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Caroline Ellison, who led the digital currency hedge fund connected with Sam Bankman-Fried’s FTX, is continuing her testimony in his criminal trial Wednesday.

Ellison, who is also Bankman-Fried’s ex-girlfriend, is considered the star witness in the prosecution’s case. Bankman-Fried faces seven federal charges, including wire fraud, securities fraud and money laundering in connection with his oversight of the now-defunct FTX and Alameda Research, both of which filed for bankruptcy last year.

He has pleaded not guilty to all of the charges. His defense attorneys began cross-examining Ellison late Wednesday afternoon and will continue Thursday.

In less than a year, Bankman-Fried, 31, has gone from a crypto titan and a rising global player with a net worth estimated at $16 billion to a defendant whose closest associates are testifying against him in a case that could put him in prison for decades.

Ellison is at the center of that. On Tuesday, she testified that Bankman-Fried told her to steal some $10 billion from FTX’s customers and use it to repay firms that had lent money to Alameda Research, the crypto trading firm she was leading.

‘Sam directed me to commit these crimes,’ Ellison said in court Tuesday after she told prosecutors that she, Bankman-Fried and others had committed fraud.

She also said that Bankman-Fried set up the system that let her move the money.

Ellison started at Alameda as a trader in 2018. She testified that after the hedge fund suffered large losses that year, Bankman-Fried made getting more money a top priority. To that end, he told Alameda employees to get loans on any terms they could.

That was risky, because lenders could call those loans in at any time. Ellison said there were enough of them to bankrupt Alameda if the loans all became due and payable immediately.

She said Bankman-Fried also tried to strengthen the firms by creating the digital token FTT. She said Alameda owned 60-70% of the supply of the coin, which cost essentially nothing to make. When its market price rose from an initial 10 cents to $50 over time, Alameda gained billions on paper.

Ellison is testifying under a deal with the government after she pleaded guilty to a series of fraud charges and conspiracy to commit money laundering. FTX co-founder Gary Wang also testified against Bankman-Fried this week after pleading guilty to fraud charges. Both are hoping to get their eventual sentences reduced.

Former FTX technology head Nishad Singh also pleaded guilty to fraud charges related to the implosion of FTX and Alameda.

‘A constant state of dread’

In 2021, Ellison became Alameda’s co-CEO, and later became sole CEO. However, prosecutors say Bankman-Fried was calling the shots. Bankman-Fried’s lawyers have argued that Ellison was fully responsible and that she mismanaged the company, including by failing to make protective hedge trades that could have reduced the risk of big losses.

Ellison testified that Bankman-Fried told her to put the growing value of the FTT tokens on Alameda’s balance sheet so it could borrow money. She said she felt that was misleading, but that he persuaded her to proceed.

Alameda later did the same with other coins that gained a great deal of value because of Bankman-Fried’s involvement with them.

When her testimony continued Wednesday, Ellison told prosecutors about events in June 2022, when several crypto firms and exchanges failed and investors collectively pulled about $1 trillion out of the market.

Some of Alameda’s lenders were asking for their loans to be repaid, as she feared they would. Ellison testified that she knew the only way to repay them was to take money from FTX customers.

She said Bankman-Fried told her to do just that, and that he knew the money was secretly being taken from those customers.

Ellison told the court that when a major lender — financial services firm Genesis — asked to see an updated Alameda balance sheet, she, Bankman-Fried, Wang and Singh brainstormed ways to make the company’s financial position look stronger so that Genesis wouldn’t ask for more money back.

They prepared a variety of different balance sheets to show Genesis, she said, testifying that she ‘was in a constant state of dread’ at this time. Bankman-Fried chose a balance sheet that hid the fact that Alameda was taking some $10 billion from FTX’s users. 

By October, she said, Alameda had taken $14 billion to $15 billion from FTX’s users, and Bankman-Fried was trying to raise money to fill that hole.

Things fell apart in early November, after one of the doctored balance sheets was leaked to CoinDesk. Even though the document made Alameda’s situation look better than it really was, it worried investors, who saw that much of the firm’s balance sheet was made up of the FTT token.

The rival exchange Binance soon announced it would dump its FTT holdings, which caused the price to crash and made Alameda’s situation much worse.

The firm managed to briefly prop it up with more customer assets, but that soon failed.

