Trump Will Not Nominate Herman Cain to Fed Board

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WASHINGTON — President Trump said on Monday that Herman Cain, a former pizza company executive and conservative presidential candidate, has withdrawn from consideration to be nominated to the Federal Reserve Board.

“My friend Herman Cain, a truly wonderful man, has asked me not to nominate him for a seat on the Federal Reserve Board,” Mr. Trump said in a post on Twitter.

Mr. Cain did not offer an immediate explanation for the withdrawal, though the move is a nod to political reality, and a victory for critics who warned Mr. Cain would act as a loyalist for Mr. Trump on the historically independent Fed board.

The president said earlier this month that he planned to nominate Mr. Cain, but the selection stoked bipartisan controversy over Mr. Cain’s qualifications for the post and the allegations of sexual harassment that derailed his 2012 bid for the Republican White House nomination.

At least four Republican senators have already said they would oppose his confirmation, if Mr. Trump were to formally nominate him — effectively killing Mr. Cain’s chances in the Senate, where Republicans have 53 seats.

“I will respect his wishes,” Mr. Trump said, calling Mr. Cain “a great American who truly loves our country.”

Mr. Cain’s decision was an abrupt departure from last week, when he vowed to stay in the running, telling The Wall Street Journal he was “very committed” to being nominated. In an op-ed column in that newspaper, Mr. Cain criticized what he called “the professor standard” for Fed nominees under presidents dating back to Bill Clinton in the 1990s, which he said had caused the central bank to lose sight of the importance of keeping the dollar strong and stable in order to support economic growth.

“The professor standard will not challenge itself — that much has been proved,” Mr. Cain wrote. “That’s why my voice is needed at the Fed.”

Mr. Cain is a former businessman and director of the Federal Reserve Bank of Kansas City, an advisory position that largely involves linking the regional Fed bank to the business community. His presidential bid was notable for his “9-9-9” tax proposal, which coupled dramatically low 9-percent flat tax rates for businesses and individuals with a new 9 percent national sales tax, and for the harassment allegations that ended it.

Those allegations worried many Republicans in the Senate. Other critics questioned Mr. Cain’s qualifications for the Fed and his shifting views on interest rates, which Mr. Cain said should be higher under President Barack Obama, when the nation was struggling to recover from the 2008 financial crisis, but now says should stay low under Mr. Trump, when the economy is growing.

Many Fed analysts warned that Mr. Cain and a second potential Trump nominee, Stephen Moore, who is one of Mr. Trump’s outside economic advisers, would threaten the Fed’s history of independence from the White House. Neither Mr. Cain nor Mr. Moore had completed formal vetting procedures before Mr. Trump indicated he wanted to nominate them.

In recent years Mr. Cain has fashioned himself as a conservative commentator and staunch supporter of Mr. Trump. He posts frequent video columns on the website WesternJournal.com, including recent videos where he walked viewers through the process of being vetted for a Fed position. He also regularly links to the site’s stories on his Facebook page. Often, those stories are critiques of Representative Alexandria Ocasio-Cortez, Democrat of New York, the freshman who has become a favorite target for conservatives.

On Monday, shortly after Mr. Trump announced Mr. Cain’s withdrawal, the most recent link on Mr. Cain’s page was a video of an eight-year-old girl doing an impression of Ms. Ocasio-Cortez. “Oh my goodness,” Mr. Cain wrote, “this is the best thing you’ll see all day.”

Mr. Moore said in a text message on Monday that Mr. Trump would follow through on his nomination “when I get all the paperwork and financial disclosure done.”

White House officials have insisted in recent weeks that Mr. Moore’s nomination was on track, despite controversies over a $75,000 tax lien filed against him by the Internal Revenue Service and a judge finding him in contempt of court several years ago for failing to pay more than $300,000 in past-due child support and alimony.

On Monday, CNN reported that Mr. Moore, in columns for National Review in the early 2000s, belittled female athletes and called for women to be disallowed from officiating, announcing or even selling beer at NCAA men’s basketball games. Mr. Moore said those columns were jokes.

It is unclear if Mr. Moore has the support he would need in the Senate to be confirmed. Some Republicans said privately earlier this month that Mr. Cain’s struggles could help Mr. Moore, because Republican senators would be unlikely to vote against both of Mr. Trump’s nominees. They were more divided on Monday, saying Mr. Cain’s departure could open Mr. Moore to additional scrutiny and attacks.

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Stop & Shop Strike Ends With Union Claiming Victory on Pay and Health Care

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After more than three months of negotiations and 11 days on strike, over 30,000 Stop & Shop workers have reached a tentative agreement with the supermarket chain that they said met their demands for better pay and health care coverage.

The employees, members of the United Food and Commercial Workers International Union at more than 240 Stop & Shops across Connecticut, Massachusetts and Rhode Island, returned to work on Monday morning after reaching the deal on Sunday.

Details of the proposed three-year agreement will not be made public until the 31,000 union members across five locals ratify the contract. Voting will begin this week.

“The new contract does satisfy the different points of contention,” Jessica Raimundo, a union spokeswoman, said in an interview.

The union said in a statement: “The agreement preserves health care and retirement benefits, provides wage increases, and maintains time-and-a-half pay on Sunday for current members.”

It added, “Under this proposed contract, our members will be able to focus on continuing to help customers in our communities.”

A previous three-year contract expired on Feb. 23, and workers had protested what they considered cuts in the new contract to health care, take-home pay and other benefits. Stop & Shop continued negotiations with the union throughout the strike.

The workers on strike included cashiers, stockers, bakers, deli clerks and butchers. Most full-time employees at Stop & Shop earn $21.30 an hour, said Jennifer Brogan, a spokeswoman for the chain.

“Our associates’ top priority will be restocking our stores so we can return to taking care of our customers and communities,” Ms. Brogan said in a statement.

When the strike began, Stop & Shops across the three states set in motion a contingency plan to keep the stores open. The chain sent out support staff members and temporary replacement workers to several supermarkets. Some stores were forced to close, although union and supermarket officials could not say precisely how many.

During negotiations, Stop & Shop employees argued that the chain’s parent company, Ahold Delhaize, reported profits of more than $2 billion to its shareholders last year, and could afford to compensate workers better.

The strike drew support from several likely and current Democratic presidential candidates, including Senator Elizabeth Warren of Massachusetts and former Vice President Joseph R. Biden Jr., as well as Senator Bernie Sanders of Vermont, whose campaign staff is represented by a unit of the U.F.C.W.

Mr. Sanders said he stood “with U.F.C.W. workers in their fight to protect health care and workers’ rights.” Ms. Warren brought doughnuts to picketers and implored Stop & Shop customers to respect the picket line. “When workers fight, workers win,” she tweeted.

