World’s richest doctor gave away millions, then steered the cash to his company
statnews.com
statnews.com
It was a good move; a few years later somebody tried to force human resources policy with a gift, and the board was able to say "no" and point to us, their predecessors.
Parsing hairs of course, and it's likely 90% of the board or more was the same, but it's enough.
It's always much easier to say:
"we already have a policy precedent that doesn't allow this."
than to say
"we can do anything we want, and we choose not to do this."
And there's a substantive difference beyond just perception. With the former, you're ruling in favor of a principled stand regardless of the person/policy behind the particular request at hand. With the latter, you're ruling against a particular person/request.
Real life example: A young lady suffered a slip and fall on the freshly waxed floor of a shop. The shop had a written policy against waxing the floors during business hours, but the janitor had done so anyway. The shop's written policy was used as evidence of negligence in court. They would have had a better outcome if they had no policy at all.
Once you have the policy, even though you wrote it, you can't declare that you're ignoring the policy or that you're changing it retroactively. Well, you could, but you'd look foolish and lose all credibility.
"Better outcome" meaning they would have been able to shirk responsibility and the woman would have been sent packing with nothing? I weep for the future.
Think about what you're arguing for.
Similar to how no one in industry reads patents (opposite of the intended purpose of knowledge-sharing) because they get treble damages if they are found infringing while being aware of the patent.
If you have one, the FTC can come after you for violation of said privacy policy. Fines can result.
If you don't have one, FTC has nothing.
> If you don't have one, FTC has nothing.
Surely this is in some sense as it should be? If a company has no privacy policy, then it explicitly offers me no guarantees about how it treats my data, and I can do business with it (or not) accordingly. However, if a company has a privacy policy, then I should be able to rely on it; it shouldn't be just feel-good boilerplate.
Also, if you make any privacy-related claims, the FTC can come down on you for misrepresentations. A clear, visible Privacy Policy provides an opportunity to clarify what might otherwise be taken as unqualified privacy claims provided elsewhere.
Out of sheer curiosity, what was the policy?
Also, charities have to be aware that they may be generating "unrelated business income" by accepting a donation in trade for something of value, as such income is taxable.
A simple example: gifts may be restricted. Restricting a gift is as simple as writing a $10 check to the Sierra Club and writing "spotted owl conservation" on the memo line. If the Sierra Club doesn't have a spotted owl program, they're supposed to get your permission to apply the gift elsewhere.
If your gift were for half a million dollars and restricted that way, you'd be trying to set policy with it.
Not all attempts by donors to drive policy are harmful to the org. And, not all such attempts are self-dealing or other fiscal shenanigans. Usually they're far more banal clashes of egos.
http://www.independent.co.uk/news/world/americas/us-election...
https://www.washingtonpost.com/politics/trump-used-258000-fr...
https://www.reddit.com/r/explainlikeimfive/comments/3nv0vh/e...
Now, it seems as though ~100% of these sorts of companies are up to some shenanigans. It makes me seriously question the validity of any tech company that is lauded by the press.
"What We Look for in Founders
4. Naughtiness
Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter."
http://lesswrong.com/lw/uv/ends_dont_justify_means_among_hum...
The former exist in the service of the latter. One problem we have with contemporary US culture is condoning a sort of twisted narcissistic, psychopathic assertion that because competently breaking the rules is sometimes ethical, breaking the rules is a sign of competence.
Theranos failed here big time.
So did Uber on the HR front at least.
The public/press distort and misreport all the time. There are plenty of reasons to be cautious there.
"If not, CHANCES ARE there is shadiness occurring".
I used this to nuance and to denote the fact that this is a rule of thumb, not one of the 10 commandments.
A [poor] analogy would be false precision. By stating something in overly specific terms we can communicate something completely opposite of what we mean.
In the case of something like "naughtiness" there's really no decent way to communicate what the author has in mind, not even in an approximate fashion. It's not reducible to a term divorced from the messy details of real-world context. And that presumes what the author has in mind is at all consistent. Better leave it unstated and leave one's actions to speak in their stead.
