All posts by Hana Zumout

GEICO store
AutomotiveExpert WitnessInsurance

Insurance: All CA GEICO Stores Shut Down

During the first week of August, GEICO officially announced its shutdown of all California locations (Sacramento Bee). When the Sacramento Bee article was written, GEICO’s website listed some of the operating San Diego and Bay Area offices, but a week later, California was removed from the list of states to search for a local office. Not only are 2.18 million Californian GEICO customers affected, but hundreds of employees are left jobless. Why would the largest auto insurance company implement a mass in-person exodus from the most populated state in the country? This question and more are answered in this month’s topical post, with insight from Liability Insurance Expert and Experts.com Member, Ms. Jane Marie Downey, M.Ed, ARM.

GEICO is a private insurance company headquartered in Chevy Chase, Maryland. Since 1936, it has passed 17 million policies in force (active insurance policies) and has insured over 28 million vehicles (last checked in 2019) [GEICO]. GEICO has offered in-person services to consumers in every state until recently with the shutdown of locations in California. Former California Insurance Commissioner Dave Jones stated, “The benefits of having a physical location in California with actual offices and physical agents is that it’s easier for the Department of Insurance to make sure those individuals have a license and meet California’s very stringent standards – consumer protection standards for the sales of insurance,” (ABC10). From a customer perspective, visiting GEICO in person helps alleviate any miscommunication with agents and ensures they receive the correct coverage or assistance they need. Unfortunately, this is no longer an option for Golden State residents.

Corporations like Tesla and Oracle removing themselves from California has become a norm in recent years. In their new locations, they can now more cost-effectively serve their consumers. The following insight from Ms. Jane Marie Downey, M.Ed, ARM, and various news articles, explains GEICO’s California departure. According to Ms. Downey, “The cost of doing business in CA is high.” She also mentioned that the steep increase in personal injury and automobile liability insurance, “nuclear verdicts,” have made it difficult for insurance companies to price accurately. Verdicts can reach as high as $30 million or more. To add, “GEICO is owned by Warren Buffett’s Berkshire Hathaway, which reported a 53-percent drop in earnings for the first quarter of 2022. It reported earning $47 million in insurance underwriting in the first quarter of this year, compared to $764 million in the same quarter in 2021,” (The Epoch Times).

California’s state regulations seem to be the root of GEICO and other corporations’ removal from California or migration to another state. Steve Young, a lawyer for Independent Insurance Agents & Brokers of California, said, “There’s a very complicated insurance rating law that is in effect here that makes it very difficult for insurers to have confidence that they can get the rate that they need from an actuarial perspective to ride these risks going forward,” (ABC10). The article reported the agents were under a gag order, but one of them said GEICO had to lower costs on its own due to rate increase rejections by the Department of Insurance. Although it eradicated brick-and-mortar services to California customers, GEICO provides presently insured consumers with online options through its website and app. This might frustrate technologically unsavvy customers knowing in-person consulting is unavailable.

Customers are not the only party affected by this swift decision. Hundreds of owners and employees of all 38 GEICO offices in California experienced a massive layoff. These offices are independently owned, and the Sacramento Bee reported agents spent between $100,000 and $250,000 to open them. “Locally owned branch offices were told of the company’s decision in a two-minute zoom call,” (The Epoch Times). The same article explained one owner’s situation: he packed up his office after being open for a year and sought legal representation for the quick shutdown. There have not been any new articles on personal anecdotes or GEICO generally since the beginning of August. If further information is released, the blog will be updated.

Thank you to Ms. Jane Marie Downey, M.Ed, ARM, for contributing to this month’s blog post.

Expert WitnessFilm IndustryMediaTrademark Infringement

Trademarks: The Fight for “Dunder Mifflin” Rights

NBCUniversal, LLC has made headlines once again, but this time, it is not to announce a new show or streaming service. On July 1st, 2022, the media conglomerate filed a lawsuit against Jay Kennette Media Group for trademark infringement of the fictional paper company, “Dunder Mifflin,” from the hit U.S. adaptation of The Office (DEADLINE). The suit was filed in the U.S. District Court for the Central District of California. As the lawsuit is in its inception details are limited. In this month’s blog post, readers can expect to find background information leading up to the filed lawsuit, explanations about trademarks and their significance, and insight from Trademark, Copyright, and Apparel Experts.com Member, Mr. Antonio R. Sarabia II.

From 2005-2013, the American version of The Office, starring Steve Carell, Jenna Fischer, and John Krasinski, chronicled the peculiarities and typical workday of office employees at Dunder Mifflin paper company. To say the show was successful is a gross understatement. According to The Washington Post, The Office received 42 Emmy nominations and won a total of 5 nominations during its nine seasons. It recently surpassed another successful NBC sitcom, Friends, for the most streamed show on Netflix in 2020. Given its impact on the public and pop culture, it was sensible for NBCUniversal to keep The Office in-house with the release of its subsidiary, Peacock TV, that same year. The network also attempted to register the trademark for the faux company name for merchandising and sales purposes, but because the Jay Kennette Media Group beat them to the punch in 2016, The U.S. Patent and Trademark Office denied NBCUniversal’s application.

Other than the situation on which this lawsuit is based, the Jay Kennette Media Group is known to register trademarks that belong to other companies and has thus garnered the reputation of an alleged “trademark squatter.” Mr. Sarabia defines a “trademark squatter” as “someone who takes the trademark of another and registers it before the owner does, usually with the intent to sell it back to the rightful owner.” Whether the media group planned to sell the Dunder Mifflin trademark back to NBCUniversal is unknown, but given the recent lawsuit filing, the outcome of who receives the fictional company’s trademark will now be decided by the judge. According to DEADLINE, “The lawsuit aims to end Jay Kennette Media’s use of the Dunder Mifflin name and destroy any remaining branded merchandise. The plaintiffs – NBCUniversal Media LLC, Universal Television LLC, and Universal Studios Licensing – also seek unspecified damages and any profits already derived from sales of the merchandise.” With the background information of this lawsuit in mind, let’s delve into how trademarks are licensed and their importance with further knowledge from Mr. Sarabia.

Q: What are the steps to registering a trademark?

Mr. Sarabia: First, file the application with the U.S. Patent and Trademark Office, then respond to any request for changes from them. In some cases, the U.S. Patent and Trademark Office will reject the application for conflict with a prior application or registration. Assuming that does not happen, next the application is published for opposition. When an application is published for opposition, anyone who believes the application conflicts with their right may oppose the application. That rarely happens. If there is no opposition, the application proceeds, and the U.S. Patent and Trademark Office issues a Notice of Allowance. If proof of use has already been filed, the application will proceed to registration. If proof of use has not been filed, the applicant has time to file that, but it must be done before the mark is registered.

Q: What is the benefit of registering a trademark?

Mr. Sarabia: A registered trademark has nationwide protection and improved damages in case a lawsuit is necessary.

Q: The Jay Kennentte Media Group has become known for being an alleged “trademark squatter.” How prevalent are “trademark squatters?”

Mr. Sarabia: Very common, though less likely in the U.S. than in other countries.

Q: How can businesses prevent being negatively impacted by “trademark squatters”?

