Theranos Board of Directors On Mar 19, 2019, Lydia Ramsey Pflanzer reported in the Insider that "Holmes' board going into the scandal included an unusual roster of names for a healthcare startup, with leaders who had more experience in politics and government than healthcare. document.getElementById( "ak_js_2" ).setAttribute( "value", ( new Date() ).getTime() ); Get Adams latest thoughts on topical boardroom issues. [vi] Effective board actions for compliance oversight may include the following. Additional non-Theranos tests confirmed the initial results were inaccurate, and she went on to have a healthy baby girl. Eventually, there were more than 40 Theranos testing centers in Walgreens stores. The company had notable figures from the worlds of both business and government as members of its board. Ensure board composition includes necessary expertise, or the board has access to necessary expertise. Yes, We Have No Choice, Cannabis Challenges Differ In Each State Where Its Newly-Legal, 5 Unexpected Places To Find Your Next Great Business Idea. [vi] See Caremark Liability for Regulatory Compliance Oversight, Harvard Law School Forum on Corporate Governance and Financial Regulation, Gail Weinstein, Warren S. de Weid, and Philip Richter (July 8, 2019) (available at https://corpgov.law.harvard.edu/2019/07/08/caremark-liability-for-regulatory-compliance-oversight/#respond) and Practical Guidance for Health Care Governing Boards on Compliance Oversight, Office of Inspector General, U.S. Department of Health and Human Services (April 20, 2015) (available at: https://oig.hhs.gov/compliance/compliance-guidance/docs/Practical-Guidance-for-Health-Care-Boards-on-Compliance-Oversight.pdf). David Paul Morris/Bloomberg. idea was to create a miniature laboratory that could perform blood tests using Holmes acted as a virtual dictator at Theranos in concert with her lover and mentor Ramesh Balwani, who also had no medical device experience (and has been indicted along with her). for the Macintosh platform. In the face of that consternation, the book describes how Tevanian set about reviewing all of the board materials hed been given during his year-long tenure. Theranos then raised $45 million in venture funding in July 2010. Finally, Theranos cheated on proficiency testing, a They, like almost everyone else, were duped. Dismissing scepticism regarding Holmess claim to have come up with a quick and easy blood test that would dramatically simplify healthcare, Shultz encouraged his grandson, Tyler Shultz, to work a summer internship at Theranos and become a full-time employee. For example, not one health care revolutionize blood testing and place these miniature labs in homes across the PHOTO: (FILES) In this file photo taken on Sept. 8, 2021 Elizabeth Holmes, founder and former CEO of Theranos, leaves the courthouse with her husband, Billy Evans after the first day of her fraud trial in San Jose, California. and a $28.5 million Series C, both in 2006. Enjoy! C CSF Therapeutics Click to share on Facebook (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Tumblr (Opens in new window), Click to share on Reddit (Opens in new window), Click to share on Pocket (Opens in new window), Click to email this to a friend (Opens in new window). Mattis, a retired four-star general, served on Theranos' board of directors from 2013 until December 2016., and was the first high-profile witness since the trial kicked off last month. The list of possible witnesses for the Theranos founder's . member looked into the firing of two high-level employees who only a few weeks Unless otherwise stated in the individual document, the works above are Nagesh Belludi under a Creative Commons BY-NC-ND license. One is that you were corrupt and have invested so much money in Theranos that you were willing to make ethical compromises in order to see return on your investment. CMS found that unqualified personnel were allowed to handle patient blood commercial analyzers, diluted small finger prick samples, and ran them on the Her co-defendant, Sunny Balwani, who is being tried separately, sometimes gave financial forecasts, but "Ms. Holmes was in charge," Mattis said. "We could do a side-by-side comparison," Mattis recalled in the courtroom. banned Holmes and Theranos from running a blood testing lab. In October 2015, a Wall Street Journal investigation exposed Silicon Valley startup Theranos for making fraudulent claims about its breakthrough advancements in blood-testing technologies. He was senior vice president of software engineering at Apple from 1997 to 2003, and then chief software technology officer from 2003 to 2006. He was also Holmes' boyfriend. United States Sentencing Commission, Guidelines Manual (USSG), Such luminaries as former Secretaries of State George Shultz and Henry Kissinger, Marine Corps General James Mattis, and former Secretary of Defense William Perry, once famously portrayed as the single most accomplished board in U.S. corporate history, should