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More Benches, Special Goggles: Taking Steps to Assist Older Travelers

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Samantha Flores was having a tough time getting through the airport. The signs were hard to see, the announcements were hard to hear and the people rushing by made her feel unsteady on her stiffened knees. Finally, with relief, she made her way to a bench to sit down, catch her breath and take off her “age simulation suit.”

Ms. Flores is the director for experiential design for the architecture firm Corgan, and the nearly 30-pound suit was meant to help her, a 32-year-old, experience the physical challenges of navigating the world as an older person. Goggles and headphones “impaired” her sight and hearing. Gloves reduced feeling and simulated hand tremors. Weighted shoes, along with neck, elbow and knee movement restrictors, approximated mobility limitations.

Using the suits is one way designers who work with airports and the travel industry in general are starting to look at creating spaces for different groups of people. And older people are one group whose numbers are growing.

According to the World Health Organization, the percentage of the world’s population over 60 will nearly double by 2050, rising to 22 percent from 12 percent. In the United States, the Census Bureau projects that by 2035, people 65 and older will outnumber children for the first time.

While some design adaptations for older travelers might seem obvious, like benches placed for frequent rest stops, others are not as intuitive. Research conducted by Corgan found that elderly people were more likely to look down while they were walking, which means they could miss directional signs above their heads. So the company suggested that its airport clients place more information closer to the ground. It also found that older air travelers often head straight for their gate to reduce anxiety about missing flights, so they bypass the main concession hubs. The firm recommends that airports add more food options near the boarding areas.

The firm also found that shiny floors should be avoided because they can appear wet and cause people to worry about falling.

Donald P. Hoover, associate director of Fairleigh Dickinson University’s International School of Hospitality and Tourism Management, said the leisure and tourism industries would do well to focus on this group. They “must consider the disabilities related to aging and keep them in mind when designing and creating anything associated with the guest experience,” he said.

Professor Hoover said many of the changes could benefit travelers of all ages. At hotels or airports, for instance, shortening the time spent waiting in line to check in, training staff to recognize and act on guests’ special needs, or designing simpler websites and more ergonomic bathrooms could improve everyone’s experience.

Some adaptations are more technical. A few airports have begun installing special systems that transmit announcements directly to the telecoil receiver in a user’s hearing device, allowing those with hearing aids to more easily understand announcements at the gate. The airports in Detroit and Rochester are among those rolling out the system.

A handful of airports, including Los Angeles and Seattle-Tacoma, have recently begun offering Aira, glasses for low-vision or blind people. The glasses connect through Wi-Fi to allow a trained guide to see what the wearers are seeing and help them navigate through the airport, identify luggage and accomplish other tasks. Kevin Phelan, vice president of sales and marketing for the company, said its top requests from older people using its service in hotels and Airbnbs are to do a walk-through so they can avoid tripping hazards and to adjust thermostats.

The Seattle airport has estimated that 35 percent of the people coming through last year were 55 or older, said Perry Cooper, an airport spokesman. To serve this group and others, the airport has begun offering electric cart service between the airport’s light rail station and the terminal, so passengers don’t have to walk the few tenths of a mile. A service for travelers arriving on cruises from Alaska lets them send their luggage directly from the ship to their departing flight.

At Tampa International Airport, the proportion of older travelers is higher than national levels — 40 percent of adult travelers are 55 or older, said Danny Valentine, an airport spokesman.

During a large renovation and expansion project that was completed last year, the Tampa airport worked with the design firm HOK and Skanska, a construction company, to minimize walking distances and create an open layout so passengers could easily find their way to gates, restrooms and restaurants. Additional staff members were stationed throughout the terminal. “For older passengers,” Mr. Valentine said, “it’s important to have that human touch.”

Hotel companies like Marriott International say they are also keeping an eye on travel trends among older guests. Toni Stoeckl, vice president of distinctive select brands at Marriott International, said one of the brands, Element Hotels, was introducing “Studio Commons” later this year — units with four rooms positioned around a single common area. The concept was developed partly in response to a rise in multigenerational family trips. In the new rooms, he said, “baby boomers can have their own private room but still share a common living area with kids or grandkids.”

Smaller properties look at those needs, as well. Joanne Cunningham, director of sales and marketing at the Dunes Manor Hotel & Suites in Ocean City, Md., said some of the hotel’s guests had been visiting since the 1960s. The management wanted to make sure they could keep returning comfortably with children and grandchildren, so Dunes converted the top three of its 11 floors to rooms that would be friendly to older people, equipping them with showers instead of bathtubs, and fixtures and furnishings that were easier for older guests to use, like extra bright lamps with large visible outlets for electronics.

“It’s important that guests who have been part of our ‘family’ for so many years are well taken care of,” she said.

Small businesses that cater to tourists are also taking steps to become more elder-friendly. Miceal O’Hurley, proprietor of Fantastic Flavours Ice Cream Parlour in Youghal, Ireland, estimates that almost half of his customers are retirees from the United States and Europe. Last year, he worked with older people and architects to evaluate each aspect of his customers’ experience and went beyond eliminating tripping hazards and installing better lighting.

Mr. O’Hurley said he widened door frames to accommodate walkers and people being assisted by a friend. He bought sturdier table bases so customers could lean on them when rising from a chair and removed some furniture to make the space easier to navigate. The store installed sound dampeners to drown out the sharp sounds and moderate the high frequencies that had caused older travelers to turn down their hearing aids.

“It was a lot to do,” Mr. O’Hurley said. But, he added, it was also important “as the average age of travelers increases.”

Jimmy Carroll, co-founder of the travel expedition company Pelorus, said he has found that as multigenerational travel has become more popular, grandparents “don’t want to miss out on anything.” He said his staff tried to find ways for everyone to participate in activities. On one family’s trip to Costa Rica, for instance, a grandmother traveled along in a submersible vehicle with a pilot while her grandchildren snorkeled around her.

Pelorus also arranges experiences for its older clients with the goal of “having them do something they thought was no longer possible,” Mr. Carroll said.

Aixa Ritz, who researches sustainable tourism at Fairleigh Dickinson’s hospitality school, said people’s “definition of adventure changes as we get older.” She is 72, and refers to herself as a “senior boomer.” She said she and her friends were still excited to see new places, “but we want everything taken care of.”

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Kraft Heinz Picks New C.E.O. as It Faces Weak Sales and S.E.C. Inquiry

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Kraft Heinz said on Monday that Miguel Patricio, an Anheuser-Busch InBev veteran, would succeed Bernardo Hees as chief executive, signaling a potential change in strategy that could involve moving away from years of cost-cutting by the giant food maker.

The announcement comes just months after Kraft Heinz took a $15.4 billion write-down for its Kraft and Oscar Mayer brands and other assets, slashed its dividend and said that the Securities and Exchange Commission was investigating its accounting practices.

[Read our article on the immediate and long-term challenges facing Kraft Heinz.]