Ellison told the court that Bankman-Fried warned her and others to be wary about how they communicate with one another and to set their private chats to auto-delete, but she turned off that feature a few days after the news broke.

The government showed the jury messages in which she told Bankman-Fried that she was relieved.

‘I think I just had an increasing dread of this day that was weighing on me for a long time and now that it’s actually happening it just feels great to get it over with one way or another,’ she wrote.

Ellison cried after the messages were shared in court.

There was a brief reprieve when Binance agreed to buy FTX, but the deal fell apart. FTX and Alameda sought bankruptcy protection two days after that.

Criminal charges were filed against Bankman-Fried, Ellison, Wang and Singh a few weeks later.

Bankman-Fried faces a separate trial in March over additional charges, including accusations of bribing foreign officials. Ellison testified that Alameda paid a large bribe to Chinese officials to get them to unfreeze about $1 billion on Chinese cryptocurrency exchanges.

Bankman-Fried has also pleaded not guilty to those charges.

This post appeared first on NBC NEWS

Prices at the pump remain on track to keep falling in the United States despite the Israel-Hamas war, according to energy industry analysts.

After Hamas’ surprise attack over the weekend, global crude oil jumped to more than $87 a barrel by Monday, from below $83 late last week — roughly a 5% increase. Prices have since retreated, clocking in at $83.62 Wednesday morning.

But Israel and its immediate neighbors aren’t major energy producers, so as long as the conflict doesn’t expand geographically, seasonal trends should continue much as they have for the last few weeks, said Tom Kloza, global head of energy analysis at the Oil Price Information Service.

“On balance, we’re looking at gasoline prices dropping in all 50 states,” he said.

A gallon of regular gas cost $3.66 on average in the U.S. as of Wednesday, according to AAA, down from $3.83 a month ago. Prices at gas stations are falling as Americans wrap up their summer travel and as refineries switch to their winter fuel blend, which is cheaper and easier to produce.

In a note Monday, GasBuddy analyst Patrick De Haan described the initial spike in crude oil prices as a temporary “knee-jerk reaction,” adding that he sees a “very very low risk” of U.S. gas prices rising.

However, Kloza warned, “If you wake up and the theater of war has been expanded to Iran, that changes the calculus.” Tehran has long funded the military wing of Hamas, and U.S. officials are currently investigating whether Hamas fighters received any advance training from Iran’s Islamic Revolutionary Guard Corps.

The winter fuel mix is rolling out at a pace that should allow gas prices to continue falling through the next few weeks, Kloza said, estimating that prices at the pump could drop by as much as 2 cents a gallon each day. That would leave a gallon of regular costing an average $3.25 by Halloween.

The conflict has already affected the operations of producers of other types of energy, including natural gas.

Israeli officials this week ordered the shutdown of the Tamar offshore gas platform, a major Chevron-operated facility off the coast of Gaza. But analysts so far don’t foresee broader disruptions in global supplies, and natural gas prices have been dropping as well.

Most U.S. households are set to spend less to heat their homes this winter, the Energy Information Administration said Wednesday in its latest seasonal forecast, in part because this winter is expected to be warmer than last. The EIA projected the biggest price drops in natural gas costs — with consumer bills for the fuel set to shrink by 21% on average.

Still, crude oil prices on international commodities markets have been volatile lately as traders weighed the violence in the Middle East. That’s partly due to potential uncertainty around shipping routes through which oil produced elsewhere in the region gets to markets around the world.

“A wider conflict including Iran may impact the oil trade through the Strait of Hormuz, a channel Iran has previously threatened to shut,” Deutsche Bank analysts wrote on Tuesday.

Five of the top 10 largest oil producers — Kuwait, Saudi Arabia, Iran, Iraq and the United Arab Emirates — use that waterway, which connects the Persian Gulf to the Arabian Sea, to move about a fifth of the world’s crude oil supply, according EIA data.

But even if Iran were to choke off exports through the strait, the U.S. would have the capacity to lean on its own domestic production, analysts said. U.S. crude oil exports reached a record high in the first half of 2023, extending America’s lead as the largest oil producer in the world, a title it claimed in 2018.

“Oil hates turmoil,” De Haan said in his note, “but if the violence does not spill over into other areas, it should not worsen.”

