries that were never shipped. In a sentencing memo, prosecutors said that Milton targeted “less sophisticated investors,” the Times reported, engaging “in a sustained scheme to take advantage of” their inexperience.
Nikola’s stock peaked in 2020, but then dozens of fraud allegations were reported by the investment firm Hindenburg Research, causing Nikola stock to plummet promptly. “We have never seen this level of deception at a public company, especially of this size,” Hindenburg Research’s report said. Facing backlash, Milton resigned, voluntarily withdrawing from his company and selling off $100 million in Nikola stock to fund more than $85 million in luxury purchases, the Times reported. Today, Milton remains Nikola’s second-largest shareholder, Bloomberg reported.
The price of these lies to investors was more than $660 million, prosecutors claimed.
Through it all, Milton has denied the charges, requesting to be sentenced to only probation while holding back tears, Bloomberg reported. At his sentencing hearing, he said that his “misstatements” came from a place of “deeply held optimism,” and he did not intend to cause any harm, Yahoo reported.
“I was not a very seasoned CEO,” Milton reportedly said.
Prosecutors sought heavier consequences, asking the judge to order Milton to pay a $5 million fine and sentence Milton to 11 years in prison.
Milton is likely to appeal, Bloomberg reported.
Nikola’s spokesperson provided Ars with a statement on the sentencing.
“Nikola has a strong foundation and is in the process of achieving our mission to decarbonize the trucking industry, which is our focus,” Nikola’s statement said. “We have made significant progress year-over-year and will continue with the same level of discipline and commitment in 2024. We are pleased to move forward and remind the public that the company founder has not had any active role in Nikola since September 2020.”
Nikola’s shaky road to recovery
Current Nikola CEO Steve Girsky has recently said that Nikola will recover by attracting “world-class people to execute on our business plan” and working toward “establishing ourselves as the leader in zero-emissions commercial transportation,” Forbes reported.
Girsky seems keen to move past the scandal by promoting Nikola’s latest successes. In September, Girsky boasted that daily tests showed that one of Nikola’s fuel cell trucks could successfully run for 900 miles.
“This was quite an accomplishment, and I defy anyone to find another zero-emission vehicle truck anywhere that can run up to 900 miles in a day,” Girsky said.
However, since the 2020 scandal, Nikola’s stock has dropped 99 percent, Forbes reported, and now an investor analytics company called Macroaxis has estimated that Nikola has an 81 percent chance of going bankrupt.
While Forbes credited Milton with most of Nikola’s current woes, it’s not just the scandal causing investment setbacks for Nikola. In August, Nikola also recalled most of its battery-electric trucks—about 209—after a fire probe revealed a “defective part” that “is believed to have caused a battery to overheat” and risk setting trucks on fire, The Wall Street Journal reported.
This represented “virtually all” the battery-electric trucks that Nikola had shipped to customers, the Journal reported. While engineers worked on a solution to keep battery-electric trucks on the roads, Nikola temporarily halted sales of the battery-electric trucks, ramping up production instead on hydrogen fuel-cell electric trucks that remain Nikola’s core focus.
In September, Girsky described the recall as a setback but pointed to all of Nikola’s progress since Milton’s departure.
“It’s a setback, but we’re in it for the long haul,” Girsky said. “We’ve proved the skeptics wrong who said we couldn’t engineer a truck, couldn’t build a truck, and couldn’t sell a truck, and we’re not planning on stopping any time soon.”