Mr. Sarabia: Make sure that their marks are registered in each country in which they sell products or offer services and in those countries in which products are manufactured.

Q: NBCUniversal submitted their trademark application for the fictional paper company, Dunder Mifflin, several years after The Office ended. Is it normal for businesses to delay registering trademarks for products or names?

Mr. Sarabia: It is common, particularly in a situation in which the company is fictional. In other situations, there may be delays because the company may not consider how important trademarks are to its business, a mistake.

A special thank you to Trademark, Copyright, and Apparel Experts.com Member, Mr. Sarabia for graciously taking the time to participate in this month’s blog topic. This post will be updated once a settlement has been determined.

PsychiatryPsychologySexual Abuse

Psychiatry: Religion, Power, and Sexual Assault

Religious communities are one of many places which provide people a sense of belonging. Connecting with fellow congregants with like-minded beliefs brings comfort and safety. However, religious institutions are not exempt from exploiting, coercing, and manipulating devotees into unsavory demands. Experts.com Member and Psychiatry Expert, Dr. Mark I. Levy, MD, DLFAPA, shares insight about abuse, power, and institutional betrayal within religious groups.

Although abuse occurs in every religious institution and denomination, the most recent scandal involves the Southern Baptist Convention. According to AP News, the Southern Baptist Convention’s Executive Committee, along with other high-profile members, currently have a chance to acknowledge a scathing report regarding their lack of action toward allegations of sexual assault. For over two decades, survivors and involved members of the church received unsatisfactory responses to abuse, which included, “resistance, stonewalling, and even outright hostility from some within EC.” An investigation has been conducted and a report was released on Sunday, May 22nd, 2022.

After seven months, a lengthy 400-page report has now been published. It mentioned, “for many years, a few senior EC leaders, along with outside counsel, largely controlled the EC’s response to these reports of abuse…and were singularly focused on avoiding liability for the SBC.” This list was made public days after the investigative report’s release, which was the SBC’s effort to encourage national churches to be “proactive” in defending the vulnerable (FOX News). Ed Litton, Southern Baptist Convention’s President, stated he was “grieved to my core” for the survivors and urged churchgoers to “prepare to change the denomination’s culture and implement reforms,” (AP News). He also vowed to address the failures and the report’s findings during their 2022 national meeting in Anaheim, California on June 14th and 15th, 2022. While the body of the Convention will meet in Anaheim, several high-ranking Executive Committee members will not be attending, as they have relinquished their roles in the church.

The Southern Baptist Convention is not the only denomination to be accused or charged with sexual assault. A recent study by the University of Alberta was released in 2019 detailing patterns of sexual assault in religious and ideological groups. This includes the Catholic Church, Protestants, the Branch Davidians, Fundamentalist Latter-Day Saints, Hindu ashrams, and various cults. Along with academic studies, documentaries such as Leah Remini: Scientology and the Aftermath (Netflix), The Vow (HBO Max), and Keep Sweet: Pray and Obey (Netflix) also expose the coercive abuse that occurs in these groups.

Experts.com Member, Dr. Mark I. Levy, MD, DLFAPA, provides his contributions on the matter. When asked about grooming minors and sexual assault against adults within religious groups, Dr. Levy presents a thought-provoking paradox. He states:

When humans identify with codes of ethics, which all religions espouse, they put themselves at risk of their own fallible humanity. In general, there’s always this perceived idealization of the role of the person in a morally heightened position and the fact that life is imperfect.”

The discrepancy between the revered status of religious leaders, along with the virtuous sermons they preach, and the egregiously immoral acts committed, is the shock value associated with deplorable situations like the ongoing Southern Baptist Convention scandal. Sexual assault and rape are heinous crimes altogether, but the inconsistency also explains why religious sexual assault contentions make more news headlines than workplace, university, or random abuse cases.

Dr. Levy provides four reasons why sexual abuse continues in religious groups:

  • Authority: The sexual abuse against minors and adults in religious environments has more of an emphasis on a person’s position of authority rather than the ideology itself. “Authority is a critical component to this because a person has to be in a role of trust and respect, which increases the chance of being able to abuse minors. It disarms them when the person is recognized as the leader because they are more prone to trust and believe them.” In communities like churches, repeat abusers in authoritative roles are not quick and brash in pursuing their ulterior motives. Due to their constant access to believers, they meticulously and strategically develop a seemingly benign relationship with their victims to ultimately exploit them at a given opportunity.
  • Power: If authority is the vehicle for abusers, then power, granted by their authority, is the fuel that perpetuates these atrocities. “Sexual abuse is always about power. Sexual abuse of children, which clearly uses that, is also about the sexual gratification of the adult abuser’s needs. They’re peculiar because the sexual interest is focused on minors because of the abuser’s own psychopathology.” Defenders may say it is justified by culture, tradition, and love, but it is illegal under the law because children are not mature enough to give consent.
  • Structure of the Group: “There are particular problems with institutions dominated by men, which are virtually all major religions. One wonders if the leaders of the Catholic Church were female…, whether there would be the same sexual abuse scandal.” This is not to say that women cannot abuse others. However, sometimes the camaraderie within fraternal groups is based on a “boys will be boys” mentality, which tends to excuse abusive behaviors and disregard the damage done to victims.
  • Structure of Belief System: “I think that sometimes within religious belief systems where sin is a prominent concept and confession of sins leads to forgiveness, the psychological damage done, and not to mention the legality of the sin, is often overlooked because it is forgiven in a religious concept.” To reverse this, victims subject themselves to acts they would not do otherwise to avoid sin, reach salvation, or to meet the expectations of the congregation. When church leaders manipulate ideology for their own selfish satisfaction, they violate their congregant’s spiritual, moral, and physical vulnerabilities.

As stated above, offenders in authoritative positions like priests or teachers are typically repeating abusers. Repeat abusers generally commit certain behaviors that allude to deviant motives. Specifically, regarding the adult sexual assault of minors, Dr. Levy has named a few warning signs that can potentially mitigate further abusive situations when identified. These include solely befriending single moms, children having an “adult friend,” overstepping boundaries (children sitting on laps or being invited out to dinner alone), and becoming an “adopted uncle” of the family. Some of these behaviors may not directly indicate the person is an abuser, but all four certainly pose a concern.

If you or someone you know needs support, call 1-800-656-4673 or visit https://www.rainn.org/resources.

AutomotiveEngineeringExpert Witness

Car Recalls: Insight on Causes and Procedures

All man-made products are subject to trial and error during the development process. In some cases, problems occur once a good has been manufactured, shipped, and sold to customers. Recently, two major automotive companies, Ferrari and Volkswagen, recalled thousands of their sports models worldwide. This month’s blog post will explain why the recalls occurred with insight from Experts.com member and Forensic Engineering expert witness Tarek Omar, Ph.D.

Ferrari, the Italian luxury sports car manufacturer, announced its recall of 2,222 cars in China, which will start on May 30th, 2022. According to China’s market regulator, the defect lies in the automotive’s braking system (CNBC). Ferrari confirmed the cause of the said defect, which is the improper venting of the brake reservoir fluid cap. “The safety and wellbeing of our clients is our priority. We operate according to stringent safety and security guidelines to ensure the right systems and procedures are in place at all times,” stated Ferrari. The retracted cars include the 458 Italia, 458 Speciale, 458 Speciale A, 458 Spider, 488 GTB, 488 Spider series models, and cars imported between March 2010 to March 2019.