Mr. Patricio will take the helm at Kraft Heinz in July after spending two decades at Anheuser-Busch, most recently as the brewer’s global chief marketing officer.

Kraft Heinz’s stock rose about 1 percent in early trading after the announcement.

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Tesla to Investigate Car That Appeared to Burst Into Flames in Shanghai

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SHANGHAI — The electric-car maker Tesla said on Monday that it had sent a team to investigate why one of its cars appeared to spontaneously combust in Shanghai over the weekend, an incident that the authorities said left no one hurt.

The explosion occurred Sunday evening in the basement parking garage of an apartment complex in Shanghai’s Xuhui District, according to a post by the local fire department on the Chinese social media platform Weibo.

Security camera footage accompanying the post showed smoke creeping out from beneath a parked Tesla sedan for a few seconds before the car bursts into flames. The fire department said that two other cars were also damaged.

“Last night we dispatched a team at once to the scene,” Tesla said in a Monday morning post on its Weibo account. The fire department said that the cause of the explosion was still being investigated.

China is a surging market for electric vehicles, and Tesla has many fans there. In January, the company started construction on a huge new factory near Shanghai, its first plant outside the United States.

The trade war between the United States and China has directly affected Tesla’s business. After President Trump issued his first tariffs last year on $50 billion in Chinese-made goods, Beijing retaliated by increasing tariffs on American-made cars to 40 percent. Cars made everywhere else face a 15 percent import tax in China.

China temporarily removed the additional tariff on American-made cars as part of a truce in the trade war that the two nations negotiated in December. The Chinese government has since kept the tax at the lower rate as a gesture of good will amid ongoing talks.

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DealBook Briefing: Tesla Wants You to Focus on Its Robo-Taxis (not Its Finances)

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Good Monday morning. (Was this email forwarded to you?Sign up here.)

Elon Musk is scheduled to show off Tesla’s latest advances in autonomous vehicles today. (Watch it here at 2 p.m. Eastern.) But it’s unclear whether the event will persuade skeptics that the company is on the right track.

Expect to hear a lot about robo-taxis. Mr. Musk has contended that Tesla’s cars would be able to drive without human intervention by next year. Today’s event is expected to promote hardware advances that let the company’s vehicles act as a self-driving fleet. (A Twitter user posted pictures of what was apparently a photo shoot for the event.)

Tesla’s exuberance isn’t shared by others in the industry. Ford’s C.E.O., Jim Hackett, said two weeks ago that his company had “overestimated” how quickly the technology had advanced. And Waymo, considered the leader in autonomous vehicles, has rolled out a test robo-taxi program in Phoenix very slowly.

The announcement comes before the release of Tesla’s latest quarterly results. The company has already said that it plans to report a loss and disclosed that vehicle sales fell 31 percent from three months ago.

Some skeptics think today’s event is a distraction from Wednesday’s earnings report. “I’ve seen this movie before,” David Kudla, a short-seller, told the WSJ.

More: Tesla will shrink its board to seven directors from 11 by next year. A federal judge gave the company and the S.E.C. more time to settle their legal dispute. And the carmaker is investigating a report that a Model S exploded in Shanghai.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York and Michael J. de la Merced in London.

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St. Sebastian Catholic Church in Negombo, Sri Lanka today.CreditAthit Perawongmetha/Reuters

The country blocked social networks like Facebook and WhatsApp yesterday after terrorist attacks that killed nearly 300 people.

The Sri Lankan government said it had “taken steps to temporarily block all social media avenues until the investigations are concluded.” Residents of Colombo, the capital, told The Guardian that they had received inflammatory unverified information about the attacks before the shutdown.

Yet the move also cut off a critical way of communicating, making it harder for Sri Lankans and foreigners to understand what was happening. And the International Federation of Journalists has said that there’s no “substantial” evidence to show such bans can scale down violence, according to the WaPo.

The action reflects governments’ wariness of social media. Max Fisher of the NYT writes, “The move suggested not just officials’ worries about social media’s risk to public safety at moments of national tension, but also their distrust in the companies’ ability to manage the platforms responsible.”

More: Washington’s reluctance to put limits on social media stands out from the rest of the world.

CreditKevin Frayer/Getty Images

The Chinese telecom giant said that its first-quarter revenue rose 39 percent over the same time a year ago, even as the Trump administration works to block its global growth.

Huawei said that its revenue grew to 179.7 billion renminbi, or $26.8 billion, in the first three months of the year. It was the first time that the privately held company has published quarterly results. (The report didn’t include the company’s profit.)

It’s all because of 5G. The company said it had signed 40 commercial contracts to supply carriers with the superfast wireless technology, and shipped more than 70,000 5G base stations, the WSJ reports.

That’s despite U.S. efforts to persuade allies from using Huawei equipment, calling the company a risk to national security. Australia and Japan have banned Huawei from their wireless infrastructure, but other countries have dismissed the concerns.

Huawei is gloating about its success. The company’s founder, Ren Zhengfei, told CNBC, “For such a powerful country to be scared of a small company like us, some other countries are saying, ‘Your products are so good that the U.S. government is scared.’ ”

More: The C.I.A. reportedly accused Huawei of being financed by Chinese state security agencies. Critics say the Trump administration is focused too much on bashing Huawei.

Japanese prosecutors charged the former Nissan chairman again today, accusing him of breach of trust, a new count of financial impropriety while running the carmaker, Ben Dooley of the NYT reports.

It was the fourth indictment for Mr. Ghosn, who was rearrested this month. He had already been accused of falsifying his pay and abusing his office to transfer unrealized trading losses to Nissan. Mr. Ghosn was supposed to be released today — unless he faced new charges.

After a raid on his apartment this month, “prosecutors said they were investigating Mr. Ghosn over allegations that he used a Nissan subsidiary to redirect $5 million to himself,” Mr. Dooley reports.

Nissan said it had filed a criminal complaint against Mr. Ghosn “after determining that payments made by Nissan to an overseas vehicle sales company via a subsidiary were in fact directed by Ghosn for his personal enrichment.”

CreditScott Olson/Getty Images

Americans paid much more for washing machines because of tariffs, showing how President Trump’s trade fight has had unintended consequences, Jim Tankersley of the NYT reports.

A new report by three economists found:

• Consumers bore between 125 percent and 225 percent of the costs of the tariffs.

• The price of dryers also went up.

• Overall consumer prices rose $1.5 billion.

Mr. Trump imposed the tariffs after Whirlpool complained about foreign competitors. The levies started at 20 percent per imported washer and later rose to 50 percent. The president said that the tariffs would create U.S. jobs and falsely claimed that America’s trading partners would foot the bill.

American manufacturers ended up increasing their prices after foreign rivals were forced to raise theirs. “The price increases are likely due to domestic firms exploiting their market power,” Felix Tintelnot, one of the report’s authors, told the NYT.

