She stole $700 million and is still walking free because that’s how our justice system works on financial crimes

Elizabeth Holmes, the one-time wunderkind of blood testing technology at bankrupt Theranos, and who was featured on the cover of nearly every gullible financial publication in existence at the time, was convicted in Jan. 2022 of wire fraud charges related to the nearly $700 million the government alleged she stole from investors.

She is still walking free 10 months later.

Proving once again that the rich are treated differently than you or I, even if those rich people got that way from stealing other people’s money. Holmes is using high-priced lawyers and endless, meaningless appeals to stave off the day she goes to jail, according to the Wall Street Journal:

Theranos Inc. founder Elizabeth Holmes is due back in court this month to make the case that she deserves a new trial based on her allegations that the government manipulated testimony from a key witness who testified against her.

The hearing was granted Monday by the judge who presided over Ms. Holmes’s monthslong criminal-fraud trial. The ruling represents a victory for Ms. Holmes in her quest to secure a new trial nine months after a jury convicted her on four counts of wire fraud and conspiracy. Her attorneys have argued that new evidence pertaining to the witness, former Theranos lab director Adam Rosendorff, shows the government presented misleading testimony that may have influenced the jury’s decision.

U.S. District Judge Edward Davila has set the hearing for Oct. 17, when her sentencing had originally been scheduled. Sentencing, if the judge doesn’t grant a new trial, would be delayed at least into November.

Judge Davila expressed skepticism about this latest legal gambit, wondering aloud if it was just a “fishing expedition.”

It’s all really quite remarkable when see through the lens of Donald Trump, Holmes and all the other rich people who play our two-tiered legal system for their own gain.

My question is: if she stole $700 million and started from nothing, how does she have the money for expensive lawyers if the government has clawed back all that they can of her ill-gotten gains?

I mean, if I was caught dealing weed, the government would probably take my house, my car, my bank accounts and anything else it even suspects I might have gained from dealing weed.

Why does the same thing not happen to people accused of stealing hundreds of millions? Why are these people not bankrupted in the way low-level drug dealers are?

Is the best way to lessen incarceration to actually make catching criminals easier to the point that criminals know they it?

If you want to respect writer Matthew Yglesias, don’t start by reading his Twitter feed.

I still haven’t figured out whether he’s extremely bad at hot takes or if he’s just trolling people.

Either way, his Twitter feed obviously lacks the nuance for which I first started reading him at TAP.

His longer form writing has its regular home at SlowBoring.com, and he has a thought-provoking piece up about America’s mass incarceration problem and ways we might start alleviating it.

It has a headline that is typically provocative for Yglesias: “The best way to end mass incarceration is to catch more criminals.”

A couple of years ago, Anne Sofie Tegner Anker, Jennifer Doleac, and Rasmus Landersø published a really interesting paper about the impact of a law passed in Denmark that allowed Danish police to add anyone charged with a felony to a DNA database, increasing the share of arrestees added from roughly 4 percent to about 40 percent.

So what was the impact? The authors “find that DNA registration reduces recidivism within the following year by up to 42%.”

That’s a big reduction. Obviously having your DNA sample in some database does not have a lot of rehabilitative power per se. But as with the classic fingerprinting1 of perpetrators, once someone is in the system, it’s easier to catch them if they commit a crime. And indeed, the authors find that databased criminals are less likely to re-offend, but if they do re-offend, they are more likely to be caught. Using some math, they “estimate the elasticity of crime with respect to the detection probability” and conclude that “a 1% higher detection probability reduces crime by more than 2%.” So what do all these registered former offenders do instead of crimes? Well, they “find that DNA registration increases the likelihood that offenders find employment, enroll in education, and live in a more stable family environment.” This is a great paper and a very cool result, and I think it makes a strong case for the expanded use of DNA databases.

But I think it also suggests a better way of thinking about the phenomenon of mass incarceration in the United States than the mode that takes a negative view toward all punitive measures.

In this case, raising the odds that a person will go to prison conditional on the commission of a crime lead to a disproportionately large reduction in the odds of offending, meaning fewer person-hours of prison rather than more. Incarceration is costly, cruel, and has certain properties that tend to encourage crime. We should try to create a society that is dedicating fewer resources to locking people in cages in abusive conditions, and the best way to do that is to reduce the number of crimes being committed.