In the United States and Canada, Volkswagen has recalled 246,000 Atlas and Atlas Cross Sport SUVs (CNBC). The reported issue stems from wiring issues that affect the cars’ airbags, brakes, and windows. The National Highway Traffic Safety Administration stated the wiring issue could lead to the airbags functioning “later than designed,” which leaves consumers susceptible to harm. Volkswagen notified owners and dealers through mail on May 10th, 2022, of the following vehicles subject to the recall: 2019 – 2023 Volkswagen Atlas and 2020-2023 Volkswagen Atlas Cross Sport. Given the provided information, Experts.com member and Forensic Engineering expert, Dr. Omar, has shared his insight on the topic.

Question: Two major car companies, Ferrari and Volkswagen, have recently recalled some of their models. How often do automotive recalls occur?

Dr. Omar: Automotive recalls are very common. There could be up to 50 million cars with a new recalled issue in any given year. Some vehicles may have multiple recalls occurring at different times. A telling statistic is the recall rate which signifies the number of recalled vehicles per 1,000 sold. A study by iSeeCars.com that tracked recalls from January 1985 to September 2016 showed that for the 427,971,556 cars sold during this period, 527,406,263 were recalled yielding a recall rate of 1,115 per 1,000 cars sold. Porsche ranked 1st with 531 per 1,000 and Volkswagen 18th with 1,805. By law, safety defects in vehicles up to 15 years old must be included in recalls.

Question: What is the most common cause of automotive recalls?

Dr. Omar: With the technological advancements in vehicles today, sensors and software are prone to faults and will probably lead the list of common recalls. Traditional safety systems such as airbags, seatbelt tensioners, and ABS braking, as well as modern driver-assist systems such as lane departure, blind spot, forward collision, and rear cross-traffic warnings, rely heavily on properly functioning sensors, computers, and software. Traditional mechanical and electrical issues will of course continue to appear in faulty wiring, fuel lines, brake lines, throttle pedals, and engines, to name a few.

Question: Are recalls usually tied to something that may cause injury? Or are there other reasons for an automotive recall?

Dr. Omar: Recalls could be initiated for any reason, but the most prevalent are safety-related. Whether initiated by the automaker or by the government regulators, the recall is aimed at correcting a defect due to vehicle design, manufacturing, or supply chain issues. Safety recalls are generally for defects that could lead to injury or death. Non-safety recalls might be due to emissions issues, such as the Volkswagen Dieselgate scandal in 2015, and are initiated by the Environmental Protection Agency (EPA). A defect in a vehicle is not always repaired through a recall. Manufacturers often issue Technical Service Bulletins, and the dealers or repair shops will typically repair the defect during routine maintenance visits. However, for safety and environmental defects, a recall must be issued.

Question:  Is there a regulatory process to follow to institute a recall?

Dr. Omar: Yes, there is. The National Highway Safety Administration (NHTSA) is tasked and funded by Congress to oversee vehicle safety and enforce the United States Code for Motor Vehicle Safety [Title 49, Chapter 301]. While NHTSA has the authority to issue recalls, most are actually initiated by automakers. The EPA has a similar regulatory framework for emissions-related recalls.

Question:  What is the average time frame for suppliers and manufacturers to repair the faults for defective cars?

Dr. Omar:  It is difficult to pinpoint an average time. Once a recall is issued the owners are notified by mail that a defect has been identified. It will explain the nature of the defect and provide instructions for getting the defect repaired either by the authorized service center or by software download. The notice will also explain whether the vehicle can be driven prior to the repair or if are any instructions in terms of parking the vehicle (in case of fire due to fuel leaks, battery charging, etc.). Some recall notices may not indicate the proposed solution, and it might take the automaker months to determine how it will repair the defect. Given that notices may not reach the current owners of a recalled vehicle, it may take years for an owner to realize that there is a recall and to get it performed. Owners should frequently check the NHTSA website for ongoing recalls. It should be noted that while repairing the issue is the most common remedy, other options include replacing a defective part, offering a refund, or even repurchasing the vehicle.

Question: In the Ferrari article, CNBC stated that the luxury sports car brand recalled vehicles from March 2010 to March 2019. Why do you think Ferrari waited so long to issue the recall?

Dr. Omar: Ferrari is a low-volume manufacturer, which might affect the process. In general, automakers rely on service centers’ repair records to identify and address potential defects. Typical car models are sold in large volumes, on the order of 100,000 per year, and often substantially more. Some parts are used across models, and that number could be as many as a million or multi-million cars. In the case of Ferrari, the total production is less than 10,000 cars per year and coupled with the fact that they are typically not driven a lot of miles a year, means that the problem reporting will take time. It is very likely that Ferrari did not become fully aware of the issue for several years after the 2010 cars began to sell, and initially offered free repairs under the vehicle warranty. Typically, once the defect is identified the company will analyze manufacturing records to determine how many of the affected parts are in production, was there a specific batch from the supplier, or any other analytics that help bound the issue. By law, the automaker must report the problem and issue a recall immediately once a safety problem is identified, even if they are still investigating the problem and solution.

Question:  How difficult is it to determine a faulty product once manufacturing and sales begin?

Dr. Omar: There are several ways that a fault is identified. First and foremost, through reported problems either from crash data or maintenance service reports. Customer reporting is another factor, and if not addressed by the manufacturer, NHTSA’s Office of Defects Investigations will open an investigation into the matter. Consumer advocacy groups and media often play a role as well in applying pressure on the manufacturer to address the issue.

Question: Both cars recalled sports models. Are sports cars more complex design-wise than other types of vehicles?

Dr. Omar: Not particularly. Sports cars tend to have higher performance components such as engines, transmissions, brake systems, and suspensions, which, unlike regular vehicles, are sometimes pushed to their limit. Given the number of ongoing defect recalls, sports cars make up a small percentage.

China Eastern Airline Aircraft
Accident Investigation & ReconstructionAviationExpert Witness

Aviation: Expert Insight On Flight MU5735 Nosedive

On March 21st, 2022, a Boeing 737 from China Eastern Airlines seating 132 passengers and crew members nosedived into the mountains of China’s Guangxi region. Lamentably, there were no survivors. CNN reported Flight MU5735 was a normal flight that departed from Kunming en route to Guangzhou in South China. The anomaly that has various aviation experts, as well as public agencies perplexed, is the plane’s nosedive position and the rate at which it situated itself into the nosedive. The accident is currently being investigated by China Eastern Airlines, the Civil Aviation Administration of China (CAAC), Boeing, CFM (engine manufacturer), and the U.S. Federal Aviation Administration. Experts.com Member and Aviation Expert, Captain Kit Darby, offers insight into this bizarre and unfortunate aircraft accident.