1) Zenefits having software tools to specifically skirt state laws about employee certification requirements
2) Theranos lying about clinical results
3) Nant misrepresenting order data to their shareholders
4) Uber having a set of formalized HR processes that facilitate the sexual harassment of female employees
all go beyond "naughty". Plus, I don't think that PG would be excited about the financial impacts that each of those behaviors have had on the respective companies' share prices if he were a shareholder in those companies.
That sounds plausible, but I suspect the correlation is very weak. Most people follow rules in a bizarrely idiosyncratic and context-sensitive fashion. For example, taking the escalator when going to the gym to use the stair-master.
What rules are fun to break?
There's a reason we love to watch crime dramas.
Is this publicly available information? First time I hear of it.
uber having a set of informal HR processes that fail to protect employees from persistent harassment
Being 23andMe selling accurate genetic information to their customers outside the purview of the FDA is being naughty. They could do it because the science was there.
In the case of Theranos, selling diagnostics that don't work is not being naughty. It isn't evading useless regulation. It is selling pseudoscience.
Unfortunately, many investors and the business press cannot tell the difference.
The thing that annoys me with Theranos was they could have found scientifically justified ways of significantly improving diagnostic efficiency but chose not to. Other startups are working on low-cost methods of providing lab tests in developing areas, without the pseudoscience.
and what rules matter, is retrospective. I was a big proponent of Uber initially, I felt they were doing the right thing, but clearly they have gone down a path that I cannot condone.
You need to have a respect for the rule of law and the enforcement of contracts, otherwise, people won't do business with each other or trust one another.
You are up to shenanigans.
They are criminally corrupt.
Lest not forget, that STAT news is sponsored in part by Janssen, which gave us this lovely piece in highline last year:
http://highline.huffingtonpost.com/miracleindustry/americas-...
Janssen's parent company, Johnson and Johnson, was sued on these accounts and paid out an excess combined over 3 billion to settle lawsuits related to the marketing, selling, distribution, and deception employed to sell risperdal to as many people as possible.
http://articles.latimes.com/2012/apr/11/nation/la-na-nn-risp...
http://www.seattletimes.com/seattle-news/ny-ag-janssen-pays-...
Unless you are accusing STAT of violating journalistic ethics, these sort of comments are off-topic and irrelevant (and hence downvoted).
Its not however, off topic or baseless. I think it is a great example of the medical industry (with pharmaceutical companies being a subset of that as well) being self serving even if it is dangerous to others (which this donation scheme isn't per say, however it is very suspicious and at the very least I would say not the way we want to business in a polite society)
I can see how it can be misinterpreted
I was red the emphasis to be back on the sponsor not on stat news
Four tax experts who reviewed the contracts at STAT’s request all agreed that the Utah deal was suspicious. Two said it appeared to violate federal tax rules governing certain charitable donations, amounting to indirect self-dealing by Soon-Shiong and his foundations.
This story highlights the imperative need for public-benefit institutions (especially those that use taxpayer dollars) to have their tax records be public. The clampdown on FOIA requests (https://news.ycombinator.com/item?id=13586952) and the refusal of a certain whitehouse-dweller to make his own dealings public make me think this scheme might be more pervasive that just this instance. Yeah, it's a high-profile doctor who got busted; however, the people who craft these kinds of schemes tend to replicate their successes across many high-profile clients.
1- He got a tax deduction: ok, but it's not like that money came back to him tax free somehow.
2- His company got inflated numbers: ok, but not revenue. They only inflated order numbers.
3- Presumably a very small percentage of his donation came back to him in the form of dividends: ok, doesn't seem worth it to me.
4- His reputation may have been enhance: but if the deal was structured as a gift of $10mil worth of free testing wouldn't it having been just as appreciated?
I fail to see how he made out like a villain in this. In fact, we used to do this type of thing when I worked at Ben & Jerry's back in the day. Just structured more as donated product, not donated money that must be used to buy product.
The difference between direct donation of services vs money to buy those services is that the direct donation would have actually lowered his order numbers and profitability, while the monetary donation raises those same numbers.