be partly culpable for Holmess malfeasance. Should The Ceo Be On The Board Of Directors? Nor is there anyone with formal accounting or auditing expertise or legal expertise []. His capital markets and corporate governance acumen are products of a singular perspective a former corporate attorney, operating executive, institutional investor, and, now, board advisor. With regard to regulators, Holmes created an illusion that Theranos When Theranos Inc. investor Alan Eisenman was unable to get the information he wanted from Elizabeth Holmes, he turned to the company's chairman. Partners. Now running his own biotech firm, he says he see how the pressure to exaggerate "could create an Elizabeth Holmes." Summit Junto is thoughtfully designed to mirror the premium Summit Series experience while in an intimate group setting. that fact. "I was interested in anything that would improve the care of casualties," he added. Elizabeth Holmes: As Theranos' founder and CEO, Holmes was the face of the company. As such, directors are responsible for ensuring a companys activities comply James Mattis, the retired four-star Marine Corps general and former defense secretary, testified on Wednesday at the fraud trial of Elizabeth Holmes, the founder of the blood testing start-up. Avadis "Avie" Tevanian (born 1961) is an American software engineer. Holmes did this routinely when Is It Time To Change Director Board Compensation In Private Real Estate Firms? The ones that dont often self-select out. Alarmed, Tyler Shultz went to his grandfather for help. To fulfill their fiduciary duty, board members must be knowledgeable about the content and operations of the companys compliance program, and develop board-level systems to ensure appropriate oversite of the implementation and effectiveness of the compliance program. When asked who was in charge in board meetings -- Holmes or her former romantic partner and Theranos Chief Operating Officer Ramesh "Sunny" Balwani -- Mattis did not hesitate when he said: "Ms. The only members who remain are [i] See, e.g., Opening statements begin Wednesday in Holmes trial, which is expected to last between three and four months total. whether in a for-profit or non-profit entity, directors are fiduciaries. The original twelve-member Board of Directors was stacked with two former Secretaries of State, two former senators and several high-level former military officers. Theyre going to argue to the jury that this was a witch hunt.. Theranoss board was window implementation and effectiveness of the compliance and ethics program.[ii], Under the seminal In re Caremark International, Inc. case, a breach of the fiduciary duty of loyalty is established by evidence that the directors knew or should have known compliance violations were occurring and took no preventative or remedial steps. gone, or asked why. Directors are The board individually and collectively failed in their responsibilities as trustees of investors interests. [The] strategy seems clear, said the ex-WSJ journalist, John Carreyrou, who has also produced a podcast and written a book about Holmes case, of the defense teams selections. Startups fail all the time, but its not often they end up with multiple trials and a cautionary tale. [5] He has a B.A. It's easy to see, however, why investors might be fooled about this because one of the company's board members, Mattis, joined Theranos in 2013 immediately after retiring from a long career of . Theranos was once a Silicon Valley golden child, expanding rapidly, partnering with a major pharmacy, and raising over a billion dollars in funding. Mattis told jurors that when he joined the board in 2013 U.S. military casualties had not relented. Former US Secretary of Defense William Perry Cliff Owen/Associated Press Perry was a member of Theranos' board of directors. The pair have both pleaded not guilty to the charges. Objectivity. Too bad our corporate law is too narrow to attribute some criminal liability to the company's board of directors. Theranos also segregated Strong companiessuch as GE and Home Depotare known for ensuring their boards do an effective job. The company raised $800 million and famously reached a $9 billion valuation, before the Securities and Exchange Commission with a material assist from Pulitzer Prize-winning reporter John Carreyrou ofThe Wall Street Journal ultimately declared the company to be a massive fraud. Over the course of its history, Theranos also formed partnerships with the Cleveland Clinic and became AmeriHealth Caritas and Capital BlueCross labwork provider in Pennsylvania. approved hiring Balwani as president and COO despite having no blood testing, demonstrating the devices to potential investors and pharma companies. He told Tyler: Im over 90 years old. Tevanian is a well-known technologist, who worked closely with Steve Jobs at both NeXT and Apple. Major questions arise with any companys breakdown, Where was the board? This helps broaden perspective and increase each individuals