This post appeared first on NBC NEWS

Social Security benefits will increase by 3.2% in 2024, the Social Security Administration announced Thursday morning.

That adds about $50 monthly to the average retirement benefit consumers will receive beginning in January. The annual increases are called cost of living adjustments, or COLAs.

The agency said people on Social Security will start getting the increased payments on Dec. 29.

‘Social Security and SSI benefits will increase in 2024, and this will help millions of people keep up with expenses,’ said Kilolo Kijakazi, the acting commissioner of Social Security. SSI is Supplemental Security Income.

The cost of living adjustment is calculated based on an average of the inflation readings for the months of July, August and September. Specifically, it’s based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, published by the Bureau of Labor Statistics.

The CPI-W rose 2.6% in July, 3.4% in August and 3.6% in September, according to the latest inflation data the bureau released Thursday.

‘Retirees can rest a little easier at night knowing they will soon receive an increase in their Social Security checks to help them keep up with rising prices. We know older Americans are still feeling the sting when they buy groceries and gas, making every dollar important,’ Jo Ann Jenkins, the CEO of AARP, the nonprofit organization formerly known as the American Association of Retired Persons, said in an emailed statement.

However, another advocacy group for older Americans, the Senior Citizens League, has argued that larger increases are required, especially for older retirees. It contends that the costs of the goods and services they need are growing much faster than Social Security benefits.

The group says people who retired before 2000 would need an additional $500 in benefits every month just to get back the purchasing power they had in 2000.

Almost 67 million people have been receiving Social Security benefits in 2023, according to the SSA. Most of them are retirees, as almost 90% of people over age 65 were getting those benefits as of June 30.

Inflation rocketed to 40-year highs last year in the wake of a combination of pandemic stimulus payments, an increase in shopping and spending, and widespread supply chain problems. That prompted the Federal Reserve to raise interest rates at a rapid pace. The benchmark U.S. interest rate is the highest it has been in more than 20 years.

That has slowed the economy somewhat compared to last year, but inflation remains higher than it was throughout the 2010s.

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Walgreens Boots Alliance has chosen veteran health care executive Tim Wentworth as the company’s new chief executive.

Wentworth is the former CEO of the nation’s largest pharmacy benefits management company, Express Scripts, which was acquired by Cigna in 2018. He stayed on and served as chief of Cigna’s health services, before retiring at the of 2021.

“What made me decide to come back was a chance to lead this iconic brand and company at a time when it’s not in a steady state,” Wentworth told CNBC. “It’s a massive platform… they touch almost 10 million people a day.”

Tim Wentworth.Business Wire

Wentworth will start on Oct. 23, almost two months after Roz Brewer stepped down as CEO, at a time when the company is facing a number of challenges in trying to transition to becoming a provider of health services beyond the pharmacy counter.

Under Brewer’s tenure, Walgreens took a major stake in primary care provider VillageMD, acquired specialty pharmacy provider Shields Health, as well as homecare provider CareCentrix. Trying to integrate and scale the businesses has pressured Walgreens’ earnings.

The transition has come at a time when pharmacy revenue has been pressured by falling demand for Covid vaccines and over-the-counter tests. In June, the company’s third-quarter profits missed Wall Street estimates for the first time in three years.

Walgreens’ board has said they were intent on hiring an executive with deep health experience who could rein in all of the new services.

“I came from one of the great efficiency companies at Express Scripts — I mean, we were built to drive out waste from health care and and we looked at everything through that lens. And that has to do by starting with our own cost structure, and there’s no question inside this company that’s every bit as important,” said Wentworth.

Walgreens’ executive chairman Stefano Pessina said Wentworth “is an accomplished and respected leader with profound expertise in the payer and pharmacy space as well as supply chain, IT and Human Resources. We are confident he is the right person to lead WBA’s next phase of growth into a customer-centric health care company.”

The company’s core pharmacy business is also facing challenges. This week, pharmacists in several cities have walked off the job to protest understaffing at pharmacies which the non-union workers say endangers patients. 

Wentworth says during Covid the drugstore chains pivoted quickly to become major providers of vaccines and supported patients with information.

“When you’re in a business that’s having to respond that quickly to something that is that unusual. You don’t get it all right. And I have no doubt that the leadership at Walgreens is taking a look and listening to their folks,” he said. “As a leader, I can tell you, there’s nothing that motivates me more than ensuring every employee feels like they’re supported in that mission.”