Also, by donating the money he gets to invest in his company tax free because the donation is a write off, gets filtered into the company which raises it's value, but he doesn't have to declare any capital gain, which he would have to do if he just put the money into the company (not to mention the tax on the money in the first place).
It's all an accounting trick, but it's all about the optics.
The article does state the inflated numbers were reported to investors, but what makes you think this was material in any way?
the deal made it possible for his company to inflate, by more than 50
percent, the number of test orders it reported to investors late last year
while updating them on interest in a flagship product, a diagnostic tool
known as GPS Cancer.
Also, if this was so above-board, want to take bets on whether this was disclosed to investors as money coming from related entities?
So that could be looked at in two different ways. Investors could see a stagnant growth in revenue while orders increase and get scared or they could look at the order trend and get excited.
I think if Apple sold 40% more phones and revenue was stagnant, investors would freak.
As far as a way to fund his company, here's two ways to put money in the business that we seem to be comparing here:
1- Take money you've earned, pay taxes on it, and then reinvest or loan to your company.
2- Take money you've earned, donate it to a charity which saves you paying taxes on that amount, then have the charity buy product from the company thus putting the money (less expenses to provide product) back into the company.
If the incremental cost to provide the tests is less than the tax rate, this could be an efficient way to fund the company, but it results in no increase of ownership or interest gain.
>The contract with the University of Utah earmarked $2 million from Soon-Shiong’s donation for scientific and administrative work. It says the remaining $10 million of the gift was required to be spent on “Omics Analysis.”
"A reporter catches some rich guy laundering money through a university, but not in time to stop him, or have any other effect. Hackernews spends some time being nonprofit fiduciary experts, until someone reminds us that Beatus Graham publicly espoused the holy virtue of Naughtiness, at which point the wagons are circled and the Doublethink Cavalry defends the pioneers. Meanwhile, the money launderer is being considered for Federal office."
Far more people have intentionally built their way to $9B than have intentionally reduced their fortune to $9B.
[1] https://www.thenation.com/article/usaid-helping-haiti-recove...
Definitely shady, but did the donation still make the world a better place?
When viewed as a donation of services instead of cash, he's simply giving his product away for free in order to collect data to improve his product. In its own right, I'd argue that certainly should be considered charity and deserving of praise.
The questionable part about this transaction seems to pertain to the tax deductions taken. However, it strikes me as unlikely that the loss on the donation withstanding any reasonable tax deduction would be covered by any personal payback on the donation.
All that's left is an illegal and unethical transaction designed to mislead investors.
This isn't by any measure a new idea.
Even the "journalist" writing about it benefited for they had something to write up.
Charitable donations are first and foremost tax planning schemes. He used it as intended and all parties agreed to it. (And the government)
Is the only issue here that the author is jealous of their business acumen?
Only careful prospective trials will identify sensitive and specific diagnostics. Those will be the winners (and they will probably be academics).
1. Funnel money to cronies or to support your useless relatives by buying them directorships.
2. Destroy social movements by tangling up the leaders in grant-writing and administrivia.
https://www.amazon.com/Revolution-Will-Not-Funded-Non-Profit...
Melinda and Bill have done pretty well on the humanitarian bit.
By the same logic, Pfizer is a humanitarian charity - it too employs the world's smartest doctors to try to cure diseases.
The Chan Zuckerberg Biohub is a non-profit research entity that has received funding from the CZI, and the IP / license fees will be shared between CZ Biohub and the research institutions that they're partnering with (UCSF, Stanford, and UC Berkeley). Researchers will also have the ability to enter their IP into the public domain (with Biohub approval).
It'd be more similar to Pfizer if Pfizer fired all their sales and marketing staff as well as funneled all of their profits into additional research instead of paying billions of dollars to shareholders every year.
The CZ Biohub is basically a West Coast Broad Institute.
[1] http://time.com/2963130/the-future-of-birth-control-remote-c...
[2] http://www.dailymail.co.uk/news/article-2908963/Judges-deman...
Nothing heree to that specific end, but a lot on the organisation's IP focus: https://duckduckgo.com/?q=gates+foundation+intellectual+prop...
I'm digging further.
I actually strongly agree with population and reproduction programmes. In strong opposition to GP.