He covers a lot of ground in this piece, but as is usual for Yglesias when he is at his best, he makes you think a bit more deeply about the issues he presents.

My biggest concern with giving everyday police officers and police officials easier access to expanded DNA databases and enhanced surveillance technology is that I, as a middle-class white guy of a certain age, will not generally have to worry too much about these developments. It’s poor people and people of color who are most abused by law enforcement.

We have a huge, mostly unacknowledged or willfully ignored, racist cop problem in this country. I don’t want to give those bad guys any more tools to arrest innocent people of color.

Facial recognition technology — much of it already shown to be unintentionally, but functionally, racist in its mistakes — scares me the most in this regard.

Elon Musk’s robotics event panned as slick sideshow of nothingness

It’s crazy that, after all his lies about pie-in-the-sky projects, the financial press is still mostly credulous about all things Elon Musk.

This time it’s the Wall Street Journal running an article about Musk’s big two-legged anthropomorphic robot event that everyone who knows anything about robots laughingly said was a sham. There was this paragraph slipped into the larger article:

Mr. Musk, who has been instrumental in popularizing electric vehicles and pioneered landing rocket boosters with his company SpaceX, also has a record of making bold predictions that don’t immediately pan out. Three years ago at an event about automation, he projected that more than a million Tesla vehicles would be able to operate without a driver by the middle of 2020, positioning the company to launch a robot taxi service. That hasn’t happened.

That “don’t immediately pan out” LOLOL.

You mean like his ridiculous tunnel in Las Vegas?

Or his unbreakable truck glass?

Or any number of other lies he’s Tweeted to manipulate his stock price?

Robotics experts mostly panned his Sept. 30 robot event, with many of them saying that a two-legged humanistic robot makes no sense from the standpoints of design and usability.

One of the big questions around Tesla’s humanoid robot is its central purpose, said Chris Atkeson, a Carnegie Mellon University robotics professor. If Tesla’s main goal is to improve manufacturing, a quadruped likely would have been easier to build than a humanoid robot, in part because additional legs make it easier to balance, he said.

So this is all likely another sham meant to prop up stock prices until everyone figures out Musk is selling snake oil again.

When a loving family-run business turns to distrust and rancor

An amusing article in today’s Wall Street Journal about what happens when close-knit Indian families who run a business together have serious falling outs:

B. Vivekanandhan, the 51-year-old owner of a popular restaurant called Moonrakers, competes fiercely for customers in this southern Indian holiday town. So fiercely, in fact, that fists have flown.

His chief foes are his own flesh-and-blood. His older brother operates a seafood joint called Moonwalkers right across the street. Just down the same lane, his younger brother runs Moonrocks. The menus are nearly identical.

“Sometimes it’s like a street fight,” Mr. Vivekanandhan said. “People say, ‘This is a complicated family. We just came down to eat.’ ”

India prides itself on close-knit families who often live together and run companies side-by-side. All that togetherness can spawn epic business breakups.

Ninety-one percent of companies listed on the Bombay Stock Exchange are family controlled, and nearly all small-to-medium-size companies are owned by families, said Kavil Ramachandran, a professor at the Indian School of Business in Hyderabad. By comparison, about 35% of Fortune 500 companies are family-controlled.

In the southern Indian city of Chennai, rival branches of a family run competing versions of a snack chain, both called The Grand Sweets & Snacks. The founder had two daughters, who split the business about a decade ago after their families clashed. They sliced the original shop in half by hanging plastic sheeting down the middle.

Priyanga Madhan, the founder’s 38-year-old granddaughter, said the breakup was inevitable because she and her cousins kept fighting over the company’s future. She now runs half of the business on behalf of her mother.

One of her cousins, Saravana Mahesh, 50, said his branch of the family no longer speaks to Mrs. Madhan’s side, even when they run into each other at the flagship shop, now split by a concrete wall. “It is still awkward, even after 12 years,” he said.

Families can be so complicated. And, as I’ve gotten older, I know definitively that most of them are dysfunctional in their own ways.