Walgreens is set to report fourth-quarter earnings on Thursday.

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Recent strikes by Hollywood talent and United Auto Workers union members are a “drag” on business travel demand, which is otherwise recovering, Delta Air Lines President Glen Hauenstein said Thursday.

Delta has an outsized exposure to the automotive and entertainment industries, with a more than 70% market share at Detroit Metropolitan Wayne County Airport and a nearly 20% share at Los Angeles International Airport, more than any other carrier, according to airport data.

The strikes have had “a not insignificant change in the business travel to and from Los Angeles as well as now the UAW strike, which curtailed a significant amount of the business in Detroit,” Hauenstein said on an earnings call on Thursday. “We are probably the most impacted by those two sectors.”

The United Auto Workers’ targeted strikes, which began after major Detroit automakers and the union failed to reach labor deals before a September contract expiration, are entering their fourth week — and escalating.

Hollywood writers earlier this week ratified a new three-year contract after nearly 150 days of work stoppage that suspended significant film and TV production.

But Hollywood actors, represented by the Screen Actors Guild-American Federation of Television and Radio Artists, are still on strike. And late Wednesday, the Alliance of Motion Picture and Television Producers, which represents production studios like Disney, Universal, Netflix and others, said talks have been been suspended with the two sides far apart on a deal.

Delta’s Hauenstein noted that demand from technology and financial services customers posted double-digit growth in the third quarter, contributing to an overall rebound for business travel.

A company survey of corporate customers found that a majority expect their travel to stay the same or increase in the last three months of this year and into 2024, Hauenstein said.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is a member of the Alliance of Motion Picture and Television Producers.

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Inflation leveled off to 3.7% in September compared to a year ago, extending a gradual slowdown in consumer prices, even as it slowed to 0.4% from 0.6% in August.

The Bureau of Labor Statistics released its latest round of price data Thursday morning. Experts had expected it to show that overall prices for consumers rose 3.6% from a year ago, and by 0.2% compared to August.

Meanwhile, core inflation — a measurement of cost increases that excludes energy and food prices because of their volatility — is up 4.1% from September last year, in line with expectations.

That means prices rose less in September than they did in August, when the cost of gasoline had spiked 10% from July.

The government said the cost of shelter rose 7.2% from a year ago. That was the largest reason for the increase, and it reflects continued growth in home prices, which by some measurements are at all-time highs.

Used car and truck prices continued to decline from a year ago.

Food prices grew 3.7%, matching the overall inflation reading, with food from restaurants and ‘away from home’ up 6%. Energy prices slipped 0.5% and natural gas and oil prices also fell.

The report might be especially significant for the trajectory of the economy.

The Federal Reserve raised interest rates sharply from March 2022 through this summer as it tried to get inflation under control. Inflation had hit 40-year highs in mid-2022, peaking at 9.1% annually, and it has generally slowed since then.

That doesn’t mean prices are lower than they were. Instead, they’re rising at a slower rate. Still, those slower increases have been a relief to some consumers, and wages have been rising faster than inflation recently, which makes it easier for people to afford goods and services.

What about interest rates going forward?

The Fed left rates unchanged in September, saying there had been progress in its fight against inflation. It’s in wait-and-see mode now.

But after 12 consecutive monthly declines, inflation sped up again in July and August. The increases were small, and there were reasons experts weren’t especially concerned about them — for example, gas prices spiked 10% in August and that hasn’t happened again.

Still, Raul Diaz, a regional senior investment officer at Northern Trust, said there’s no guarantee that inflation will continue to trend down.

‘Inflation could reignite given that the labor market has been very resilient and the U.S. is a very consumer-based economy,’ he said.

If the data shows inflation stayed higher than expected in September, especially in core areas, it might push the Fed to start raising interest rates again.

That would slow the economy further by making it more expensive for people and businesses to borrow money, and it would push mortgage rates even higher.

The Fed will announce its next decision on rates Nov. 1. Its main rate is now in the range of 5.25% to 5.5%, the highest since 2000.

While inflation remains higher than the Fed’s goal of 2% a year, experts say there are signs things are going in the right direction even as the economy holds up fairly well.

