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Ramesh "Sunny" Balwani, the former president and chief operating officer of failed blood-testing company Theranos, on Wednesday was sentenced to 12 years and nine months in prison, plus three years of probation. 

Driving the news: Balwani's sentencing comes less than three weeks after his former boss and girlfriend, Elizabeth Holmes, received a prison sentence of 11 years and three months that's scheduled to begin in April.

Flashback: A California jury in July found Balwani guilty of 12 counts of conspiracy and fraud against certain Theranos investors and patients.

Judge Ed Davila sentenced both Balwani and Holmes, who prosecutors originally wanted to try together.

Behind the scenes: Prosecutors had sought a 15-year prison sentence for Balwani plus more than $800 million in restitution, while defense attorneys requested probation.

Balwani opted against speaking before sentencing. 

Judge Davila will determine restitution specifics at a later date, as he also is doing with Holmes.

The bottom line: Balwani's defense strategy had been to blame Holmes for fraud at Theranos, much as Holmes had tried to blame Balwani. Neither worked.

Elizabeth Holmes sentenced to 11 years in prison for Theranos fraud

Theranos trial reveals investors' questionable due diligence

Editor's note: Cox Enterprises, which invested in Theranos, is the parent company of Axios. This story has been corrected to reflect that Balwani has been sentenced to 13 years in prison, not in jail.

Ex-Theranos president Sunny Balwani sentenced to nearly 13 years in prison

Balwani in July was convicted on 12 counts of conspiracy and fraud.

Photo illustration of Sunny Balwani with abstract shapes, textures and gavels.

 Photo illustration: Shoshana Gordon/Axios Photo: Justin Sullivan/Getty Images

Theranos

Economy & Business

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

Rep. Paul Gosar (R-Ariz.) on Wednesday posted, then deleted, a tweet stating he supported former President Trump's call to terminate parts of the U.S. Constitution over baseless claims of election fraud.

Why it matters: The tweet, which included a screenshot of Trump's original social media post calling for termination of parts of the Constitution, was posted on Gosar's official House Twitter account, not his personal account.

Gosar won re-election to the House in November. As a representative, he was required to swear an oath to "support and defend the Constitution of the United States against all enemies, foreign and domestic."

Trump has received widespread condemnation for the post, including from several influential GOP lawmakers and figures.

What they're saying: "I support and agree with the former president," the tweet from Gosar's account read before it was later deleted.

"Unprecedented fraud requires unprecedented cure," the tweet continued.

Gosar's account had also liked supportive quote tweets of and replies to the now-deleted tweet.

A spokesperson for Gosar's office said Wednesday in a statement: "No one in Congress has fought for Constitutional values more than Congressman Gosar. 

"He is known as a strict constitutionalist for good reason. He has a decade of votes proving that."

"President Trump has reissued his statement to clarify what he meant," the statement continued, referring to Trump on Monday attempting to backtrack on his comments.

"Those who claim either Trump or Congressman Gosar don’t believe in the Constitution are acting in bad faith or are low IQ people unable to comprehend our language and our actions," the spokesperson added.

Gosar's office did not explain why the tweet was deleted or why it included a screenshot of Trump's original post, which in part stated: "A Massive Fraud of this type and magnitude allows for the termination of all rules, regulations, and articles, even those found in the Constitution."

The big picture: The House censured and stripped Gosar of his committee assignments last year for posting a video on Twitter depicting him attacking President Biden and killing Rep. Alexandria Ocasio-Cortez (D-N.Y.).

Earlier this year, Gosar and Rep. Marjorie Taylor Greene (R-Ga.) both appeared at a gathering of white nationalists hosted by Holocaust denier, antisemitic, homophobic and racist activist Nick Fuentes, who has also been labeled a "white supremacist" by the Department of Justice.

Gosar later claimed his appearance was due to a staff error, though he did not apologize for the video.

State of play: House Minority Leader Kevin McCarthy (R-Calif.), who is vying to become House speaker in the incoming Congress, had previously said Gosar would get his committee assignments back if Republicans win control of the House in the midterms, which they narrowly did.