I remember when I was young and watching the Brady Bunch from the perspective of living with an extremely dysfunctional family, I thought, “Wouldn’t it be nice to have a family like that? Where nobody gets drunks and fights in the front yard so the cops are called, but instead works together to figure out how we’re going band together to help our sister who breaks her nose right before the big prom when Billy the football team captain had just asked her out?”

If only!

I’ve known families who approached that level of love and commitment to one another, and they always seemed like aliens. I was always half-expecting the perfect mom and perfect dad and perfect kids to suddenly split in half as aliens shed their human disguises and reveal that it was all an other-wordly field experiment in earth family dynamics.

In the southern Indian city of Chennai, rival branches of a family run competing versions of a snack chain, both called The Grand Sweets & Snacks. The founder had two daughters, who split the business about a decade ago after their families clashed. They sliced the original shop in half by hanging plastic sheeting down the middle.

Starting and maintaining adult friendships can be hard

Interesting article up at the NYT about friendships in adulthood and why those friendships — outside of the ones tied to your children and grandchildren — can be so hard to maintain. The Times interviews Dr. Marisa Franco, a psychologist who wrote the book “Platonic: How the Science of Attachment Can Help You Make — and Keep — Friends.”

First step: When you do meet people, help drown out self-defeating thoughts by starting out with the assumption that people like you.

New York Times: [Why is] assuming people like you is so important?

Franco: According to the “risk regulation theory,” we decide how much to invest in a relationship based on how likely we think we are to get rejected. So one of the big tips I share is that if you try to connect with someone, you are much less likely to be rejected than you think.

And, yes, you should assume people like you. That is based on research into the “liking gap” — the idea that when strangers interact, they’re more liked by the other person than they assume.

There is also something called the “acceptance prophecy.” When people assume that others like them, they become warmer, friendlier and more open. So it becomes a self-fulfilling prophecy. I never used to be much of a mind-set person until I got into the research. But your mind-set really matters!

Times: Still, putting yourself out there can feel nerve-racking. Any advice?

Franco: I suggest joining something that meets regularly over time — so instead of going to a networking event, look for a professional development group, for example. Don’t go to a book lecture; look for a book club. That capitalizes on something called the “mere exposure effect,” or our tendency to like people more when they are familiar to us.

The mere exposure effect also means that you should expect that it is going to feel uncomfortable when you first interact with people. You are going to feel weary. That doesn’t mean you should duck out; it means you are right where you need to be. Stay at it for a little while longer, and things will change.

Times: You also believe that it is critical to show and tell your friends how much you like them. Why is that?

Franco: Because we tend to like people who we believe like us. I used to go into groups and try to make friends by being smart — that was my thing. But when I read the research, I realized that the quality people most appreciate in a friend is ego support, which is basically someone who makes them feel like they matter. The more you can show people that you like and value them, the better. Research shows that just texting a friend can be more meaningful than people tend to think.

I know some people find texting to be impersonal, but I am the opposite. Whenever someone in our busy world takes the time to text me, it means a lot and it makes any day just a little more special.

Dr. Marisa Franco, author of Platonic: How Understanding Your Attachment Style Can Help You Make and Keep Friends Paperback

I’m asking potential roommates one very important Trump-related question

I’m looking for a roommate because my landlord (who is great BTW) is raising the rent on my small free-standing bungalow. I could eat the increase myself. But it would mean much less money I have per month to save money.

Looking for a housemate after living by myself for 8 years is turning out to be far more stressful than I thought it would be.

When I looked for roommates in my 20s it was like: Can they pay the rent and do they seem not crazy? Those were pretty much the only criteria. It made for some disastrous roommates, but mostly it worked out because in your 20s you’re not home much. In your 20s an apartment always seemed like more of a home base than a home.

Now I have a home.

I’m older, I have a dog, and I’m most likely bringing a total stranger into my house because my circle of friends and acquaintances doesn’t really include people who are often (if ever) looking for a place to live with another adult with whom they are not related.

At first I was only using Roommates.com because I like the fact that you could, if you wanted, only choose from people who are verified by one or more methods: Facebook account, Apple account, email verified, phone number verified and, finally, verified by some form of government ID.

The more ways a person verifies him/herself, the less chance they’re some sort of scam artist; always the initial form of screening when looking for a roommate online.

I tried sticking with people who have three out of the five verifications, but you might be surprised how many people, including tech savvy young people, can’t be bothered to verify their identity even in these cursory ways. My matches on roommates.com were paltry and few.