That’s one reason the Fed left interest rates alone in September. But another higher-than-expected inflation report would challenge that viewpoint.

Like interest rates, mortgage rates are at 23-year highs, which has made it much harder for people to afford homes.

Diaz told NBC News that’s just one challenge facing consumers and the economy in general. He said higher interest rates, the end of the pause on federal student loan payments, the recent increase in gas prices and dwindling personal savings are all likely to affect spending by consumers in the months ahead. It’s why he and Northern Trust think economic growth might be pretty weak over the next year.

‘We’re not predicting a recession over the next 12 months. We just think that growth is going to be positive but pretty low,’ he said.

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The U.S. government will make its next monthly inflation report Thursday, and it’s generally expected that it will show inflation is cooling off.

The Bureau of Labor Statistics will release its latest round of price data in the morning. Experts think it will show that overall prices for consumers rose by 0.2% compared to August and 3.6% compared to a year ago.

Meanwhile, core inflation, a measurement of cost increases that removes energy and food prices because of their volatility, is expected to be up 4.1% from September last year.

Both of those figures would show that prices rose less in September than they did in August. Prices for consumers rose in August because the cost of gasoline had spiked 10% from July.

The report Thursday morning might be especially significant for the trajectory of the economy.

The Federal Reserve raised interest rates sharply from March 2022 through this summer as it tried to get inflation under control. Inflation had hit 40-year highs in mid-2022, peaking at 9.1% annually, and it has generally slowed since then.

That doesn’t mean prices are lower than they were. Instead, they’re rising at a slower rate. Still, those slower increases have been a relief to some consumers, and wages have been rising faster than inflation recently, which makes it easier for people to afford goods and services.

What about interest rates going forward?

The Fed left rates unchanged in September, saying there had been progress in its fight against inflation. It’s in wait-and-see mode now.

But after 12 consecutive monthly declines, inflation sped up again in July and August. The increases were small, and there were reasons experts weren’t especially concerned about them — for example, gas prices spiked 10% in August, and that hasn’t happened again.

Still, Raul Diaz, a regional senior investment officer at Northern Trust, said there’s no guarantee inflation will continue to trend down.

‘Inflation could reignite given that the labor market has been very resilient and the U.S. is a very consumer-based economy,’ Diaz said.

If the data shows inflation stayed higher than expected in September, especially in core areas, it might push the Fed to start raising interest rates again.

That would slow the economy further by making it more expensive for people and businesses to borrow money, and it would push mortgage rates even higher.

The Fed will announce its next decision on rates on Nov. 1. Its main rate is now in the range of 5.25% to 5.5%, the highest since 2000.

While inflation remains higher than the Fed’s goal of 2% a year, experts say there are signs things are going in the right direction even as the economy holds up fairly well.

That’s one reason the Fed left interest rates alone in September. But another higher-than-expected inflation report would challenge that viewpoint.

Like interest rates, mortgage rates are at 23-year highs, which has made it much harder for people to afford homes.

Diaz told NBC News that’s just one challenge facing consumers and the economy in general. He said higher interest rates, the end of the pause on federal student loan payments, the recent increase in gas prices and dwindling personal savings are all likely to affect spending by consumers in the months ahead. It’s why he and Northern Trust think economic growth might be pretty weak over the next year.

‘We’re not predicting a recession over the next 12 months. We just think that growth is going to be positive but pretty low,’ he said.

This post appeared first on NBC NEWS

DETROIT — The United Auto Workers union significantly escalated its strikes against Detroit Three automakers Wednesday by going on strike against a major Ford truck plant in Louisville, Kentucky.

In a surprise move, the 8,700 members left their jobs at about 6:30 p.m. at the plant, which makes profitable heavy-duty F-Series pickups and large SUVs.

UAW President Shawn Fain said in a statement that the union has waited long enough “but Ford hasn’t gotten the message” to bargain for a fair contract.

Ford called the strike expansion “grossly irresponsible” but said it wasn’t surprising given the UAW leadership’s statements that it wanted to keep Detroit automakers hobbled with “industrial chaos.”

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The Supreme Court on Tuesday declined to hear arguments in a case challenging the Food and Drug Administration’s authority to reject approvals of flavored electronic cigarettes. 