sense of responsibility to the company. Theranos is cautionary tale for board of directors. Avadis " Avie " Tevanian (born 1961) is an American software engineer. Elizabeth Holmes -- CEO and chairman of the board of Theranos. CNNMoney (New York) First published March 15, 2018: 6:43 PM ET This catalyzed a fall from grace that led to the dissolution of the business in September 2018 and Holmes estimated net worth falling to $0, according to Forbes. [v] Marchand v. Barnhill, 212 A.3d 805 (Del. And, too many board members are financially reliant upon their board stipends, and feel constrained to consider resignation. It is important to be clear on a few things about the boards role in the companys failure. In 2010, Theranos raised $45 million in investment capital. Mattis told the court that he became instantly impressed with Holmes' description of Theranos' testing capabilities, thinking the company's devices could have game-changing benefits on the battlefield. Mattis joined Theranos in 2013 and departed in 2016, prior to joining the Trump administration as the secretary of defense. As the name suggests, a board meeting is a formal gathering of the board of directors, scheduled on a regular basis for example, bimonthly or quarterly. 5. only a drop or two of blood pricked from a finger. When Holmes explained away her underlying technology as a chemistry performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel, all the board had to do was demand, Show me. Determining how a device or service worksexists evenas purported, is the essential obligation of a board member. Avie Tevanian Was on Theranos's Board of Directors From MarketWatch's bio of Avie Tevanian: Dr. Avie Tevanian, Jr. PhD, is a Managing Director at Elevation Partners. Without denying or admitting to the charges, Holmes separately settled with the SEC, agreeing to pay a $500,000 penalty. This seems to be the key to a robust boardbuilding a team of diverse skills and perspectives, where individuals are held accountable and dissent is encouraged. [1][6], In United States v. Microsoft in 2001, he was a witness for the United States Department of Justice, testifying against Microsoft. Palo Alto-based Theranos was, Balwanis trial is expected to begin next year. But Tyler Shultz came to suspect that Holmes was overselling her technology and took his concerns to the Wall Street Journal. Along with Mattis, last week jurors heard from a digital forensic expert, Theranos' former lab director, and the first Theranos patient to take the stand. blood test results run on its proprietary equipment. to establish this type of utter failure. Shareholders derivatively sued the board A Board of Directors plays a critical role in any corporation and safeguards should be established to guarantee that they steer the best course for the company. Holmes defense team has tapped numerous members of the federal health bodies that reviewed Theranos technology to possibly testify at trial as well, such as former Food and Drug Administration head Alberto Gutierrez. He leveraged that work at NeXT Inc. as the foundation of the NeXTSTEP operating system. Copyright 20022023 The Daring Fireball Company LLC. No board member seemed concerned a C-suite level employee was suddenly Founded in 2003 by then 19-year-old Elizabeth Holmes, Theranos raised more than US$700 million from venture capitalists and private investors, resulting in a $10 billion valuation at its peak in 2013 and 2014. The Theranos board was made up of eminent statesmen and business luminaries, mostly recruited to the company by George Shultz, jurors heard Tuesday. Kolide ensures only secure devices can access your cloud apps.Its Zero Trust for Okta. He testified that at a certain point, following growing scrutiny of the company's testing capabilities, "I didn't know what to believe about Theranos anymore.". Lawyers representing embattled Theranos founder Elizabeth Holmes have submitted a list of dozens of witnesses who could be called to testify in her defense at her trial beginning Wednesday,. Shultz joined the Theranos board of directors in 2011. [ii] The company's downfall has been swift and brutal. Theranos has 3 board of directors, including Avadis Jr.. View all management team Compare Theranos to Competitors A Aksys Aksys has developed an automated personal hemodialysis system for patient-performed hemodialysis in alternative care settings such as the patient's home. He specializes in helping executives and companies ensure that the overall quality of their decision-making benefits isnt compromised by a lack of a big-picture understanding. In July 2016, CMS He is now the subject of In the Nations Service, written by Philip Taubman, a former New York Times reporter. after reports questioning the validity of its tests came out, alleging a breach of contract. The company is currently facing investigations from He helped the young entrepreneur form a board of directors and raise money from heavyweight investors including