So, I expanded my search to Craigslist.

Yes, this opened me up to an entire world of weirdos.

I decided quickly I needed some way to at least try to weed out creeps, night owls, the chronically angry, and other anti-social types.

So I researched different roommate questionnaires used mostly by colleges and professional schools for dormitories. I came up with my own 24-question Google Forms questionnaire.

Most of the questions are like the one shown immediately below, which tries to access compatibility issues around hours.

Twenty-two of the questions are like that. Multiple-choice or Likert scale questions that try to tease out how compatible (or not) I would be with a person. (One question is asking a person’s name so I know to whom the answers belong. )

Most people are pretty good about answering all of the questions. If they refuse to answer them at all, that’s a sign of something bad on its own, right?

Then I added the question below.

I debated myself about this question.

I live in a deep red state and because human beings are tribal and the primary tribal identification in this part of the country is Republicanism, I might miss some genuinely good roommate candidates who reflexively believe in the norms of their tribe, but might be perfectly normal otherwise. They might think the 2020 election was stolen, but would still pay their rent and bills on-time, and be courteous and affable living companions. (Don’t laugh. It could happen.)

But what I’m finding is this: That question about Trump on its own might not tell me all that I need to know about potential roommate. But coupled with their answers on the other 22 compatibility questions, it means a great deal.

If a person’s answers about, say, the hours they keep and how much they party, put them on shaky ground as roommate material, AND they say the election was stolen? Those things together disqualify them.

What if a person gives me “perfect” answers on the 22 compatiblity questions and then indicates they believe the 2020 election was stolen from Trump?

Then it would all come down to how the person seemed in a face-to-face meeting.

In any case, I am finding the roommate questionnaire is allowing me to disqualify people outright whom I might have otherwise wasted time meeting.

Alzheimer’s drug has Wall Street excited, but some researchers are still skeptical

We ought not be surprised that the Wall Street Journal went all-in with its gush-y reporting about lecanemab, the Alzheimer’s drug from Biogen that has shown promise in clinical trials where other drugs of the same class have failed. Investors are drooling.

The reversal in investor sentiment is nothing short of massive. After so many drugs targeting amyloids had failed in clinical trials in recent years, there was growing skepticism of the “amyloid hypothesis,” the idea that targeting an unusual buildup of the protein in patients’ brains should slow dementia.

The results released Tuesday were unequivocal though. The drug reduced cognitive and functional decline by 27%, compared with a placebo. The data, which haven’t yet been published in a peer-reviewed medical journal, hit all of the trial’s primary and secondary endpoints, with many analysts calling it a best-case scenario. Importantly, while the drug did show safety concerns such as brain swelling, it looked safer than other candidates now making their way through clinical trials, wrote Michael Yee of Jefferies.

The positive data make it likely that the Food and Drug Administration will grant Biogen accelerated approval in January, with full approval coming later next year. The bigger question for investors, patients and society is what the Centers for Medicare and Medicaid Services will do. Biogen’s last approved drug for the disease, Aduhelm, received the FDA nod, but CMS effectively killed its commercial prospects by restricting it due to lack of meaningful improvement in health outcomes.

Biogen’s Aduhelm is the first approved treatment for early stage Alzheimer’s patients that may be able to slow the disease. WSJ explains how the drug interacts with brain cells, and why some doctors aren’t ready to prescribe it yet.

This time will be different, with CMS unlikely to “dig in and refuse coverage” due to the highly successful clinical data, wrote Brian Skorney at Baird. With about 2 million Americans suffering from early-stage Alzheimer’s, the costs to the insurance program could be meaningful, leading to higher healthcare costs for most seniors. Just Tuesday, CMS had announced that premiums and deductibles would be declining next year due to lower-than-projected spending on Aduhelm specifically. Now, the government might find itself paying for another pricey Alzheimer’s drug instead.

Just how pricey will be another important question. Biogen has probably learned some hard lessons from the backlash it got to the Aduhelm launch at $56,000 a year, so expect it to price lecanemab at closer to $20,000.

Still, the costs—and the payoff for investors—are likely to be astronomical.