And it was an expensive job-creation program: The U.S. gained around 1,800 new jobs because of the tariffs — at a cost of $817,000 each, the report estimates.

Boeing’s Dreamliner plant in South Carolina.CreditEric Johnson/Reuters

Even as investigators are examining what went wrong with Boeing’s 737 Max jets, company employees have raised concerns about another crucial model for the plane maker, the Dreamliner, Natalie Kitroeff and David Gelles of the NYT report.

• With airlines placing hundreds of orders for the Dreamliner, the company set up a factory in South Carolina to help produce the jet along with a plant in Everett, Wash.

• But Boeing had no pool of aerospace workers to draw from in South Carolina, and struggled to recruit locally.

• Workers have since “filed nearly a dozen whistle-blower claims and safety complaints with federal regulators, describing issues like defective manufacturing, debris left on planes and pressure to not report violations.”

• “All factories deal with manufacturing errors, and there is no evidence that the problems in South Carolina have led to any major safety incidents. The Dreamliner has never crashed, although the fleet was briefly grounded after a battery fire. Airlines, too, have confidence in the Dreamliner.”

• “I’ve told my wife that I never plan to fly on it,” Joseph Clayton, a technician at the South Carolina factory, told the NYT. “It’s just a safety issue.”

Joe StiglitzCreditSasha Maslov

The Nobel laureate thinks that the battle over economic priorities has become a war of words — and that it’s time for liberal policies to take on a new image to win over the electorate, Andrew writes.

• Mr. Stiglitz, who won the Nobel Prize in economics for identifying the inequities of market economies, now finds that many of his policy proposals have been embraced by the likes of Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez.

• But as young leftists have embraced the term “socialism,” Republicans have used the term as a political cudgel.

• “Some people are trying to attach more emotions to the historical legacy of socialism, which was never the same as communism, but in the United States those distinctions have gotten blurred,” Mr. Stiglitz told Andrew.

• Mr. Stiglitz’s preferred term is “progressive capitalism,” because “I believe in a market economy, but I also believe in government regulation.”

China reportedly named Chen Siqing as the head of Industrial & Commerce Bank of China, the world’s biggest bank.

Robert Zoellick has stepped down as chairman of AllianceBernstein.

Hershey hired Steve Voskuil from the medical device maker Avanos Medical as its C.F.O.

Rich Friedman has reportedly given up day-to-day management of Goldman Sachs’s private-investing arm. His responsibilities will be picked up by Sumit Rajpal and Andrew Wolff.

Wes Uhlmeyer stepped down as Archer Daniels Midland’s top grain-trading executive. Chris Boerm, ADM’s transportation chief, will take over his responsibilities.

Deals

• Deutsche Bank and Commerzbank are expected to decide soon whether to merge, but political opposition to a deal is growing. (NYT)

• Big investment firms like D.E. Shaw and the Carlyle Group are taking a bigger cut out of investor profits. Skeptics worry that financiers are getting too greedy. (Bloomberg, FT)

• Shares in Zoom jumped in the company’s market debut last Thursday. But so did shares in Zoom Technologies — which has nothing to do with that I.P.O. (DealBook)

• I.P.O.s for consumer tech companies get all the attention. Those for enterprise-focused businesses perform much better. (WSJ)

• Institutional Shareholder Services backed Barclays in its fight against the activist investor Edward Bramson. (FT)

Politics and policy

• Hospitals stand to lose billions under “Medicare for all” proposals, since private insurance pays much more for procedures than government programs do. (NYT)

• Senator Elizabeth Warren is collecting plenty of money from employees of Facebook, Google and Amazon, despite calling for breaking up tech giants. (Mercury News)

• Joe Biden reportedly plans to announce that he’s running for president on Wednesday. (Atlantic)

• Confidential emails and text messages chronicle the falling out between President Trump and his longtime lawyer, Michael Cohen. (NYT)

• Facebook may loosen restrictions on political advertising ahead of European Parliament elections next month. (FT)

Tech

• Federal regulators are said to be discussing how to hold Mark Zuckerberg accountable for Facebook’s data lapses. (WaPo)

• Kansas students and teachers are rebelling against an online curriculum developed by Facebook engineers and backed by Mr. Zuckerberg and his wife, Priscilla Chan. (NYT)

• Publicly, Apple disparaged Qualcomm’s technology. Privately, the tech giant said it was “the best,” according to documents shown in court last week. (WaPo)

• Kroger, America’s biggest supermarket chain, is struggling with the online grocery revolution. (WSJ)

• Spotify is riding high, but music-licensing costs and growing competition should worry investors. (Barron’s)

Best of the rest

• Larry Fink of BlackRock sees no sign of a recession within the next 12 months. (CNBC)

• Banks want to overturn a federal law prohibiting them from hiring people convicted of minor crimes. (WSJ)

• Michael Avenatti is accused of embezzling nearly $2 million from a client, an ex-girlfriend of the N.B.A. player Hassan Whiteside. (LAT)

• Sovereign wealth funds built on oil money are under pressure to cut ties to the sector. (FT)

• Corporate donations to rebuild the Notre-Dame cathedral in Paris show how corporate governance is hazy at best at some French companies. (WSJ)

• China censored the camera maker Leica from the Sina Weibo social network over a video commemorating the “Tank Man” photograph taken during the Tiananmen Square protests in 1989. (FT)

Thanks for reading! We’ll see you tomorrow.

You can find live updates throughout the day atnytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

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White Collar Watch: Elizabeth Warren Wants to Make It Easier to Prosecute Executives

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Get the DealBook newsletter to make sense of major business and policy headlines — and the power-brokers who shape them.
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Prosecutions of finance executives related to the 2008 financial crisis were few and far between — and that has remained a persistent complaint about the government’s response to the meltdown.

Senator Elizabeth Warren of Massachusetts has offered legislation that would make it easier to prosecute them with the Corporate Executive Accountability Act.

The challenge with charging corporate executives is that they are often insulated from the decisions that violate the law. That can make it difficult, if not impossible, for prosecutors to prove they have the requisite intent. The former head of the Justice Department’s criminal division, Lanny A. Breuer, has defended the lack of prosecutions. In a PBS “Frontline” special, he said, “When we cannot prove beyond a reasonable doubt that there was criminal intent, then we have a constitutional duty not to bring those cases.” Former Attorney General Eric H. Holder Jr. told a Senate committee that some banks had become so big that prosecuting them would have negatively affected the economy. In other words, they had become “too big to jail.”

Ms. Warren’s bill would make it easier for federal prosecutors to pursue charges against individuals by holding executives liable if they “negligently permit or fail to prevent a violation of law.” The government often uses statutes like mail and wire fraud to pursue criminal cases. Those laws, however, require proving the defendant’s intent to defraud, which is unlikely when a senior executive has little to do with the actual misconduct. The new provision would allow punishment if the executive were merely negligent in overseeing the enterprise, which means the person acted in an objectively unreasonable manner.