McCarthy also suggested that Gosar and Greene, who also lost her committee assignments, may "have better committee assignments" in a Republican-controlled House.

Go deeper ... "Don't want to be held hostage": GOP braces for chaotic speaker fight

Editor's note: This story has been updated with a statement from Gosar's office, additional details and context.

Rep. Gosar deletes tweet backing Trump's call to "terminate" parts of Constitution

"I support and agree with the former president," the tweet from Gosar's official House account said.

Rep. Paul Gosar, R-Ariz., leaving the Capitol in April 2022.

Rep. Paul Gosar, R-Ariz., leaving the Capitol in April 2022. Photo: Bill Clark/CQ-Roll Call, Inc via Getty Images

Congress

Donald Trump

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Salt Lake City

The Sundance Film Festival unveiled its 2023 lineup Wednesday which consists of 101 feature-length films. 

Why it matters: The largest independent film festival in the U.S. is returning to in-person showings from Jan. 19-29 after two years of virtual showings during the COVID-19 pandemic. 

What's happening: The annual event will be held in Park City, Salt Lake City and at Sundance Resort. A large selection of films will be available online during the second half of the festival. 

State of play: Notable films in the U.S. Dramatic Competition section include the drama "Fair Play" starring actors Phoebe Dynevor and Alden Ehrenreich and comedy "Theater Camp" co-produced by Will Ferrell. 

Of note: In 2021, a top title for this section was the drama "CODA," which sold to Apple TV+ for $25 million, per IndieWire, and won Best Picture at the Oscars this year. 

The Premieres section includes the biopic of a gay amateur wrestler "Cassandro" starring Gael García Bernal; "Still: A Michael J. Fox Movie," a documentary about the actor's life; and the thriller "Eileen" starring Thomasin McKenzie and Anne Hathaway.  

A still from "Cassandro" by Roger Ross Williams, an official selection of the Premieres program at the 2023 Sundance Film Festival. Courtesy of Sundance Institute.

Zoom in: This year, Sundance Institute is expanding its footprint in Salt Lake City by showing films at Megaplex Theatres at The Gateway. 

By the numbers: The film selections this year were chosen out of nearly 16,000 submissions, according to organizers. 

This year's program represents 23 countries. 

28% of feature-film directors are first-time filmmakers.

A still from Eileen by William Oldroyd, an official selection of the Premieres program at the 2023 Sundance Film Festival.

A still from "Eileen" by William Oldroyd, an official selection of the Premieres program at the 2023 Sundance Film Festival. Courtesy of Sundance Institute.

What they're saying: "In so many ways this year's slate reflects the voices of communities around the world who are speaking out with urgency and finally being heard," the festival's director of programming, Kim Yutani, said in a statement Wednesday. 

"Maintaining an essential place for artists to express themselves, take risks, and for visionary stories to endure and entertain is distinctly Sundance," Sundance Institute founder and president Robert Redford also said in a statement. 

Tickets: In-person ticket packages are on sale through Dec. 16. 

Online ticket packages go on sale on Dec. 13, and single tickets will be available starting Jan. 12. 

Sundance Film Festival releases 2023 line-up

The largest independent film festival in the U.S. is returning to in-person showings Jan. 19-29.

Sundance Film Festival marquee sign in Park City, Utah

Movies

Things to Do

The family of Patrick Lyoya, a Black man fatally shot by a white police officer in April, filed a civil lawsuit on Wednesday against the city of Grand Rapids, Michigan, and the former police officer involved in Lyoya's death.

Driving the news: An independent autopsy revealed that Lyoya was fatally shot in the back of the head by ex-police officer Christopher Schurr after a traffic stop.

Schurr has been charged with second-degree murder and is awaiting trial.

The big picture: The lawsuit contains both state and federal counts, attorney Ven Johnson said during a press conference Wednesday.

The first count alleges that Schurr used "unnecessary illegal excessive force," Johnson said.

The second count is against the city of Grand Rapids. "We will prove that the policies and practices of the city of Grand Rapids as it relates to the use of excessive force actually lead to Schurr utilizing excessive force," Johnson said.