It is important to provide pertinent information regarding the accident before proceeding with Mr. Darby’s contribution. Airplanes usually begin to gradually descend toward their destination at 29,000 ft. Passengers are supposed to experience minimal turbulence at the stage of the flight, however, the same could not be said for Flight MU5735. According to SFGATE, “the plane’s dive appeared to have halted for about 10 seconds and it climbed briefly, adding an unusual twist to the scenario.” However, the Flightradar24 data track, which derives its information from radio transmissions, reported the plane plunged nearly 26,000 feet within a minute and 35 seconds. In general, it is difficult to place a plane into a nosedive position. Given that Flight MU5735 passed all pre-flight checks, the reality of the aircraft nosediving should not have happened. A second black box – a device that records the condition and performance of planes in midair – was found near the crash site on March 27th, 2022 (ABC7 Chicago). However, due to the mountain region’s muddy terrain, the black box was damaged with possible repair remaining questionable. Luckily, the cockpit voice recorder was located two days later and is currently being analyzed in Beijing with the help of the U.S. National Transportation Safety Board (NTSB) [Reuters]. Providing insight on the matter is Capt. Kit Darby, Aviation Expert, and Experts.com Member:

Question: How often do plane crashes occur?

Capt. Darby: Very rare. Driving a car is much more dangerous than flying in a commercial aircraft.

(Photo 1)

(Photo 2)

This was a scheduled air carrier. This is the safest group of operators by far with only .132 accidents per 100,000 flight hours.

(Photo 3)

The aircraft was at a point in the flight where it would normally start a descent for landing. It appears to have started down normally just before it began its dive.

 Question: What is the most common cause of plane incidents?

 Capt. Darby:                                              (Photo 4)

Question: According to SFGATE, it is difficult for planes to position into a nosedive, which is why this particular crash is odd. Considering the aircraft passed pre-flight checks, what would the plane have to undergo to be situated into a nosedive?

Capt. Darby: Aircrafts are what is called “dynamically stable.” If they are displaced from their normal flying state, they tend to return to their original conditions. If you nose down an aircraft, it speeds up, and the increased speed makes the plane’s nose return to its original level of condition. You would have to push the aircraft’s nose down and then hold it down to sustain a dive as speed increases.

Alternatively, something could break that forces the nose down and hold it there, but I have never seen this happen in my 24,000 hours in the aircraft and 7,000 hours teaching in simulators. Possible, but unlikely. Additionally, the hold could force the aircraft’s nose down and hold it there.

Question: ABC7 News Chicago reported the second black box from the China Eastern Boeing 737 was found. How vital are black boxes for flight investigations?

Capt. Darby: They are key. One records what the aircraft does and the other records the communications between the pilots and the air traffic controllers. Just a note that the “black boxes” are actually bright orange to help locate them in a crash. The flight recorder records 1,000 plus of the aircraft parameters. Speed, heading, altitude, flight controls, gear, flaps, time – almost everything. The plane also has voice recorders that record the radio and intercom communications.

(Photo 5)

Question: How much of the investigation is conducted by locating debris on the ground vs. reviewing the black box recording?

Capt. Darby: In a high-speed crash like this, there is very little that can be learned from the crash site due to the amount of damage done from the high sped aircraft hitting the ground at a steep angle. In this case, the crash was so extreme that the black boxes may be damaged beyond repair and therefore not a useful tool.

As of April 11th, 2022, the investigation is still ongoing. However, rumors regarding the cause of Flight MU5735’s nosedive have been circulating. Online gossip’s latest conjecture is the co-pilot might be culpable for the crash (Global Times). Since official conclusions are yet to be discovered and announced, questionable rumors are to be taken with a grain of salt. This post will be updated once the Civil Aviation Administration of China (CAAC) releases a statement.

Conflict between Ukraine and Russia, male fists - governments conflict concept
EconomicsExpert WitnessInternational TradeSecurity

Experts Weigh In on Crushing Russian Trade Sanctions

After nearly a decade of deep-seated tension between Russia and Ukraine, Russia commenced its invasion on February 24th, 2022. According to the Wall Street Journal, the attack is “President Vladimir Putin’s most aggressive move yet to redraw the boundaries of the former Soviet Union since the end of the Cold War more than 30 years ago.” During the last two weeks, Russia has strategically strengthened its forces in four major Ukrainian cities: Kharkiv, Mariupol, Kherson, and the capital of Kyiv. Putin has also threatened Volodymyr Zelensky, Ukraine’s President, with annexation. Due to the bombings, air raids, and the Russian army pillaging the country, Ukrainian citizens are fleeing their homes seeking refuge in Poland, Hungary, Slovakia, Romania, and Moldova. NATO members have responded to this unjustified attack by imposing financial and trade sanctions against Russia. This blog post will delve into the purpose, logistics, and violation penalties of trade sanctions. Insight has been provided by Experts.com Members and International Trade Experts, Jo-Anne Daniels and Rosemary Coates.

When warfare is mentioned, people tend to imagine soldiers fighting on the battlefield or the vast array of weaponry used to defeat enemies. As the world continues to develop, the modern concept of warfare seems to become more complex and multifaceted than in previous years. Rather than physically attacking countries, world leaders can choose to affect their enemy’s economy and trade deals through sanctions. Regarding the United States, Ms. Coates notes, “Sanctions are often used when America chooses to protect sensitive technology or punish a country for violating certain laws… When sanctions are applied, licenses for export are denied to the sanctioned country and the goods may not be shipped there.” In this case, Russia’s attack on Ukraine has prompted President Biden and other international officials to order trade sanctions to denounce Putin and cripple his economy to such an extent he can no longer continue his attack.

A couple reasons explain why various NATO members like the United States, Germany, and the United Kingdom have imposed sanctions rather than use military force, even to their own disadvantage. The first reason is Russia’s influence on European trade. A statistic from the European Commission states, “The EU is Russia’s biggest trade partner, accounting for 37.3% of the country’s total trade in goods with the world in 2020.” To add, Russia accounts for 26% of the EU’s oil imports and 40% of the EU’s gas imports. A physically combative response to the invasion would be potentially disastrous considering Russia’s nuclear capacity. Sanctions are the lesser of two evils because Europe relies on Russia’s export of oil and gas. They have chosen to endure financial damage over a possible bloody war. Although the United States is not heavily reliant on Russia for trade, it has followed suit by implementing trade sanctions. Ms. Coates stated, “all trade with Russia (except food and medical supplies) is now stopped.”

Another explanation centers around Ukraine’s relationship with NATO. The North Atlantic Council acknowledged Ukraine as an Enhanced Opportunities Partner on June 12th, 2020 (NATO). Since Ukraine is a partner and not an actual member, NATO’s Collective Defense pledge, specifically Article 5 of the Washington Treaty stating “an attack against one Ally is considered an attack against all Allies,” is an inapplicable solution to the country’s plight (Washington Post). Given the Russian government’s unpredictable nature, the possibility of Article 5 being invoked will not be discounted since multiple NATO allies border both Russia and Ukraine (ABC News).