The legislation has already drawn criticism. An article in Slate argued that “the proposal to put corporate executives in jail for acting negligently is a very bad idea.” The authors’ main objection is that negligence is a far lower standard, so executives with minimal culpability could end up in prison.

Holding business executives criminally responsible for violations by the company is not a new concept. In United States v. Park, decided in 1975, the Supreme Court upheld the conviction of the chief executive of Acme Markets for violating a provision of the Food, Drug and Cosmetic Act, which makes it a crime to ship adulterated or misbranded food. The court found that the statute imposed strict liability on the executive, which “reflected the view both that knowledge or intent were not required to be proved in prosecutions under its criminal provisions, and that responsible corporate agents could be subjected to the liability thereby imposed.”

In both the Clean Water Act and the Clean Air Act, Congress provided that a person who violates the law can include “any responsible corporate officer.” In United States v. Iverson, the federal appeals court in San Francisco held that a corporate officer can be held liable “only when the officer in fact exercises control over the activity causing the discharge or has an express corporate duty to oversee the activity.”

Ms. Warren’s proposal is much broader than the food and environmental laws, however. It would apply to any company with more than $1 billion in annual revenue, and the punishment for an executive would be up to one year in prison for a first violation, and as much as three years for a second offense. Those are much more severe penalties than typically imposed for crimes resulting from a lack of adequate oversight.

In addition, the proposal would apply if a company engaged in a civil violation of federal or state law that affected the “health, safety, finances or personal data” of 1 percent of the population of the United States or any individual state, including entering into a settlement agreement with regulators. That provision could encourage companies to fight regulatory claims rather than settling them, ratcheting up the cost of pursuing cases by civil regulators.

One potential limitation in the law is that it refers specifically to a Securities and Exchange Commission rule that defines an “executive officer” as the president of a company or any vice president in charge of a principal business unit or subsidiary. But that rule applies only to companies that have securities registered with the S.E.C., which means that privately held corporations could avoid the strictures of the new negligence standard by not selling securities to the general public. By using the S.E.C.’s definition of executive, the law would not apply to private companies. That may discourage companies from going public to avoid coming under the provision.

The proposal would add a powerful tool to the arsenal of federal prosecutors to pursue cases against corporate executives. But the key question is whether using negligence as the standard for criminal liability is the best means to police corporate leaders.

Proving negligence is a far lower bar than proving intent. If it is too low, then companies may do everything to fight any claims of a violation. Executives may even cover up violations rather than reporting them if they are more worried about personal exposure to a prison term than ensuring their companies are in compliance with the law.

And that would end up reducing compliance with the law.

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Like a Boss: Jonny Sun’s Work Diary: Correct Spellign Optoinal, Creativity Mandatory

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anastasios pallis

In his orthographically freewheeling 2017 best seller everyone’s a aliebn when ur a aliebn too,” the author-illustrator Jonny Sun explores the melancholia of life on Earth as seen through the eyes of an extraterrestrial. The inquisitive outsider, an alter ego birthed on Mr. Sun’s Twitter account, stumbles through heart-melting highs and lip-quivering lows, meeting such creatures as an owl plagued by impostor syndrome and an egg suffering from an existential crisis.

Near the end of its “activitey log,” the alien concludes: “if u replace ‘i have to..’ with ‘i get to..’ then human life becoms AMAZIMG.”

Lately, Mr. Sun has been able to say “I get to” about a lot. He collaborated with Lin-Manuel Miranda last year on “Gmorning, Gnight!”, a best-selling collection of inspirational messages, and he created an AI-powered interactive art installation at the Massachusetts Institute of Technology, where he’s a doctoral candidate.

Mr. Sun, an emotionally transparent Canadian who is also a humorist, artist and screenwriter, is working on a screenplay for “Paper Lanterns,” a film for Fox Family and Chernin Entertainment. He’s also writing for Netflix’s animated series “BoJack Horseman,” prepping for a talk at the TED2019 conference in April and queuing up three new books per a recently announced deal with Harper Perennial.

“I’m always interested in very personal, kind of quirky, kind of sad and kind of funny stories about what it means to be a person,” he told me. “The ‘aliebn’ book was the first crystallized version of just one way to talk about that type of stuff. Right now, I’m in the process of stretching and pulling and seeing what other ways those ideas can be explored.”

I caught Mr. Sun, 29, in early March, as he patronized virtually every coffee shop in Los Angeles and prepared to head to the South by Southwest conference in Austin, Tex.


9 a.m. Make coffee and work on a new draft of my TED Talk. For me, it’s tough to distill and trim things to fit a time limit. I’m sort of a hoarder, in real life and also when I write. I’m trying to cram in a lot of ideas, but given that it’s a 10- or 12-minute talk, it has to be a lot simpler and more straightforward. I send it off to my TED curator — who acts as editor, mentor and emotional support — in advance of our call tomorrow.

1 p.m. I meet a friend at Document Coffee Bar in Koreatown to write, now focusing on my “BoJack” episode. A normal week is working from 10 a.m. to 6 p.m. in the writers’ room, but this is a little bit of an unusual week.

3 p.m. Call with Susan Benesch. We created the M.I.T. Online Humor Conversation Series together. We discuss what we’re going to talk about in our South by Southwest panel, “Online Humor in Difficult Times,” with the comedian Jaboukie Young-White.

8 p.m. Head to Balcony Coffee and Tea in Koreatown to work. I’m still new to L.A. and have been trying to explore different neighborhoods by writing in their coffee shops. I usually will get an iced matcha (Americano-style or with sparkling yuzu if available), a regular drip coffee with cream and sugar or a flat white if I’m feeling fancy.

11 a.m. I have a call with my TED curator to discuss my latest effort. We both think it’s not where it should be and agree to scrap that draft and approach the talk from a different angle.

1 p.m. Meet a friend for lunch at Triniti in Echo Park. The thing that helped me really fall in love so quickly with L.A. was the food. In a weird way, it sort of reminds me of home, which is Toronto: they both have such a great food scene that doesn’t get talked about enough.

3 p.m. I have a call with an exec at Chernin to discuss the first act of “Paper Lanterns,” which I sent over a couple weeks ago. But I won’t be able to get back to writing that screenplay until after I finish writing my episode of “BoJack.” It takes me a little bit of mental ramp-up to be able to switch between these two different things. With “BoJack,” I’m working with eight other writers in a room, a group collaboration where I’m the one piecing all the ideas together. With the screenplay, it seems personal; more independent and quiet. But I think I actually like both of those modes.

8 p.m. I’ve been working hard so I treat myself to an izakaya dinner at Tsubaki. It’s almost embarrassing how much I eat out.