Between June 2015 and May 2020, 79 citizen complaints for excessive use of force were lodged against Grand Rapids police officers, Johnson said, adding that all but two officers were "exonerated or otherwise cleared."

The Michigan Department of Civil Rights is investigating complaints of racial profiling with disparate treatment from Grand Rapids police officers, Johnson pointed out.

A third count alleges gross negligence and wanton misconduct on Schurr's part. "Schurr's actions demonstrated a reckless lack of disregard of his legal duties as well as a substantial lack of concern for whether death of injury would result from his actions," the lawsuit stated.

What they're saying: "When you take driving while Black plus excessive force, you end up with Patrick Lyoya being unjustly executed by this Grand Rapids police officer," attorney Ben Crump said at the press conference.

"The pain is so deep," Patrick's father, Peter Lyoya, said during the press conference when speaking of his son's death.

"I just want to say thank you for all the work that they're doing, because they're fighting hard for me to get justice for Patrick," he added, addressing the attorneys on the case.

What's next: A date has not yet been set for Schurr's trial, but a status hearing is scheduled on Dec. 15, per NBC News.

Editor's note: This story is developing and will be updated.

Family of Patrick Lyoya sue city of Grand Rapids and former cop

Lyoya, a Black man, was fatally shot by a white police officer in April.

Activists gathered and marched during a protest against the killing of Patrick Lyoya, who was killed by a Grand Rapids police officer 

A protest against the killing of Patrick Lyoya in Grand Rapids, Michigan, on April 16. Photo: Katie McTiernan/Anadolu Agency via Getty Images

Lawsuits

Americans' real incomes are stagnating or declining thanks to high inflation, yet consumers are still spending at a rapid pace — two things that, taken together, are a bit of an economic puzzle.

What’s going on: One explanation dates back to pandemic-era fiscal policy, the effects of which are still rippling through the economy.

Why it matters: The lagged COVID-era effects of stimulus checks, topped-up unemployment benefits, and unspent income has provided a cushion for the consumer and buoyed demand this year — allowing Americans to keep spending even as inflation chips away at their incomes.

Driving the news: The personal saving rate — the share of disposable income left over after spending — dropped to a rock-bottom 2.3% in October, as consumer spending accelerated at a healthy clip.

In data that goes back more than 60 years, there's been just one instance of a lower saving rate (July 2005).

Between the lines: As Americans spend down their accumulated savings, their voracious appetite for goods and services will wane.

The worry is that savings will dry up just as the full effect of the Fed's interest rate increases hit economic activity, creating a double-whammy that hits growth in 2023.

Roughly $1.5 trillion in accumulated savings will run out in the middle of next year, JPMorgan Chase CEO Jamie Dimon told CNBC yesterday.

“When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about," Dimon said.

Flashback: It marks a stunning reversal from the depths of the pandemic, when the saving rate skyrocketed to a record high.

In the decade leading up to 2020, the personal saving rate averaged roughly 7%. But it averaged twice that throughout the first two years of the pandemic, a period that included three rounds of fiscal aid and — thanks to the global shutdown — limited places to spend.

Context: That resulted in a huge pile of excess savings for consumers. Recent Fed research estimated that households accumulated roughly $2.3 trillion in savings through last summer. That stockpile started declining at the end of last year; as of the second quarter, it stood at $1.7 trillion.

The biggest contributor to excess savings for the richest households was the lockdown-driven reduction in spending, the Fed found. For the bottom half of the income distribution, the fiscal transfers were the primary contributor.

The poorest Americans are much closer to exhausting the built-up excess savings than the richest ones.

What they're saying: Economists have a slew of guesses about when those savings will be exhausted — another important variable for how the economy develops.

Analysts at Bank of America found one excess savings estimate — around $930 billion — would last another eight months based on recent trends. But their alternate estimate suggests excess savings could last for up to two more years.

Americans' pandemic-era cash pile is shrinking

The worry is that savings will dry up just as the full effect of the Fed's interest rate increases hit economic activity

Illustration of a hand squeezing a piggy bank. 