The case is one of several challenges to the FDA’s regulation of the vaping industry, which has hooked members of a new generation on nicotine, and ballooned into an $8.2 billion market in less than a decade. 

The 4th Circuit U.S. Court of Appeals in December ruled that the FDA has the power to deny applications for flavored e-cigarette products because of its mandate to protect public health by discouraging younger people from smoking.

The lower court ruling rebuffed an appeal by Avail Vapor, a vape retailer, which argues that the FDA unfairly denied its product applications based on requirements the agency “secretly” changed without notifying companies.

Avail’s attorney, Eric Heyer, told CNBC on Tuesday that the company is “disappointed that the Supreme Court declined to review the flawed process by which FDA issued its marketing denial orders to Avail without adequate prior notice of the specific longitudinal comparative efficacy study requirements the agency ultimately imposed.”

The FDA issues marketing denial orders to reject product applications.

A spokesperson for the FDA did not immediately respond to a request for comment on the Supreme Court’s decision.

In 2016, the FDA determined that e-cigarettes were subject to its regulation, like traditional tobacco products. E-cigarettes are handheld devices used to inhale a vapor, which usually contains nicotine, flavoring and other chemicals. 

The agency gave companies until September 2020 to submit applications for approval of each of their vape products, even if they were already on the market. 

The FDA in March said nearly seven million applications were submitted by that deadline, but the agency has rejected more than 1 million of them.

Why did the FDA reject the e-cigarette applications?

The case is related to the FDA’s 2021 decision to reject all of Avail Vapor’s applications for its fruit- and dessert-flavored e-cigarettes.

The FDA said Avail did not present long-term studies demonstrating that its sweet-flavored vapes were more effective at helping adult smokers quit than tobacco-flavored e-cigarettes.

The agency said those studies are necessary to demonstrate that the benefits of Avail’s products to adults outweigh their risks to youth. Children, teens and young adults are more attracted to e-cigarettes that mimic the taste of sweet treats, according to the FDA.

Avail’s applications included four studies that surveyed patients on the safety and usability of a few of the company’s products and e-cigarettes overall, but that research did not make any comparisons to tobacco-flavored vapes. The company also outlined its marketing measures, including age verification for online sales, designed to prevent underage use of its flavored e-cigarettes. 

Avail in its appeal to the 4th Circuit had argued that the FDA had not said it would need to see long-term studies comparing the company’s fruit and dessert-flavored e-cigarettes with tobacco-flavored vapes. 

“The FDA says Avail and other retailers should have known what they were going to be looking for. Well, virtually nobody in the industry knew,” Heyer told CNBC.

“The lack of those comparative efficacy studies was one of the main reasons why the FDA denied these applications,” he added. “The FDA had five years to communicate this to applicants and they never did. Not a single word.”

Avail also argued that the FDA was obligated to consider the marketing plan included in its applications.

What are the implications for the vaping industry?

But 4th Circuit Judge J. Harvie Wilkinson wrote in December that Avail “encourages us to neglect the forest for the trees” by focusing on procedural objections rather than the FDA’s mandate to “ensure that another generation of Americans does not become addicted to nicotine and tobacco products.”

Wilkinson said the FDA did not reject the applications due to their lack of specific long-term studies. He said the agency followed its mandate by requiring strong, product-specific evidence to evaluate the benefit of new e-cigarette products to adults, which Avail did not provide.

Avail exited the retail business after selling all of its 100 brick-and-mortar stores in October 2021, a month after the FDA rejected its applications.

Avail is not the only company to challenge application rejections from the FDA.

Last year, Juul Labs lost in its appeal of the FDA’s ban on its vaping products. The e-cigarette giant, which slashed nearly a third of its workforce in a bid to avoid bankruptcy, said the FDA conducted an incorrect and incomplete assessment of its data.

Upon review of the appeal and a temporary reprieve that allowed some of Juul’s products to come back to market, the agency determined Juul’s products still pose a risk to public health.

However, in some cases, the FDA has rescinded, or partially rescinded, rejections following the appeal process. To date, the FDA has authorized 23 tobacco-flavored e-cigarette products and devices.

Efforts to restrict e-cigarette flavors favored by teens may have fallen flat as new brands hit the market. E-cigarette unit sales rose nearly 47% between January 2020 and December 2022. Many popular brands of disposable e-cigarettes on the market are not FDA-approved and are illegal.