9:30 p.m. Go home and talk to my fiancée over the phone. We’re doing long distance for a little stretch, so we talk every night when we’re apart.

9 a.m. I have to go into the “BoJack” offices for a meeting today. I also have my weekly phone call with my therapist. It takes about 45 minutes to walk to work from where I’m living, and it’s nice to walk and talk to him.

12 p.m. Work on my episode all day at Coffee for Sasquatch on Melrose. I’m definitely a headphones-on person in coffee shops, but sometimes I forget to even play music. I think part of me just likes the feeling of having headphones in; it’s like I’m preventing things from escaping out of my ears. When I do listen, lately my go-to writing music has been “A Seat at the Table” by Solange, Nina Simone and Mahalia. When I’m outlining and need more excitement, it’s “Acid Rap” and “Coloring Book” by Chance the Rapper, anything Janelle Monae, Tierra Whack, Raveena and Prince.

5 p.m. Haircut, in advance of South by Southwest.

10 a.m. My episode is due at noon tomorrow, so I work all day on it. I’m Postmates-ing food because it’s crunchtime, and I stay home and write. What I love about working on the last day of deadline is that it almost feels like everything else melts away. Having the deadline looming is almost like a clarifying thing for me. There’s always so much stuff that feels like it needs to get done, but on those days, it feels like everything falls away and it forces me to focus on the thing that is the most pressing. It’s a mixture of both peacefulness and stress.

4 a.m. Finished.

9 a.m. I have a call with my editor at Harper Perennial in the morning, where we talk about the batch of essays and ideas I sent her on Sunday. We go over what’s working, what isn’t and discuss ideas for ordering and structuring the book. It’s a collection of short pieces — small moments and discreet little things. For the most part right now, I’m in the process of writing them in disparate places. I’ll email some to myself, or write them down in a notebook or in my Notes app. It feels a lot like scrapbooking. I think it’s nice that I get to do that while I’m balancing a long-form screenplay that’s just one long story.

12 p.m. Pack for South by Southwest.

2 p.m. I go into the “BoJack” office. Raphael Bob-Waksberg, the creator and showrunner, and the writers have read my draft of the script, and they all discuss their notes with me.

4 p.m. I get a Lyft to the airport to catch my flight to Austin. During the ride, I take out my laptop — car office, woo-hoo! — and I review an audio recording from the notes session. I clarify and write comments on my script on what needs work and what needs to be edited, rewritten, moved around, etc.

6 p.m. Get to my gate. It’s three hours until we take off; I’ll spend the flight working on the new draft for my TED Talk and poking around at my episode notes.

9 a.m. From my room, I review a festival application for “The Laughing Room,” the M.I.T. installation, that will make up a central part of my Ph.D. dissertation.

11 a.m. Meet Susan to discuss the South by Southwest panel.

12:30 p.m. We go to an event called “We Tried to Tell Y’all: Black Twitter as a Source,” featuring activists and academics that I’m really excited to hear from: Feminista Jones, Dr. Meredith Clark, L. Joy Williams, Dr. Mia Moody-Ramirez. There are a few others that I wanted to go to (“We’re Here, We’re Queer and We’re Changing the Film World” and “How Media Fragmentation Fuels Online Toxicity”), but we skip those because we need to figure out our own panel.

5 p.m. Our talk starts. Having Jaboukie offer his insight is wonderful. I don’t think we get to hear enough from comedy people working online about how and why they’re doing what they’re doing. It’s cool to talk shop with him and get Susan’s perspective from a more academic standpoint.

6 p.m. I go to the after-party for the premiere of “Ramy,” a new Hulu show created by Ramy Youssef. I try to catch the screening of “Long Shot,” but the theater is full by the time I get there, so I go back to my hotel and work on my episode for a little bit, finish the new draft of my TED Talk, then crash.

I try to do South by Southwest stuff but I’m overwhelmed and a bit burned out. Sometimes I am energized by big crowds, but this weekend they made me incredibly anxious and overwhelmed. Instead, I find a quiet corner of a hotel lobby near the festival and have coffee all day and work. It’s still close enough that I can people-watch and feel a part of South by Southwest.

Interviews are conducted by email, text and phone, then condensed and edited.

This article is from NYT – go to source

The Giants at the Heart of the Opioid Crisis

anastasios pallis

There are the Sacklers, the family that controls Purdue Pharma, the maker of OxyContin. There are the doctors who ran pill mills, and the rogue pharmacists who churned out opioid orders by the thousands.

But the daunting financial muscle that has driven the spread of prescription opioids in the United States comes from the distributors — companies that act as middlemen, trucking medications of all kinds from vast warehouses to hospitals, clinics and drugstores.

The industry’s giants, Cardinal Health, McKesson and AmerisourceBergen, are all among the 15 largest American companies by revenue. Together, they distribute more than 90 percent of the nation’s drug and medical supplies.

New civil suits from the attorneys general in New York, Vermont and Washington State accuse distributors of brazenly devising systems to evade regulators. They allege that the companies warned many pharmacies at risk of being reported to the Drug Enforcement Administration, helped others to increase and circumvent limits on how many opioids they were allowed to buy, and often gave advance notice on the rare occasions they performed audits.

Three-fourths of prescriptions at a Queens pharmacy supplied by Amerisource were written by doctors who were later indicted or convicted, the New York complaint said. For more than five years, Cardinal shipped to a pharmacy with the highest oxycodone volume in Suffolk County, N.Y., despite continually flagging its orders as suspicious. McKesson kept shipping to two pharmacies six years after learning that they had been filling prescriptions from doctors who were likely engaging in crimes. The shipments stopped only last year, after the doctors were indicted.

“How do the C.E.O.s of these companies sleep at night?” Bob Ferguson, Washington’s attorney general, said at a recent news conference.

Image
Executives of drug distribution companies testified before a House hearing on the opioid crisis in May 2018. From left, George Barrett of Cardinal Health; Dr. Joseph Mastandrea of Miami-Luken Inc.; John Hammergren of McKesson; J. Christopher Smith of H.D. Smith Wholesale Drug Company; and Steven Collis of AmerisourceBergen Corporation.CreditAlex Brandon/Associated Press

Now, in what could be a test case, the United States attorney’s office for the Southern District of New York and the D.E.A. are wrapping up an investigation that appears likely to result in the first criminal case involving a major opioid distributor, Rochester Drug Cooperative, one of the 10 largest, people familiar with the matter said. The investigation began with an examination of possible crimes including wire and mail fraud and various drug violations, according to three people with knowledge of a federal grand jury subpoena served on Rochester in 2017, but it remains unclear what charges might be brought.

The state lawsuits also present evidence that government at all levels has been ineffective at policing the distributors. For the first decade of the crisis, the three largest companies did not even have meaningful programs to monitor suspicious orders, despite being required by federal law to track narcotics and to look out for spikes in orders and cash payments. Since then they have promised and failed to build robust systems to prevent widespread opioid abuse.