Economy

Jobs

Stock market

Tel Aviv

Axios from Tel Aviv

CIA director Bill Burns gave his Turkish counterpart a strongly worded message opposing the recent Turkish artillery strikes and airstrikes against the Kurds in northern Syria, warning that they put U.S. forces in danger, according to two U.S. sources with direct knowledge of the issue.

The big picture: Several of the airstrikes, which U.S. officials said endangered American forces in northern Syria, were conducted by the Turkish intelligence service using drones, according to the U.S. sources. 

Driving the news: The Turkish operation was launched after the terror attack in Istanbul on Nov. 13. The Turkish government claims Kurdish militias based in northern Syria were behind the attack. 

No group has claimed responsibility, and the mostly Kurdish Syrian Democratic Forces, which is backed by the U.S., and Kurdistan Workers Party denied involvement.

The U.S. is concerned the Turkish operation will escalate into a ground invasion and could endanger U.S. troops and their Kurdish allies who have been working together to fight ISIS in Syria.

The U.S., which has 900 soldiers in northern Syria, with most of them stationed at bases that belong to the SDF, has been pressing Turkey at a high level to stop the operation and avoid an invasion.

Secretary of Defense Lloyd Austin spoke to his Turkish counterpart last week and the chairman of the joint chiefs Gen. Mark Milley spoke to his counterpart a few days before.

SDF commander Mazloum Kobane Abdi told Axios' David Lawler the U.S. has a "moral duty" to do more to prevent Turkish President Recep Tayyip Erdoğan from ordering a ground offensive into Kurdish-controlled northeastern Syria.

Behind the scenes: The main reason for the increase in U.S. pressure on Turkey to stop its attacks in northern Syria is that one of the airstrikes conducted by Turkey last week hit a target that was less than a quarter of a mile from U.S. troops in the area, a U.S. source said.

That prompted a call between Burns and his Turkish counterpart Hakan Fidan. 

The two U.S. sources briefed on the call said Burns told Fidan the strike put U.S. troops in danger and urged him against a ground invasion.

What they're saying: The White House and the CIA declined to comment.

State Department spokesperson Ned Price said in a briefing with reporters on Tuesday that the U.S. made clear to Turkey publicly and privately that it strongly opposes military action, including a potential land incursion in northern Syria.

“We remain concerned by escalating action in northern Syria, including recent airstrikes, some of which directly threaten the safety of U.S. personnel who are working to defeat ISIS," Price said.

Scoop: CIA warns Turkey that strikes in Syria endanger U.S. troops

CIA director Bill Burns gave his Turkish counterpart a strongly worded message opposing the recent Turkish artillery strikes.

Smoke plumes rise in a field following reported Turkish drone strikes near the town of al-Qahtaniyah in Syria's northeastern Hasakah province, close to the border with Turkey, on Nov. 23.

Smoke plumes rise after reported Turkish drone strikes near al-Qahtaniyah in Syria's northeastern Hasakah province, close to the border with Turkey, on Nov. 23. Photo: Gihad Darwish/AFP via Getty Images

Turkey

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

A North Carolina power company said Wednesday it repaired the equipment that was damaged in an alleged attack that left a majority of Moore County without electricity over the last several days.

Why it matters: Around 45,000 homes and businesses in the county lost power on Saturday night as a result of what Moore County Sheriff Ronnie Fields described as a "targeted" attack involving gunfire on two electrical substations.

Local and state police and the FBI are investigating the attack.

Driving the news: The power company, Duke Energy, said in a notice on its outage site Wednesday that all damaged equipment had been repaired but power could only be restored after testing is completed.

"All substation equipment damaged from recent vandalism has either been fully repaired or replaced," the notice stated. "Once we have completed all necessary testing, the gradual restoration of service to those Moore County communities still without power will begin."

"To avoid overwhelming the electrical system we will bring power back on gradually, with the goal of having the majority of customers restored before midnight tonight," it added.