The repercussions of the Kremlin’s actions have significantly impacted the country’s economy and lifestyle to their detriment, alluding to these sanctions’ effectiveness. These sanctions catalyzed a mass exodus of multi-billion-dollar companies from Russia. These corporations include but are certainly not limited to American Airlines, General Motors, L’Oréal, Shell, John Deere, Goldman Sachs, McDonald’s, Starbucks, PepsiCo, Airbnb, Marriott International, DHL, Netflix, The Walt Disney Co., Mastercard, Pfizer, Deloitte, Amazon, Apple, and even Google (NBC News). Russian athletes are also affected by Putin’s decision to invade Ukraine. Professional tennis player, Daniil Medvedev, currently ranked No. 2 by the Association of Tennis Professionals (ATP), may have to condemn President Putin if he wants to participate in Wimbledon (CNN). Another example is Nikita Mazepin’s firing from the Formula 1 racing lineup due to his father’s connections to the Russian government (Washington Post). Various outlets have reported Russia’s occurring financial losses will take decades to recover. “It’s pretty clear that Russia will become poorer and more technologically backward, the choices for its citizens will be radically diminished and for many, many years to come,” a quote from The Hill. The Russian citizens suffer different consequences because of Putin’s actions. The hope is that they put pressure on Putin, so he decides to halt his malicious efforts to usurp Ukraine. However, that is not an easy feat in a totalitarian society. Al Jazeera confirmed Putin had arrested more than 4,300 people at Russia-wide anti-war protests. For now, sanctions will continue to be issued by the international community.

Two government agencies are responsible for establishing sanctions in the United States. The first is the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC). OFAC deals with the authorization of economic and trade sanctions related to national security and foreign policy. The agency mainly targets any entity with a motive to antagonize the United States. OFAC releases an account of Specially Designated Nationals (SDNs) when a sanction is issued. Ms. Daniels explains SDNs are “companies owned or controlled by, or acting for or on behalf of, targeted countries.” Non-country-specific parties like narcotic traffickers and terrorists are also included in the report. For example, since Biden ordered sanctions against Russian banks and oligarchs on February 23rd, 2022, the assets of said banks and oligarchs are blocked. Any U.S. company that willingly or inadvertently conducts business with sanctioned entities will receive penalties, which will be explained in detail later in the post.

The second agency is the U.S. Department of Commerce & Bureau of Industry and Security (BIS). BIS manages U.S. export control policies for three categories: software, technology, and dual-use commodities (i.e., global positioning satellites, missiles, thermal imaging, etc.). According to Ms. Coates, “the export of technology or military items require more formal individual licenses.” As an agency also allowed to administer sanctions, BIS also releases a Consolidated Screening List (CSL) compiled of parties. The U.S. Government holds restrictions on specific exports, re-exports, and transmission of items. Ms. Daniels mentioned the BIS simultaneously issued sanctions against Russia and Belarus, allied with Russia, under the Export Administration Regulations (EAR) and licensing policies to defend U.S. national security. “Furthermore, the new BIS policy regarding the export, re-export, or transfer (in-country) of items that require a license for Russia or Belarus is under a policy of denial with certain limited exceptions. This means that if the export license is denied, the company must cease exporting its products to those countries,” Ms. Daniels stated. Although there are two agencies responsible for establishing sanctions, a third party wields this same power.

As previously mentioned, the President of the United States can also order sanctions against threatening companies, individuals, and countries. If sanctions are summoned through Executive Orders, they are established immediately. Otherwise, there will be a pause. For example, an Executive Order was made on March 8th, 2020, which banned both imports and investments with Russia. Because it continued to sabotage Ukraine’s sovereignty, the United States prohibited products such as “crude oil, petroleum fuels, oils, and products of their distillation, liquified natural gas, coal, and coal product of Russian Federation origin,” said Ms. Daniels. She adds that any written contract or agreements submitted before March 8th, 2022, will be authorized through 12:01 A.M. Eastern Daylight Time on April 22nd, 2022. According to Ms. Daniels, “The General License is available up to April 22nd, 2022, and then the Executive Order issued March 8th, 2022, takes full effect.” With the continuing invasion, NATO countries will issue sanctions to limit Putin’s efforts in undermining Ukraine’s independence.

Companies that violate OFAC and BIS regulations can be subject to civil and criminal punishment. These penalties range from paying hefty fines to serving jail time. Ms. Daniels provided examples of two different companies that have broken regulation policies for both agencies:

  • OFAC: Pennsylvania-based software company, SAP, paid $2,132,174 as a settlement for potential civil liability for 190 OFAC violations. The company was exporting software to Iran, a U.S.-sanctioned country.
  • BIS: In 2014, the Virginia-based business, Patriot 3 Inc., traded maritime jet-boots to the Russian Government Federal Guard Service without an export license. Last year, BIS charged the company for violating this rule of the Export Administration Regulations (EAR). Patriot 3 Inc. agreed to pay $200,000 as a penalty. If Patriot 3 Inc. is untimely with its settlement, the BIS will invalidate its export privileges for two years.

To avoid unintentionally breaking the law, both agencies implore businesses to be vigilant of export regulations, entities classified as SDNs, and parties on the CSL.

The full extent of economic and trade sanctions against Russia are yet to be seen. However devasting they may be, for Russia and its population, does not compare with the death and destruction that has already occurred in Ukraine. A special thank you to International Trade Experts, Jo-Anne Daniels, and Rosemary Coates for their contribution to Experts.com’s latest blog post.

AdvertisingExpert WitnessMarketing

Super Bowl LVI: How COVID-19 Has Influenced Marketing Strategy

It is indisputable that COVID-19 has inflicted its wrath on the United States. Americans have been impacted in ways never experienced before, pivoting from variant to variant while adjusting to ever-evolving public health guidelines from the CDC and other governing bodies. To boot, joblessness has skyrocketed, and inflation is at an almost forty-year high at seven percent. In fact, COVID has affected nearly every aspect of our lives.

Despite the daunting cons, there seems to be a light at the end of this dark two-year tunnel. The opening of concerts, sporting events, playhouses, and other in-person entertainment sites brings hope for a “new normal.” Fans around the country are getting ready to celebrate the biggest game in sports, the Super Bowl. Not just football anymore, the highly anticipated Super Bowl has become unmatched in football strategy, mid-show entertainment, and must-see sponsorships. With the help of Experts.com Member, Dr. Larry Chiagouris, Professor of Marketing, Lubin School of Business, Pace University, this blog will discuss COVID’s impact on the marketing industry and the changes, if any, fans can expect during Sunday’s game.

As a Professor of Marketing, Dr. Chiagouris is aware of the ever-changing shifts in messaging and methods businesses implement. During the pandemic, he noticed the most significant change in business-to-business (B2B) marketing. “For B2B, video sales presentations have become the norm to limit the travel expenses and exposure to COVID-19. What we are learning is that these presentations can be effective, but many marketers are still learning how to more effectively use remote sales tools. Business sales professionals have not yet perfected their game at using virtual presentations effectively.” Visual content is crucial for compelling pitches, negotiations, and overall communication when conducting business remotely. Dr. Chiagouris suggests marketing strategists direct more attention to developing high-quality content and graphics.

