Business briefing

The daily business briefing: December 8, 2022

Former Theranos COO Ramesh 'Sunny' Balwani sentenced to nearly 13 years in prison, the Pentagon awards cloud-computing contract to four companies, and more

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Former Theranos COO sentenced to nearly 13 years in prison

Ramesh "Sunny" Balwani, the former chief operating officer and president of the defunct blood-testing startup Theranos, was sentenced on Wednesday to nearly 13 years in prison for fraud. Theranos attracted high-profile investors by claiming its tests could quickly detect several illnesses with only a few drops of blood. This wasn't true. Theranos was later dissolved after The Wall Street Journal reported on the company and the accuracy of its machinery and testing, and the executives were found to have falsified documents and faked test results. Both Balwani, 57, and Theranos founder Elizabeth Holmes, 38, were accused of deceiving investors and charged with fraud. In November, Holmes was sentenced to more than 11 years in prison.

2

Pentagon awards cloud-computing contracts to Amazon, Google, Microsoft, Oracle

The Defense Department announced Wednesday that it had awarded cloud-computing contracts valued as high as $9 billion to Amazon, Google, Microsoft, and Oracle. The companies will develop a cloud architecture called the Joint Warfighting Cloud Capability to provide cloud services "across all security domains and classification levels," the Pentagon said. The decision to work with four companies marked a shift three years after a $10 billion cloud-computing contract awarded to Microsoft for the Joint Enterprise Defense Infrastructure sparked a legal fight over claims that then-President Donald Trump interfered to favor Microsoft over rival bidder Amazon. This "was a key deal to win for all the software vendors in this multiyear soap opera," Wedbush Securities tech analyst Dan Ives told The New York Times in an email.

3

California seeks $600,000 in unpaid taxes from Kanye West's fashion company

California authorities are trying to collect at least $600,000 in unpaid taxes from Yeezy Apparel, a fashion company run by embattled rapper Ye, NBC News reported Wednesday. Ye, formerly known as Kanye West, reportedly owns and manages the Yeezy brand, and has recently claimed that four of his personal accounts have been frozen due to tax debt, NBC reported. The Yeezy debt adds to Ye's financial troubles, which have mounted as a backlash over his recent antisemitic comments cost him business deals. The state has sent at least three letters about the debt to Ye since July 2021, and placed tax liens on his company's assets. "That's certainly a sign of either extreme incompetence or extreme cash problems," USC law professor Edward McCaffery told NBC.

4

Stock futures rise slightly after days of losses

U.S. stock futures edged higher early Thursday after concerns about a looming recession fueled several days of losses. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.1 percent at 6:30 a.m. ET. Nasdaq futures were up 0.2 percent. The S&P 500 fell 0.2 percent on Wednesday, its fifth straight day of losses. The Dow finished the day essentially flat, up 1.6 points. The tech-heavy Nasdaq fell 0.5 percent. The Federal Reserve is expected to raise its benchmark short-term interest rate 0.5 percent at a two-day policy meeting next week, after four straight 0.75 percent increases to cool the economy and bring down the highest inflation in decades.

5

Report: Prosecutors open market manipulation investigation of Bankman-Fried

Federal prosecutors in Manhattan have launched an investigation into whether Sam Bankman-Fried, founder of collapsed cryptocurrency exchange FTX, manipulated the market for two cryptocurrencies last spring, The New York Times reported Wednesday, citing two people with knowledge of the matter. Bankman-Fried is suspected of steering the prices of TerraUSD and Luna to benefit FTX and his hedge fund, Alameda Research, the Times' sources said. The two interlinked cryptocurrencies collapsed in May, contributing to the downfall of FTX. The investigation is in its early stages. It's not yet clear whether prosecutors believe Bankman-Fried did anything wrong, but the matter is part of a broader inquiry into FTX and possible misappropriation of customers' money.

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