Rupert Murdoch. Now, it looks like the company is losing another key player: its board of directors. The company has promised to Do Members Of Board Of Directors Get Paid? Taubman writes: Instead of hugging his grandson and disowning Holmes, Shultz equivocated. Elizabeth Holmes Trial Starts This WeekHeres What To Know About Her Charges, Defense Strategy And More (Forbes). in mathematics from the University of Rochester and M.S. November 19, 2022 By Nagesh Belludi Leave a Comment. With its reputation in tatters and its technology under scrutiny, Theranos is a shell of its former self. outbreak in several factories, which caused the deaths of three customers. Proving such a failure is difficult e.g., it requires evidence of a sustained or systematic failure to exercise oversight, such as an utter failure to attempt to assure a reasonable information and reporting system exists.[iv]. Theranos dissolved in September 2018 and founder Elizabeth Holmes now faces up to 20 years in prison for fraud and conspiracy. Saddened friends and associates attributed the conduct to his advanced age.. Theranos board was filled with Washington VIPs, including Defense Secretary James Mattis, former secretaries of state George Schultz and Henry Kissinger - Silicon Valley Business Journal. uncleared medical device and prohibited Theranos from using it. Sonnenfeld states in the Harvard Business Review that when honest dialogue is not actively encouraged, it is common for groupthink to take over: Directors are, almost without exception, intelligent, accomplished, andcomfortable with power. Raising capital isn't a cure-all. [7], Tevanian left Apple on March 31, 2006, and joined the board of Dolby Labs[8] and Theranos, Inc.[9] He resigned from the board of Theranos in late 2007, with an acrimonious ending as he faced legal threats and was forced to waive his right to buy a company cofounder's shares, actions he believed were in retaliation for the skepticism he was often alone in expressing about the company's finances and progress in developing its technology at board meetings. Henry Kissinger (former United States Secretary of State); Jim Mattis (retired Marine Corps four-star general); George Shultz (former United States Secretary of State); William Perry (former United States Secretary of Defense); and, Centers for Disease Control and Prevention, Freelance Writers: How To Pitch Crunchbase News, Chicagos Varied Startup Scene Takes A Breather After 2 High-Flying Years, Februarys 10 Top Rounds: Real Estate And AI Startups Score Big, 5 Interesting Startup Deals You May Have Missed In January: Genetically Engineered Trees And Securing Space, The 10 Biggest Rounds Of January: OpenAI Starts Out The Year With A Big Bang, Whos Hiring In Tech This Week? Theranosa privately held company valued at $9 billionhas advertised its proprietary medical technology as being transformative, enabling laboratories to run scores of medical tests with merely a finger-prick of blood. Now, founder Elizabeth Holmes is on trial. At our core are the personal advisory boardshighly curated groups of members who come together in a confidential environment to solve life and work obstacles and share opportunities. shall be knowledgeable about the content and operation of the compliance and It explores his involvement in the summits between Reagan and the Soviet leader Mikhail Gorbachev that ended the cold war, the Iran-contra affair and Internal Revenue Service investigations into Nixons enemies. In Bad Blood Carreyrou lays bare the toxic culture at Theranos that helped cause the companys demise. The board appears to have been assembled primarily to secure influential government connections, rather than to govern with solid industry insight, product knowledge and operational expertise. Long story short, the technology did not work (ultimately, Theranos did not develop any new technology, it took existing technology and made it smaller). Theranos Fiserv, LG back Korea Credit Data as the SME-focused fintech startup raises another $24.7M Kate Park 6:05 PM PDT October 5, 2022 In South Korea, there are about 7.3 million small and. So no matter how many times she lies to you, no matter how many patients she injures and no matter how badly she harms your family, you will put her above everything else. Theranos has since changed its board structure to include a smaller board of directors, a new board of counselors and a medical advisory board staffed with physicians and researchers.. Why didnt directors demand a better accounting of the companys direction and well-being? These were questions asked at the collapse of Enron, for example, and the answers were revealing. Holmes convinced them to change their There, he redesigned NeXTSTEP to become macOS, which became iOS. Last year, she was sentenced to more than 11 years in prison, made a symbol of Silicon Valley ambition that veered into deceit. Board Education. Holmes and Balwani face a dozen charges of wire fraud and conspiracy to commit wire fraud in connection with what prosecutors call a multi-million dollar scheme to defraud investors and patients. She is principal of Hilltop Strategies, a strategy and consulting firm engaged with corporate legal leaders on strategic leadership. The book then chronicles some actions Tevanian took, which are poignant examples of outstanding corporate governance. 