For business-to-consumer (B2C) marketing, branding professionals are responsible for capturing consumers’ attention and persuading them to purchase a company’s goods and services in digital and physical spaces. Dr. Chiagouris explains, “Marketers need to better understand the opportunity to reach consumers at home during the day. Because so many white-collar workers are now working from home, daytime television has become a much more popular and effective tool to reach consumers. Particularly moms and dads who are home with children and can be more easily reached during the day than prior to the pandemic.” He suspects two factors will influence marketing this year, more people than ever are working from home, and they care about their safety and security. Since national crime rates continue to climb, Dr. Chiagouris suggests that companies selling security-related products like home-alarm systems and front-door camera apps take advantage of the demand and the number of consumers constantly looking at their screens. Online delivery services will also be in high demand this year. Amazon, Walmart, and Instacart are a click away from all household needs, and Uber Eats, DoorDash, and Grubhub are not far behind with whatever suits one’s palette. Social distancing and integrating the work-from-home lifestyle has required marketers to reach a new level of innovative thinking for campaigns, more like those aired during the Super Bowl.

When the first Super Bowl occurred in 1967, it revolved around the game, the calls, and which team reigned supreme (the Green Bay Packers beat the Kansas City Chiefs 35-10). It was not until 1984 that the most significant event of the year became known for more than just an old-fashioned game of American football. Apple’s “1984” themed commercial announcing their Macintosh Computer was the Super Bowl advertisement that started the trend of “high-end” commercials fans know and love today. According to Business Insider, “Steve Jobs wanted an ad to announce the advent of Macintosh that would stop the world in its tracks.” Apple’s commercial was so successful that it made the Super Bowl the Super Bowl of Advertising from that year forward. Since then, there have been record-breaking ad costs from sponsors to out-perform their competitors year after year. Memorable commercials from Super Bowl LV include State Farm’s “Drake from State Farm,” M&M’s “Come Together,” and Uber Eats “Wayne’s World & Cardi B’s Shameless Manipulation.” An article from Variety stated last year’s Super Bowl produced approximately $545 million in in-game advertising. It is yet to be determined whether last year’s record-breaking cost will be surpassed on Sunday, but the prediction that it can is plausible for two reasons.

(Photo Credit: People Magazine)

According to Statista, during the Super Bowl, there has been a significant increase in 30-second TV advertisements from 2002 to 2021. Because it is one of the most viewed broadcasts annually, sponsors will not hesitate to pay top dollar for airtime. From the statistics, it is inferred that the total cost of in-game advertising would also increase. If this trend continues, Super Bowl LVI is set to surpass last year’s in-game advertising record.

Another component to consider regarding the Super Bowl commercials is the element of surprise. Dr. Chiagouris states that audiences, “Want to see something that they have not seen before. Commercials aired during the Super Bowl which look and feel like all other pre-game spots will not attract the attention needed, given the high cost of commercial time during the Super Bowl. More out-of-the-box thinking and creativity is needed.” These commercials are the most anticipated ads of the year. Instead of turning the channel, people anxiously wait for each new ad. Sponsors realize the more creative the ad, the more revenue for the company. The commercial content Super Bowl sponsors will adopt this year remains to be seen, but it is safe to assume they will not be COVID-19 related. “I think that consumers are fatigued regarding the COVID-19 pandemic and are ready and willing to turn the page,” said Dr. Chiagouris. As vaccines are administered, and businesses are opening again, including the Super Bowl itself, normalcy is reinstated into daily life. Super Bowl Sunday has always been a day to escape, indulge, and engage in friendly competition. COVID-related commercials would perpetuate the doom and gloom Americans are all too familiar with after two years. As Dr. Chiagouris said, sponsors would be wise to keep it lighthearted. The Super Bowl LVI: Cincinnati Bengals vs. Los Angeles Rams airs on Sunday, February 13th, 2022, at Sofi Stadium in Inglewood, California.

Accident SafetyBallisticsFilm IndustryFirearmsWorkplace Safety

Firearm Safety: Crime Lab Ballistics Expert Weighs In On Rust Film Prop Mishap

On October 21st, 2021, filming his latest movie, Rust, Alec Baldwin fired a prop gun containing live ammunition, unbeknownst to him, which ended Director of Photography Halyna Hutchins’s life and injured Director Joel Souza. A Santa Fe Sheriff’s Office spokesperson claimed a search warrant was issued, and the investigation is ongoing. On the day of the event, Balwin published a statement expressing his grief and disbelief over the situation. Although fully cooperating with the police, on December 2nd, 2021, he revealed in an interview with ABC News’ George Stephanopoulos, “Someone is responsible for what happened, and I can’t say who that is, but I know it’s not me.” Considering how identical incidents have occurred in the past, like the passing of Bruce Lee’s son, Brandon Lee, this devastating accident raises questions about firearm safety protocols within the entertainment industry and perhaps more suitable working conditions for members of the International Alliance of Theatrical Stage Employees (IATSE). This blog post will address these issues with insight from Expert.com Member and Crime Lab Ballistics Expert, Mr. Francis T. “Jay” Jarvis.

The sequence of events leading up to the accidental death of Halyna Hutchins involved three people. According to Fox News, “Armorer Hannah Gutierrez Reed placed the prop gun outside of the church set location on a cart with other prop guns due to the coronavirus restrictions. The next person to handle it was assistant Director Dave Halls, who handed it off to Baldwin, announcing that it was a “cold gun,” a term used to indicate to those on-set that the firearm was not loaded and therefore safe to handle.” The article also highlighted how Director Joel Souza was confused about the presence of ammunition on set in the first place. According to Mr. Jarvis, “An armorer or a movie production would be responsible to make sure no live ammunition is permitted on-set, only blanks. It should be very easy to tell the difference between the two types of ammunition.” Unfortunately, there were existing gun safety problems for the Rust crew even before the fatal tragedy.

(Photo Credit: ABC News)

According to the LA Times, safety regulations were not thoroughly enforced on set. Before the significant incident resulting in Hutchins’ death, Baldwin’s stunt-double fired two rounds by mistake after being notified the gun lacked bullets. A witness told the Times, “There should have been an investigation into what happened. There were no safety meetings. There was no assurance that it wouldn’t happen again. All they wanted to do was rush, rush, rush.” Another event that occurred prior to Baldwin’s misfire involved a cinematographer and various camera crew members protesting against their working conditions by walking off the set. “The camera operators and their assistants were frustrated by the conditions surrounding the low-budget film, including complaints about long hours, long commutes, and waiting for their paychecks….,” a statement from the Times. Rust Movie Productions reassured the public that safety is the utmost priority. Although they were unaware of formal complaints, internal investigations with the Santa Fe Police Department have already begun, according to upper management.

On December 16th, 2021, Detective Alexandria Hancock obtained a warrant to search Baldwin’s cellphone. Three weeks have passed, and Baldwin has yet to comply, inconsistent with his original promise to cooperate with Santa Fe Police. According to New York Times, he filmed a video of himself and posted it on Instagram on January 8th, 2022, stating, “Someone from another state can’t come to you and say, ‘Give me your phone. They can’t just go through your phone and take, you know, your photos or your love letters to your wife or what have you.’” His legal team speculates two reasons for Baldwin’s lack of cooperation. He may be worried about possible incriminating evidence, or he wants his conversations to stay private (New York Post). The Santa Fe Police Department is now working with the Suffolk County Sheriff’s Office in New York to retrieve Baldwin’s cellphone from his residence.