What they're saying: Restoring power "is a methodical process that is done in waves of several thousand customers at a time to ensure that we are returning service reliably and not creating additional operational challenges," said Jeff Brooks, a Duke Energy spokesperson.

The company said Tuesday it had restored service to about 10,000 customers in the county, but approximately 35,000 were still without power.

Go deeper: Moore County remains in the dark after "targeted" attack

Raleigh

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N.C. power company: Substation repairs complete after alleged attack

A majority of Moore County has been without power since the incident last weekend.

Workers at a substation in Carthage, North Carolina, on Dec. 5.

Workers at a substation in Carthage, North Carolina, on Dec. 5. Photo: Peter Zay/Anadolu Agency via Getty Images

North Carolina

Sam Bankman-Fried was a prolific investor in the two years prior to FTX's collapse, pumping billions of dollars into startups and venture capital funds. 

Why it matters: Many of those recipients are wondering what happens next, and if the money could be clawed back.

The big picture: Bankman-Fried's investment portfolio is complex, and likely not yet entirely known. 

But it appears to include over 100 deals made by Alameda Research Ventures and more than 80 made by FTX Ventures (which was a personal investment vehicle, despite the corporate VC-sounding name).

Zoom out: Clawback concerns are understandable, given the growing likelihood of fraud charges, but unlikely to be realized.

After Bernie Madoff went down, many of his clients had investment returns clawed back, even though they themselves had done nothing wrong. In short, they had received what lawyers call "fraudulent conveyances," or proceeds transferred for less than fair market value. 

Clawbacks also can occur if it's determined that there were so-called "preferential transfers" within 90 days of a bankruptcy filing. That would relate to payments or asset transfers made to creditors.

Neither seems applicable in the case of SBF and FTX, according to several lawyers who spoke with me on background. 

Not fraudulent conveyances, because the investments themselves were made at fair market value (even if that value has since declined). Moreover, there are resultant assets, such as equity, digital tokens or limited partnership positions. 

Not preferential transfers, since there isn't any debt attached to startup stock investments (or at least there isn't usually). 

Better safe than sorry: This doesn't necessarily mean that those with SBF monies are out of the woods, and some are either formally or informally segregating his investments in case an enterprising lawyer does come calling.

The bottom line: Expectations are that the investments either will be sold off by liquidators, or that some issuers will be offered the opportunity to buy back their stakes with proceeds going to creditors. But it could take months or years for that to work itself out. 

The fate of Sam Bankman-Fried's investments

Sam Bankman-Fried invested billions into startups. Those companies are wondering what happens next.

Illustration of a one hundred dollar bill being yanked out of the spotlight by a stage hook. 

The White House held a high-level meeting last week to discuss its approach toward the new Israeli government and the possibility of not engaging with some of its ultranationalist ministers, two U.S. officials told Axios. 

Why it matters: It was the first such meeting since the Israeli elections took place on Nov. 1, and it was highly sensitive because Israel is one of the U.S.' closest allies.

Driving the news: The new Israeli government is set to include several far-right ministers, including Itamar Ben-Gvir and Bezalel Smotrich — two politicians known for their Jewish supremacist rhetoric. 

A U.S. Congressional Research Service report updated not long after the Israeli elections said the rise of the ultranationalist Religious Zionism faction as a likely Netanyahu coalition partner “has triggered debate about the implications for Israel’s democracy, its ability to manage tensions with Arabs and Palestinians, and its relations with the United States and other countries."

Ben-Gvir and Smotrich “openly support policies to favor Israel’s Jewish citizens over its Arab citizens and annex the West Bank," the report added. 

Behind the scenes: The forum of U.S. officials that convened last week, known as the White House National Security Council "deputies committee," includes senior officials from the relevant government agencies, the U.S. officials said.

Among the issues discussed were guidelines for engagement with the new government, especially its far-right ministers, according to the two U.S. officials. 

While no decisions have been made, U.S. ambassador to Israel Tom Nides hinted this week that the Biden administration may not engage directly with Ben-Gvir and Smotrich.