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Thistory was reported in collaboration with the International Consortium of Investigative Journalists, Arab Reporters for Investigative Journalism and The Guardian.

Momtaj Mansur flew to Saudi Arabia in September 2021, excited to work at one of the world’s biggest companies, Amazon. He was promised a well-paying job and planned to use the money to help his family back in Nepal.

Less than a year later, he said he was living in a crowded room with seven other men, jammed with bunk beds infested with bed bugs. The water was often salty and undrinkable. His hopes were shattered, and he was deep in debt.

Momtaj Mansur is one of more than 50 current and former workers who said they were misled and exploited by firms that supply labor to Amazon in Saudi Arabia and by their network of recruiting agencies in Nepal.

All the workers said they had to pay fees to recruiters to get hired, ranging from the equivalent of $830 to $2,040, even though fees that large are illegal, according to the Nepali government. To pay those fees, many workers needed to take out loans at high interest rates. They also all said they were duped by recruiters into working for labor supply companies rather than directly for Amazon.

The workers were interviewed as part of an international reporting collaboration with NBC News, the International Consortium of Investigative Journalism, Arab Reporters for Investigative Journalism and The Guardian.

Click here to read the ICIJ’s version of this story.

About a dozen workers like Mansur agreed to speak on the record. Others, fearful that speaking out would hurt their chances for other employment, were interviewed with the agreement that their names would not be published. To substantiate their accounts, the journalists reviewed photographs, emails, receipts, messages and other documentation from their time working at Amazon.

After being presented with the findings, Amazon told NBC News it had conducted its own investigation and found labor violations. The company promised measures to fix the problems, including compensating workers who paid recruiting fees to the companies supplying labor.

“We are deeply concerned that some of our contract workers in the Kingdom of Saudi Arabia … were not treated with the standards we set forth, and the dignity and respect they deserve,” John Felton, Amazon’s senior vice president of worldwide operations, said in a written statement.

“We appreciate their willingness to come forward and report their experience,” Felton wrote. “Our supply chain audit process and our own investigation surfaced violations of our standards.”

In particular, the company cited recruiting fees and squalid housing among the violations it found, but declined to offer more details or discuss other labor violations.

A kitchen where Momtaj Mansur and other workers shared housing in Saudi Arabia.Courtesy of Momtaj Mansur

A key player for Amazon is a labor supply company that gets workers from other countries — the Saudi-based Abdullah Fahad Al-Mutairi Co. Amazon is among several large corporations that has contracted Al-Mutairi, which has billed itself as “a leading provider of human resource solutions in the Kingdom of Saudi Arabia.” Forty-nine of the 54 workers interviewed were hired through Al-Mutairi.

Amazon said it considered “suspending” the company “when these allegations came to light.” Instead, it decided to work with Al-Mutairi to make “significant changes to their operations.”

Al-Mutairi did not respond to repeated requests for comment.

To get workers, Al-Mutairi has worked with recruiting companies in Nepal and elsewhere to attract laborers. 

Momtaj Mansur in Nepal was one of them.

When he came to Saudi Arabia, he worked at Amazon’s vast two-story warehouse called RUH 6, in the capital city, Riyadh. He spent his nights as a “picker,” hustling up and down aisles grabbing iPhones, packs of Red Bull and other items ordered by Amazon’s customers across the Arabian Peninsula. He recalled that Amazon managers berated him for being slow, even as he exceeded company targets to pick 70 to 80 items an hour from shelves and boxes.

Then things got worse. In May 2022, Mansur said, he was among a group of workers who were let go without warning or explanation — without work, wages or enough food.

Mansur said he pleaded with Al-Mutairi: If there was no more work at Amazon, let them return to Nepal.

“I told them: Either kill us or send us home, but don’t give us so much pain.” 

He said the labor supply firm told him that the only way he could return home was to pay the company an exit fee of more than $1,300 as a penalty for leaving before the end of his two-year contract. It was an enormous sum for his family, which subsisted on about $300 a month, along with rice, wheat and peas grown on a fifth of an acre shared with relatives. 

The labor firm was “heartless,” Mansur said. “How could I pay that amount? By selling our house or my kidney?”

In the end, his family sunk itself even deeper in debt by taking out a loan — at 36% interest — to pay the exit fee.

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