Mr. Jarvis explains the root of this preventable tragedy stems from inadequate safety measures for crew members and cast. He adds, “It sounds like a training issue, not a budget issue. There is no cost involved in following the number one safety rule as it applies to firearms. No live ammunition on the set. Teach people the difference between live ammunition and blanks. Teach people how to check a firearm to see if it is loaded.” As the investigation continues, only time will tell who is responsible for this tragedy. What is certain is the production company must ensure suitable working conditions for all cast and crew members, including the armorer, whose job is to manage all gun props diligently. However, the number one safety rule Jarvis references, the measure that would have prevented protests, injuries, and the loss of an innocent person’s life, is to “NEVER point a gun at anyone unless you intend to shoot them. Even if the gun is safe, you should NEVER do this.”

FraudHealthcareLitigationSecurities

Securities Fraud: The United States v. Elizabeth Holmes

In 2018, Experts.com uploaded a blog post regarding the separate SEC charges against Theranos founder, Elizabeth Holmes, and Chief Operating Officer, Ramesh “Sunny” Balwani, for securities fraud and injunctive relief. The post offered predictions of the types of experts expected to provide their insight on the situation due to the case’s multifaceted nature. As the trial began on September 8th, 2021, this month’s blog post will cover the events that have transpired since the SEC charge in 2018, the opening statements made in the trial thus far, and insight from Experts.com Member, Mr. James (Jim) Ellis, to help explain the legalities from an Expert Witness perspective.

2018 to the Present (Timeline by CNN)

As mentioned, the SEC has pressed separate charges against Holmes and Balwani for securities fraud in March 2018. Before these charges, Theranos had advertised how it could drastically change the healthcare industry by providing the world’s first portable, needle-free, and affordable blood analyzer sold in stores like Walgreens and Safeway. Essentially, people can test for various diseases and get results from a prick of a finger. Theranos would be a pioneer in modernizing blood tests without large vials with the help of their Edison blood analyzer machines. Investors were sold on this dream and the company was able to garner a net worth of $9 billion. Due to this seemingly revolutionary invention, she was heralded as the “next Steve Jobs” by multiple news outlets.

Since 2015, suspicions have been raised by various media and medical groups including the Wall Street Journal, Journal of the American Medical Association, Food and Drug Administration, Central for Medicare and Medical Services, and various investors, as the technology of Theranos’ product proved to be faulty. Holmes and Balwani not only denied any wrongdoings when criticized by skeptics, but they continuously reassured customers and investors that their blood analyzer was sure to be the next life-altering invention for the healthcare industry. As time went on, Theranos failed to execute its mission technologically, ethically, and by medical guidelines. Investors sued for fraud in 2016. The amount of money misappropriated by Theranos totaled approximately $700 million. 

This led to the eventual indictment of both Holmes and Balwani despite having separate SEC charges. According to ABC News, Holmes agreed to pay a $500,000 fine, relinquish her role as CEO of Theranos and any other publicly traded company for the next decade, and give back her $18.9 million in stocks. As for Balwani, it remains to be seen whether he will decide to settle with the Securities and Exchange Commission. ABC News also highlighted Balwani’s attorney, Jeffrey Coopersmith, stating his client, “accurately represented Theranos to investors to the best of his ability.” He will, however, still be tried in court after Holmes.

Since the settlement, the rise and fall of Theranos have been the subject of various documentaries like HBO’s “The Inventor: Out For Blood in Silicon Valley,” (2019) and ABC’s podcast “The Dropout: Elizabeth Holmes on Trial,” (2019). Holmes’ trial date was set to occur in 2020, but due to the pandemic and her pregnancy, the trial was delayed and set for 2021. 

The Trial (CNN Business)

On September 8th, 2021, the long-overdue trial between Elizabeth Holmes and the U.S. Government began. As this trial is ongoing, there is a limited amount of information. In his opening statement, Robert Leach, Assistant U.S. Attorney and lead prosecutor for the case stated, “This is a case about fraud, about lying and cheating to get money… Out of time and out of money, the defendant decided to mislead…. The defendant’s fraudulent scheme made her a billionaire. The scheme brought her fame, it brought her honor, and it brought her adoration.”

Holmes’ attorney, Lance Wade, shot back in an opening statement for the defense with, “Elizabeth Holmes did not go to work every day intending to lie, cheat and steal. The government would have you believe her company, her entire life, is a fraud. That is wrong… In the end, Theranos failed, and Ms. Holmes walked away with nothing. But failure is not a crime. Trying your hardest and coming up short is not a crime.”

There have been some predictions about what strategies Holmes’ legal team may use in court. In 2020, CNN reported the relationship between Holmes and Balwani was more than just business partners. As the two were romantically involved in the past, and according to recently unsealed court documents, Holmes may admit to experiencing emotional, psychological, and sexual abuse. Whether Holmes testifies regarding these claims remains to be seen. Balwani has vehemently denied the abuse allegations, and since his trial commences after Holmes’, only time will tell if this topic will be discussed in court.

(photo credit: New York Post)

Insight from Our Members

Considering the charges of the trial, Experts.com Member and Private Investigation Expert Witness, Mr. James (Jim) Ellis, sheds light on the elements that constitute wire fraud and the situations for which the federal charge is used. According to Mr. Ellis, “Wire fraud, and mail fraud as well, are generally federal statutes that can be used against fraud schemes where no other federal statutes apply.” Since the statute is extensive, federal prosecutors use this to charge the varying types of fraud. Four characteristics constitute wire fraud (941. 18 U.S.C. 1343, United States Department of Justice Archives):

  1. The defendant was part of a scheme to defraud another person, such as obtaining money or something else of value through false pretenses.
  2. The defendant acted knowingly with the intent to defraud.
  3. The defendant made or caused to be made false representations that were material to the scheme to defraud.
  4. The defendant transmitted a material misrepresentation by wire, radio, or television communications in interstate or foreign commerce.

Mr. Ellis adds how the courts also include electronic communication in their interpretation of the statute due to the emergence of the internet and cellular devices in recent decades. This increases the odds of Ponzi schemes, phishing, catfishing, online shopping scams, and other duplicitous actions taking place. Most of these cases would not be considered wire fraud scams unless the dollar amount lost equals or surpasses $1 million. Anything less does not warrant federal attention. Although this is unrelated to the Theranos v. United States Government trial, Mr. Ellis mentioned, “According to the FBI, over $600 million was stolen from unsuspecting people in 2020 through online romance scams.” 

From the elements of the statute and the multitude of avenues wire fraud can be committed nowadays, it can be inferred that wire fraud cannot be an accidental crime. Due to the second element of wire fraud, federal prosecutors who use this charge must provide evidence of the defendant having the intent to scam individuals, knowingly providing promises under false pretenses, and doing so to acquire monetary gain from their victims.

To play devil’s advocate regarding Elizabeth Holmes’ trial, it is possible her intention at the beginning of building her business was not to scam investors and patients. From her interviews on various media channels, her belief in Theranos and its mission never wavered. Mr. Ellis imparts, “However… if the same person began to realize their company wasn’t sustainable or even profitable, or if their product wasn’t turning out as they thought it would; and they knowingly made misrepresentations about their company or product in the hope they could eventually turn it around; then they quite possibly have committed wire fraud.” Because it is difficult to distinguish a failed attempt from a duplicitous sale, law enforcement must be meticulous in looking for the elements of fraud (listed in the statute above) before starting an investigation.