The distributors rebutted the new allegations.

“We reject the state’s suggestion that our employees circumvented safeguards to increase sales,” Kristin Chasen, a spokeswoman for McKesson, said in a statement. Cardinal, in its statement, said it had “developed and implemented a constantly adaptive and rigorous system to combat controlled substance diversion.”

Amerisource put the onus on the D.E.A., which it said receives data on all orders shipped and notifications of suspicious ones. “It defies common sense for distributors such as AmerisourceBergen to be singled out,” the company said in a statement.

In the two decades since OxyContin was introduced in 1996, there have been nearly 218,000 overdose deaths related to prescription opioids, according to the Centers for Disease Control and Prevention. While overdose deaths continue to rise, the number of opioid prescriptions has been falling since 2012.

But that is mostly because of a classification change that made drugs like Vicodin (which mix opioids with milder drugs) Schedule II narcotics, which placed more restrictions on prescribing them. Oxycodone, the powerful narcotic that is the main ingredient in OxyContin, was already a Schedule II drug and its sales have continued to rise, according to figures compiled by Iqvia, a health data provider.

The three largest distributors sold 1.6 billion oxycodone pills in New York alone between 2010 and 2018. It was distributors, said the office of Attorney General Letitia James of New York, who “jammed open the floodgates.”

A page from the complaint filed by the New York attorney general’s office.

In 2017, after years of allegedly flouting legal requirements to monitor suspicious orders of opioids, McKesson agreed to a $150 million settlement with the Justice Department, a record for a distributor.

For most businesses, $150 million would be a lot of money. At McKesson, it was less than the $159 million retirement package the company granted its longtime chief executive, John H. Hammergren, in 2013. (After a public backlash — a Forbes headline asked if it was “The World’s Most Outrageous Pension Deal?” — the company later reduced the package to $114 million.)

It was among a string of settlements, and others came far cheaper.

In 2008, McKesson, which supplies Walmart, paid $13.25 million and Cardinal, the main CVS supplier, paid $34 million to settle federal claims that they had been filling suspicious orders.

Before 2007, only two of Cardinal’s roughly 40,000 employees were dedicated to addressing the problem, according to court filings. One McKesson compliance officer complained that asking for resources was like “asking for a Ferrari,” according to New York’s lawsuit.

More settlements followed, but little changed. Cardinal paid a total of $64 million in settlements with the Justice Department in 2012, 2016 and 2017, with similar agreements struck by its rivals. The policing of opioid sales continued to be largely delegated by law to the distributors.

The companies created order volume thresholds for different drugs that would trigger reporting to the D.E.A., but some were so lofty that they resulted in relatively few such reports, the complaints said.

Or they worked around them. In one industry practice, known as “cutting,” Cardinal canceled pharmacy orders “that exceeded a threshold” and allowed “a subsequent, often smaller order,” Vermont’s complaint said.

The headquarters of Rochester Drug Cooperative in Rochester.CreditMustafa Hussain for The New York Times

Brandi Martin, a Cardinal spokeswoman, said that “cut orders are reported to the D.E.A.” and were not “a tactic to avoid reporting.”

Egregious moves spurred limited responses, according to the complaints. McKesson allowed one pharmacy a fivefold oxycodone increase over six months, then refused another request for an 80 percent increase. The company continued shipping to the pharmacy anyway, even after a rival stopped.

McKesson, in its statement, said it was continuing “to enhance and evolve” its compliance efforts.

By last year, executives were summoned by Congress. Both Mr. Hammergren, of McKesson, and George Barrett, the executive chairman of Cardinal at the time and its former chief executive, played down their roles in the supply chain.

During the hearings, Representative Kathy Castor, a Florida Democrat, picked out a single drugstore in rural West Virginia that had been swamped with opioids — 4,000 pills a day at one point from Cardinal, 5,000 from McKesson.

“Don’t you take responsibility?” she asked, adding, “You saw that paying the penalties on your settlement agreements was a cost worth paying because you were making so much money?”

“I wish we had moved earlier to stop shipping to that pharmacy,” Mr. Barrett said at the hearing. Mr. Hammergren echoed that, saying, “I would have liked to have made a decision faster.”

Ms. Castor was not satisfied. “This was the opposite of due diligence,” she said.

There was little enthusiasm for policing opioids at Rochester Drug Cooperative, New York’s complaint alleges.

A Rochester Drug Cooperative newsletter announced the retirement of its chief executive, Laurence Doud III. Mr. Doud has sued the company for firing him and has alleged that it conspired to blame him for a criminal investigation of the company.

For years, only two people at Rochester were assigned to compliance, and one had other responsibilities. Amid discussions about hiring a compliance consultant, Laurence F. Doud III wrote in an email when he was the company’s chief executive that it was “making me ill as to how much this is going to cost.”

Mr. Doud is now suing Rochester, claiming wrongful termination and contending it conspired to blame him for conduct that the D.E.A. and federal prosecutors in New York are investigating in the criminal inquiry. (His suit was previously reported by The Democrat and Chronicle of the city of Rochester.) The current chief executive, Joseph Brennan, is on leave.

Rochester is a cooperative of pharmacies, so monitoring suspicious orders meant monitoring its own members. But it had practices that were similar to those of its larger rivals. Rochester’s upper limits on how many pills pharmacies could buy were “invariably so high that customers could not reach them unless their order volumes tripled from their historical purchasing patterns, rendering the system virtually useless,” New York alleges.

Sales were brisk. Between 2010 and 2018, Rochester sold 143 million oxycodone pills in New York.

The company added a Queens pharmacy with numerous cash buyers as a customer in 2016. The pharmacy was also filling prescriptions from out-of-state doctors and one who had been arrested over oxycodone prescribing practices, the complaint says.

In 2013, Rochester continued shipping to a pharmacy run by a pediatrician who had surfaced in headlines as running a pill mill, according to the complaint. In an email, one Rochester consultant called the situation “a stick of dynamite waiting for the D.E.A. to light the fuse.” The shipments continued.

In a $360,000 settlement in 2015, Rochester admitted that it had failed to report thousands of opioid transactions over five years. The subsequent criminal inquiry sought records including loans and lines of credit that Rochester had extended to its customers, according to people with knowledge of the 2017 subpoena.

Criminal charges are soon expected, with the company and current and former executives under scrutiny, the three people familiar with the matter said. They, like those with knowledge of the subpoena, spoke on the condition of anonymity because of the developing investigation. Such a prosecution would appear to be the first time a major distributor has been held criminally responsible in connection with opioids.