In an interview with the Israeli army radio on Monday, Nides was asked several times whether he or other Biden administration officials would work with the two far-right politicians. He answered by saying: "We are going to work with Prime Minister Netanyahu."

What they're saying: A White House spokesperson said they don't comment on internal discussions and pointed Axios to Secretary of State Tony Blinken's speech at the J Street conference on Sunday. 

In that speech to the U.S. liberal advocacy group, Blinken said the Biden administration will deal with the new Israeli government according to its policy and not according to individual personalities.

Another issue that was discussed at the White House meeting was which core interests and demands regarding the Israeli-Palestinian conflict, human rights and rule of law the U.S. needs to focus on in its engagement with the new Israeli government, U.S. officials said.

In his speech, Blinken articulated some of those issues when he focused on minority and LGBTQ rights in Israel and mentioned U.S. concern about settler violence against Palestinians. He also stressed the need for equal justice under the law.

Blinken also said the U.S. opposes steps that undermine the prospects of a two-state solution, like settlement expansion, moves toward annexation of the West Bank, disruption to the historic status quo at holy sites, and demolitions of Palestinian homes.

Between the lines: According to the U.S. officials, Nides has been urging the White House and the State Department to take a more nuanced and careful approach toward the new government and not to rush with public criticism or action against the government.

The other side: The U.S. officials said Israeli ambassador to Washington Mike Herzog lobbied White House and State Department officials over the last two weeks not to rush into setting a policy and not to take a hard line toward the new Israeli government.

Herzog declined to comment, but in a meeting with students in Washington last week, he said the new government "should not be defined by the more extreme edges of the body politic in Israel."

What’s next: U.S. officials said no decisions were made in the White House meeting and the issue is expected to be discussed in the coming weeks, including with President Biden.

Go deeper: The rise of Israel's extreme right

Scoop: White House holds sensitive meeting on approach to new Israeli government

The government is set to include Itamar Ben-Gvir and Bezalel Smotrich — politicians known for their Jewish supremacist rhetoric.

Itmar Ben Gvir and Bezalel Smotrich talk in the Knesset on Nov. 15. Photo: Kobi Wolf/Bloomberg via Getty Images

Itamar Ben-Gvir (left) and Bezalel Smotrich talk in the Knesset on Nov. 15. Photo: Kobi Wolf/Bloomberg via Getty Images

Israel

German authorities on Wednesday arrested 25 members of a far-right group that prosecutors said was plotting to violently overthrow the government.

Driving the news: Authorities believe that 22 of the individuals arrested are suspected members of a "terrorist organization," while the remaining three are suspected supporters, according to a press release from Germany's federal public prosecutor.

One of the suspected supporters arrested was a Russian national.

The arrests were made after a series of raids across 11 of Germany's 16 states, as well as in Austria and Italy.

Germany arrests 25 people over far-right coup plot

The arrests were made after raids across 11 of Germany's 16 states, as well as in Austria and Italy.

Wednesday's top stories

Ex-Theranos president Sunny Balwani sentenced to nearly 13 years in prison

Rep. Gosar deletes tweet backing Trump's call to "terminate" parts of Constitution

Sundance Film Festival releases 2023 line-up

Family of Patrick Lyoya sue city of Grand Rapids and former cop

Americans' pandemic-era cash pile is shrinking

Scoop: CIA warns Turkey that strikes in Syria endanger U.S. troops

N.C. power company: Substation repairs complete after alleged attack

The fate of Sam Bankman-Fried's investments

Scoop: White House holds sensitive meeting on approach to new Israeli government

Germany arrests 25 people over far-right coup plot

The U.S. chip boom is just beginning

China eases COVID precautions after protests

Warnock win cements Democrats' 2024 blueprint

U.S. Supreme Court will hear arguments on a major NC elections case

The "flying taxis" of the future are lifting off

COVID could be DeSantis' secret weapon in 2024

Stock market bulls just might be back

Raphael Warnock defeats Herschel Walker in Georgia Senate runoff

Trump's horrific month

Exclusive: GOP launches probe into handling of Afghanistan withdrawal

New campaign tool: Monetizing friends