This case is interesting not only because of the nature of Theranos’ inventive endeavor, but because we see two corporate executives being sued for wire fraud. Mr. Ellis mentioned, “Often the federal government will use civil statutes to target the corporate entity itself. The wire fraud statute is normally used against the employees of a corporation who is committing fraud.” Those who hold corporate positions, especially people that lead the corporations, tend to be entrepreneurs. Why is this important? Because those with an entrepreneurial spirit are most likely to find themselves in legal matters like Elizabeth Holmes if they are not careful enough. “These people who start new ventures, even with the best of intentions, could easily fall into a trap of telling a ‘white lie’ to not let a dream die,” Mr. Ellis added. The question of how often corporate executives find themselves in civil or criminal fraud lawsuits remains unanswered, but what is salient is the undesirable consequence of committing wire fraud, an outcome Elizabeth Holmes and Sunny Balwani are currently facing. 

It remains to be seen how this will all play out in the courtroom but investors, clients, and the general public are on the edge of their seats to learn the fate of these two infamous entrepreneurs.

Update:

On Monday, February 21st, 2022, Elizabeth Holmes was found guilty on four of eleven counts of conspiracy to commit wire fraud and wire fraud. The four counts are (WSJ):

  • Conspiracy to commit wire fraud against Theranos investors.
  • Wire fraud against Theranos investors: wire transfer of $38,336,632 from PMF Healthcare Master
  • Wire fraud against Theranos investors: wire transfer of $99,999,984 from Lakeshore Capital Management LLP
  • Wire fraud against Theranos investors: wire transfer of $5,999,997 from Mosley Family Holdings LLC

According to New York Times, Ms. Holmes “faces a maximum sentence of 20 years in prison for each count.” Her sentence will be finalized and announced on September 26th, 2022. Sunny Balwani’s trial commenced on March 23rd, 2022, so the verdict is yet to be determined.

FDAPharmaceutical

Pharmaceutical Medicine: Pfizer Vaccine Granted FDA Approval

On Monday, August 23, 2021, the Pfizer-BioNTech COVID-19 vaccine was granted approval by the Food and Drug Administration (FDA) for individuals 16 and older. Due to its newly approved status, what was known as the Pfizer-BioNTech COVID-19 vaccine will now be advertised as Comirnaty (koe-mir’-na-ty). According to the BBC, “The approval ultimately came less than four months after the Pfizer-BioNTech filed for licensing in early May – the fastest vaccine approval in the FDA’s more than 100 year history.” The abrupt onset of the Coronavirus last year served as the impetus for a necessary response by medical professionals to reduce spread, infections, and deaths. Even though the vaccine has been distributed since December 11th, 2020, Acting FDA Commissioner, Janet Woodcock, M.D., hopes the FDA approval will cement certainty for concerned individuals to get vaccinated. With insight from FDA Expert Witness, Mr. Alan Schwartz of mdi Consultants, Inc., this blog post will examine the approval process for vaccines before and during COVID-19 as well as enlighten readers about reasons behind Comirnaty’s FDA approval.

Alan Schwartz is a seasoned expert in FDA protocols. He has over 50 years of experience in the field . When asked about the FDA’s general approval process, he states, “The process is NORMALLY very extensive. It could take years from the start of development through laboratory bench testing, animal safety studies, then human safety, and finally efficacy studies.” Mr. Schwartz also noted the avergage costs companies pay for these trials can reach up to $100 million, which these companies were able to actualize due to the Emergency Use Authorization (EUA). “The FDA under the EUA gave the companies a BULLET TRAIN path to get these through the emergency use approval,” he stated. In an ideal situation, the FDA would contact the clinical study participants throughout the duration of a year after receiving a vaccine. However, because of COVID-19, the vaccine has been officially approved after it has been administered to approxiamtely 100 million people. This was most likely due to political pressure and, more importantly, ensuring the well-being of citizens around the globe. In this situation, the long-term follow up was missing in the approval process. Nevertheless, the fact that roughly 100 million people received the Pfizer-BioNTech vaccine before its approval provided the necessary data on its efficacy and safety in real time. “So, did the FDA expedite the approval or did they have more data to use in their decision making process… we hope that they used good science to get this through the approval process since it was already being used for a year,” Mr. Schwartz mentioned.

Some concerns from those expressing doubt include whether the Pfizer vaccine was changed or modified for the purpose of an expedited approval process. Schwartz reassured there was an absence of changes regarding the production and formula of both the EUA and approved vaccinations. “This was all new to the FDA and in the industry… Normally when a vaccine or a drug is under FDA review there are many questions and back and forth that take a lot of time. I don’t think this was necessary under these conditions.” However, since Pfizer is currently manufacturing and advertising Comirnaty, the pharmaceutical company is allowed to continue using the EUA vaccine. The EUA is considered an experimental drug, but as soon as Comirnaty is ready for vaccine administration, Pfizer will be held liable if any problems arise.

A New York Times article stated, “Regulators are still reviewing Moderna’s application for full approval of its vaccine.” Since both Pfizer-BioNTech and Moderna vaccines are based on similar mRNA technology and both had emergency use authorization, there are questions regarding when the public can expect or not expect Moderna’s approval by the FDA. “I would be very surprised if we did not see Moderna approved,” Mr. Schwartz commented. Moderna has submitted their application for full FDA approval which is currently pending review. Announcements about its approval should occur in the near future (NPR).

The FDA has stated that the immunization will continue to be available for children aged 12-15 under Emergency Use Authorization (EUA). It remains uncertain when Comirnaty will be FDA approved for younger people, as the CDC recently announced its vaccine recommendation for said demographic back in May. Although there is not an official timeline, Mr. Schwartz predicts, “It may take until next year to obtain all required safety and efficacy data for pediatric indication.” The lack of data amid clinical trials is the primary reason as to why Comirnaty has not received approval for young people. However, this is not an obstacle for the Los Angeles Board of Education, the second-largest school district, who recently voted on September 9th to require students 12 and older to get vaccinated.

Current protocols include a mask mandate during in-person classes and frequent COVID-19 testing as a precaution against the virus. According to U.S. News, “Under LA Unified’s plan, all students age 12 and up will be fully vaccinated by the time they return to class following winter break on Jan.11. Those who are participating in sports and other activities need to receive a first dose of vaccine by Oct. 3 and a second dose by Oct. 31, while other students need to get their first dose by Nov. 21 and a second dose no later than Dec. 19.” Board members believe the implementation of this plan is the best course of action to responsibly protect children under the age of 12, the demographic not yet eligible for vaccinations. There are some parents who agree with the Los Angeles Board of Education’s vote, as it is similar to other immunizations students are required to receive such as chickenpox, polio, and measles to name a few. Other parents not only think the vote was rushed, but also believe the choice for their child receiving COVID-19 vaccine or not should be a parental decision.

So, we continue on this journey of uncertainty with COVID-19, the vaccines, and their aftereffects. It is only a matter of time before future vaccine mandates are implemented in school districts and businesses across the country. A special thanks to Mr. Alan Schwartz for his insight on the FDA approval process of the Pfizer-BioNTech produced Comirnaty vaccine.