6. Theranos whistleblower Tyler Shultz reflects on Elizabeth Holmes' jury verdict. Click here to find the show on your favorite app. entity. Tyler Shultz said his grandfather never apologised but their relationship started to heal. Holmes and her father, who is the company's chairman. A media darling, she appeared on the covers of most major magazines and was declared Americas youngest self-made female billionaire by Forbes in 2015 after Theranos was valued at $9 billion. Theranos Inc. (/ r. I agree with some others who are also regularly in boardrooms, that the number of directors who probably should resign from their boards far outpaces the number who actually do. Similarly, in November 2006 Holmes faked successful results of a blood Less than two weeks later Holmes fired both employees. Barring a plea deal, which seems unlikely, Elizabeth Holmes, the founder and CEO of failed blood testing company Theranos, and president/COO Ramesh Balwani are scheduled for trial on multiple counts of criminal fraud in August 2020. Taubman recounts how Shultz then in his 90s and with no biomedical expertise was impressed by Holmess startup and its promise to revolutionise blood testing. the SEC and the Justice Department, and it is also facing a number of lawsuits. Media mogul Rupert Murdoch invested $125 million towards Theranos. 8B2.1(b)(2)(A) (Nov. 2018). Integrity. You may quote, copy and share them freely, as long as you link back to RightAttitudes.com, don't make money with them, and don't modify the content. He noted that Theranos had assembled a star-studded board of directors which included former presidential-cabinet members such as Henry Kissinger and George Shultz, two ex-senators, and Jim . Buddhist nun Pema Chodron's treasury of wisdom for overcoming life's pain and difficulties, and ways for creating effective social action. Jim Mattis, Secretary of Defense, listens during a meeting with President Donald Trump in the Roosevelt Room of the White House, Nov. 28, 2017. at Stanford, Holmes dropped out to start Theranos, a privately held for-profit The biography was written over 10 years and draws on exclusive access to Shultzs papers. William Foege: Foege is a former director of the Centers for Disease Control and Prevention and an advisor to Theranos. As Bloomberg Businessweek commented regarding Mr. Epsteins category-defining corporate governance book, attention, directors of small-cap companies. It wasnt until 2013 that Theranos began operating more publicly and started to receive mainstream attention. [6], He was Vice President of Software Engineering at NeXT Inc. and was responsible for managing NeXT's software engineering department. The company had notable figures from the worlds of both business and government as members of its board. It seems the board never pushed for proof of the products efficacy, either because they did not know any betterhaving no industry experienceor because they were not encouraged to be vigilant and involved. Book Summary: Jack Welch, The Man Who Broke Capitalism? [2], Tevanian is from Westbrook, Maine. Courage. He resigned from the board in 2016. Each wire fraud charge has a maximum sentence of 20 years in prison, in addition to potential fines and restitution, per the Journal. Gould, who had already miscarried three times, testified that in September 2014 she took a Theranos blood test at a Walgreens store in Arizona after learning that she was pregnant. dressing. This begins by ensuring that the right people are on board. Vox senior correspondent, Timothy Lee, points out that this is a huge misstep for a biotech startup: In the world of defense contracting, it's not unusual to have secretive projects that cost tens of millions of dollars and take a decade to complete. A full recap of last week's proceedings is available on Tuesday's episode of "The Dropout: Elizabeth Holmes on Trial'' free on Apple Podcasts, Spotify, Amazon Music, or wherever you listen to podcasts. Bernard Marcus once stated his preference for board members who are contentious and unwilling to relent until their questions have been answered. Management should report on critical operations issues to the board, particularly on yellow or red flag concerns (e.g., whistleblower complaints, regulator actions). The last possibility is that you have completely lost your mental edge and despite an abundance of data showing that she was a criminal, you somehow are incapable of connecting these very, very big dots.. and Ph.D. degrees in computer science from Carnegie Mellon University. The board's shrinking membership is a reflection of the company's struggles. Help Launch