Attorney General Letitia James of New York announcing the state’s lawsuit against opioid manufacturers, the Sackler family and opioid distributors last month.CreditTimothy A. Clary/Agence France-Presse — Getty Images

The D.E.A. and the office of Geoffrey S. Berman, United States attorney for the Southern District of New York, declined to comment on the inquiry.

Jeff Eller, a Rochester spokesman, declined to answer specific questions, citing the investigation, but he said that Rochester’s compliance department is more than six times larger than it was in 2013 and that the company “will continue to make a significant investment.”

Louis Crisafi’s opioid of choice was Actiq, a powerful fentanyl lollipop.

He allegedly left wrappers around the office, which was a bad idea, since he was a senior investigator for the Bureau of Narcotics Enforcement, a branch of the New York State Department of Health that monitors opioid sales.

Mr. Crisafi’s fentanyl use was noticed at work by several other investigators and was among the topics of a 2008 report issued by the state inspector general that raised concerns about the bureau, where many investigators reported to a pharmacist. (Mr. Crisafi, who left the bureau at the time, said he had a legal prescription and never used opioids on the job.)

States have had trouble policing opioid use — even among their own. Like similar agencies elsewhere, the New York narcotics bureau was ill-equipped, with fewer than 20 investigators overseeing distributors and manufacturers, along with the state’s 5,586 pharmacies and more than 120,000 prescribers.

Kenneth Post, a former director of the bureau, said it does not belong in the Health Department, which has close ties with health care providers.

“They’re policing their own, and it doesn’t work,” said Mr. Post, who left the agency in 2010. The Health Department called him a “disgruntled former employee.”

Louis Crisafi, a senior investigator at the Bureau of Narcotics Enforcement, removing the tarp from his illegally parked Corvette in 2008. Mr. Crisafi’s fentanyl use was among the topics of a state inspector general’s report that year.CreditNew York State Inspector General

A 2012 audit by the state Comptroller’s Office found that the bureau had overlooked hundreds of thousands of flawed opioid prescriptions over two years.

The Health Department said in a statement that the bureau had only “limited investigatory” power, deflecting responsibility “to federal, state and local law enforcement.”

At the federal level, the D.E.A. does not closely monitor the millions of transactions involving controlled substances, said Paul T. Farrell, a lawyer who represents municipalities in lawsuits against drugmakers.

“The D.E.A. is not the T.S.A., which is responsible for looking at every passenger going through and screening out those who are threats,” he said, referring to the Transportation Security Administration. Instead, he said that “once a tip is made,” the D.E.A. will “reconstruct what actually happened.”

In a statement, the D.E.A. said investigations are presented to federal prosecutors, who choose “the appropriate litigation strategy.”

Distributors have marshaled lobbyists, contributing $1.5 million to sponsors and co-sponsors of a 2016 law thwarting the D.E.A.’s efforts to freeze suspicious drug shipments.

Distributors have also lined up lobbyists with ties to Gov. Andrew M. Cuomo of New York, where lawmakers included $100 million in opioid taxes or surcharges in two consecutive budgets, though last year’s measure is tied up in court. They have hired two firms founded or co-founded by onetime aides to former Gov. Mario M. Cuomo as well as Mercury Group, whose executives include former advisers to the current governor.

For now, distributors remain largely in control.

“It’s not a good system,” said Dr. Andrew Kolodny, an addiction expert. “It’s the fox guarding the henhouse.”

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Japanese Prosecutors Bring New Charge Against Carlos Ghosn

anastasios pallis
anastasios pallis

TOKYO — Japanese prosecutors on Monday formally charged Carlos Ghosn, the former head of the Nissan-Renault auto alliance, with breach of trust, piling a new count of financial impropriety onto his existing charges in a move that adds pressure on him and ensures he remains jailed.

Mr. Ghosn, who continues to maintain his innocence, has been in a detention center on the outskirts of Tokyo since April 4, when prosecutors swarmed into his apartment in an early morning raid. They seized evidence and dragged him off to jail — his fourth arrest in the case so far — before attempting to take his wife in for questioning.

He was initially arrested in November on suspicion of hiding the true amount of his executive compensation and spent over 100 days in detention, racking up two additional arrests. Including Monday’s charge, prosecutors ultimately indicted him on four charges of financial wrongdoing, including temporarily shifting his personal financial losses onto Nissan’s books.

He was released in early March after paying $9 million in bail and agreeing to strict limits on his activities that put him under virtual house arrest.

But prosecutors soon revealed that the original charges were just a prelude to more serious allegations: After the April raid, prosecutors said they were investigating Mr. Ghosn over allegations that he used a Nissan subsidiary to redirect $5 million to himself.

Prosecutors have not revealed the details of the allegations, but an internal investigation by Nissan found that Mr. Ghosn had authorized over $30 million in payments to a business partner in Oman, according to a person familiar with the report, who spoke on the condition of anonymity because the company has not yet made its full findings public.

Part of that money was sent on to a Lebanese company controlled by Mr. Ghosn, who then passed funds on to companies controlled by his wife, Carole, and his son, according to Japanese news reports. Mrs. Ghosn appeared before a Japanese judge in mid-April to answer questions about the allegations against her husband.

Neither Mr. Ghosn’s wife nor his son has been accused of wrongdoing. Mrs. Ghosn has said her husband is innocent. His representatives have said the payments were for business purposes only.

In a short statement Monday, the Tokyo prosecutor’s office said that it had presented Mr. Ghosn with “an additional charge for violating the Companies Act.”

Nissan on the same day said that it had filed a criminal complaint against Mr. Ghosn in relation to the charges.

“Nissan filed the complaint after determining that payments made by Nissan to an overseas vehicle sales company via a subsidiary were in fact directed by Ghosn for his personal enrichment and were not necessary from a business standpoint,” the company said in a statement.

Since Mr. Ghosn’s most recent arrest, his Japanese legal team has fought to have him released, taking its appeal to the country’s Supreme Court. But judges declined to set him free, won over by the prosecutors’ argument that Mr. Ghosn would be able to tamper with evidence or witnesses if he were released.

Monday was the last day for prosecutors to either release Mr. Ghosn or charge him, following his arrest this month.

His legal team has filed a new bail application, a spokesman for Mr. Ghosn said.

Mr. Ghosn’s treatment by Japan’s legal system has brought global attention to the harsh tactics employed by the country’s prosecutors.

His family and legal team have argued that the multiple arrests are intended to force Mr. Ghosn into confessing to a crime he did not commit.

Japanese prosecutors are notorious for extracting confessions from suspects, sometimes under duress: In 2017, 88 percent of those who went to trial confessed, according to data maintained by Japan’s Supreme Court.

In a video statement after his arrest this month, Mr. Ghosn insisted that he was innocent, saying that the charges against him were the result of a plot concocted by Nissan executives afraid of taking the blame for years of bad financial results at the company.

“My biggest wish,” he said, “is to have a fair trial.”

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