Space Satellites Or Fight Cancer With These Startup Jobs, Some Beaten-Down SPACs Recover Amid Tech Rally, The Weeks 10 Biggest Funding Rounds: Anthropic And Our Next Energy Raise Huge $300M Rounds. Holmes' lawyers elected not to cross examine Gould. The former Secretary of State resigned amid questions about the company's practices. Idaho Code 30-29-830, 30-30-618. Taubman notes that the Holmes issue remained unfinished business when Shultz died in 2021, at the age of 100. According to a new report from The New York Times, all but two of Theranos' board "The Foundation Fighting Blindness is excited to be partnering with Doug Zarkin and Avi Kaner through Night for Sight," said Peter Ginsberg, chief operating officer of the Foundation Fighting . The board had no system in place to monitor Theranoss compliance with laboratory regulations or identify any of these problems. In 2016, the US government accused Theranos of "massive fraud" and banned Holmes from owning or operating a blood-testing lab for two years. He tried unsuccessfully to mediate between Tyler and Holmes., When that effort failed, Shultz refused to cut ties with the businesswoman. By now, everyone has heard of or read about Theranos. Easy access to affordable and reliable blood testing would help with The company claimed its technology could run blood tests with just a prick of a finger, but it was later revealed that Theranos used traditional blood testing machines for the majority of its tests, and that its own technology could produce inaccurate test results. The makeup of Theranos boardroom has done very little for its credibility in the medical technology industry. by Apple, Inc. connections, raise funds, and gain attention. document.getElementById( "ak_js_3" ).setAttribute( "value", ( new Date() ).getTime() ); This field is for validation purposes and should be left unchanged. How To Elect Board Of Directors For Nonprofit? Lucas, in turn, was highly dismissive, and reportedly suggested again that Tevanian should probably just resign. He apparently came to a discomforting conclusion: in the space of a year, not only had fundamental aspects of the companys story completely changed, but so had the lions share of the companys management team. Theranos Inc. (/r.n.os/) was an American privately held corporation that was touted as a breakthrough health technology company. In January 2017 the Theranos board of directors had shrunk considerably, at that time including Holmes, Foege, Bonanni and Daniel Warmenhoven, former NetApp CEO, replacing Riley Bechtel. Opinions expressed by Forbes Contributors are their own. blood testing, by testing proficiency samples on commercial analyzers rather The company claimed that it had devised . [11][12] On January 12, 2010, he became managing director of Elevation Partners. ethics program and shall exercise reasonable oversight with respect to the Any statements of fact about Theranos in this article are taken from Carreyrous and Jarviss reporting. She attracted a litany of high-profile investors who pumped more than $700 million into the company and also struck partnerships with Walgreens, Cleveland Clinic, Capital BlueCross and more from 2013 to 2015. Crunchbase Daily. According to Jeffery Sonnenfeld of Yales Executive Leadership Institute, the most deciding factors in a boards effectiveness are, surprisingly, not structural prescriptionssuch as board makeup, procedures, committees, executive sessions, board members age, equity involvement, independence or even credentials. [iii] In other words, directors must make a good faith effort to implement a board-level oversight system and monitor it. [iii] See In Holmes and Balwani have both pleaded not guilty and are standing trial separately (Balwanis trial is set to begin January 2022). He resigned from Theranos' board in 2016 amid questions about the company's practices. Holmes.". (now called Threshold) in June 2004, according to Crunchbase. 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The validity of its tests came out, alleging a breach of contract effective.! Us Secretary of Defense of both business and government as members of its tests out... System in place to monitor Theranoss compliance with laboratory regulations or identify any of these problems CEO on! That helped cause the companys demise the right people are on board have been answered the businesswoman there! In the companys demise stipends, and the Justice Department, and it is important to Be clear on few... On your favorite app 20 years in prison for fraud and conspiracy Owen/Associated Press Perry a! Failed, Shultz refused to cut ties with the businesswoman v. Barnhill, 212 A.3d 805 Del. Effort failed, Shultz refused to cut ties with the SEC and the were! Theranos boardroom has done very little for its credibility in the medical technology industry company... William Foege: Foege is a former director of Elevation Partners a for-profit or non-profit,... 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