That last part really jumped out at me. They could cut the annual price by almost 2/3 and still make ungodly profits. That shows you how much money big Pharma makes when nobody is keeping tabs on the price they are charging.

And, as Caitlin Owens article in Axios notes:

Some in the research community continue to question the focus on anti-amyloid cures and say success fighting Alzheimer’s will come in combination therapies like those used for heart disease, cancer and hypertension.

“Amyloid-clearing drugs will provide an incremental benefit at best and there is still a pressing need for the next generation of drugs focused on other targets based on our knowledge of the biology of aging,” said Howard Fillit, co-founder and chief science officer of the Alzheimer’s Drug Discovery Foundation.

This is a nightmare scenario for Medicare: an expensive drug of limited benefit that will mean higher premiums for millions of Americans.

More adult grandchildren are choosing to live with their grandparents as roommates

The New York Times has an article up noting what some see as a definite trend: adult grandchildren living with their grandparents:

Grandchildren and grandparents have their own discrete needs. The grandchildren, still in school or in low-paying, entry-level jobs are looking for deeply affordable housing with very tolerant landlords. The grandparents — not as young as they once were — may be contending with decreased mobility, health challenges and isolation.

Further, both sides of the age divide come to the table armed with their own skill sets. The grandchildren can demystify smartphones, Twitter and paying bills online. “They get to feel useful in the relationship. They can help the person they love,” Dr. Saltz said. In turn, their grandparents can share family lore and recipes, give the grandchildren a sense of their roots — and a sense of perspective.

Those in their early 20s don’t have the experience to know that life will go on, “and older adults can provide that context,” Ms. Butts said. “We’ve survived disasters before. We’ve survived diseases before. We’ve survived recessions before.”

Mr. Elson and Ms. David, 25, shared a home office and, occasionally, meals. When her grandparents decamped for a few weeks to their condo in Stuart, Fla., Ms. David sorted the mail and flagged the utility bills. “I came from living with three friends in a rowhouse in Washington, D.C., to living with people who were a lot older,” she said. “Different energy, right?”

Yes, but good energy. “I feel very fortunate and grateful to have had that housing option,” Ms. David said.

“The idea of young adults living with grandparents really solves a lot of social issues,” said Rachel Margolis, an associate professor of sociology at the University of Western Ontario in Canada who studies the demography of grand-parenthood. “Most older adults want to age in place, and they need help to do so.”

June Iseman, 90, shares quarters on the Upper East Side with her granddaughter Ally Iseman. “My granddaughter moving in with me means I’m not alone,” she said. “Even though she sleeps until 11 and goes to work at noon, the fact is, she’s here. Because I’m not 100 percent OK in terms of my health, that’s a good thing.”

The article adds that living with grandparents, sometimes as the sole parental figure, has been much more widespread among many children of color for a very long time.

Privatization has set the stage for rising far-right populism

“The privatization of schools, water, and other public goods increases inequality, which leaves people more susceptible to far-right leaders,” writes Jeremy Mohler of the anti-privatization organization In The Public Interest (ITPI):

It’s one sentence in a 1,244-word article, but it made me pause and think deeply.

The article was a guest essay in the New York Times about the rise of Sweden’s far-right political party, which was created out of a neo-Nazi group and resembles the increasingly Trumpian Republican Party with its hatred of immigrants, journalists, and others.

The sentence: “Once one of the most economically equal countries in the world, Sweden has seen the privatization of hospitals, schools and care homes, leading to a notable rise in inequality and a sense of profound loss.”

That makes me wonder: How much has privatization contributed to soaring far-right populism, white nationalism, and fascism in the U.S.?

In Sweden, argues journalist and author Elisabeth Asbrink, high levels of political and economic inequality leaves people looking for answers to why they’re suffering and who is to blame—and far right leaders are happy to provide them.

“It was better in the good old days, [those leaders] say, and people believe them,” Asbrink writes. “Back to red cottages and apple trees, to law and order, to women being women and men being men.”

Sound familiar?

Indeed it does sound famliar.

I always argue about privatization the same way:

Let’s say you have a city’s publicly-owned water utility, the major expenses of which can be grouped into four main areas:

  1. Water (getting and treating water)
  2. Distribution (moving the water from the utility to customers)
  3. Labor (wages, benefits)
  4. Operations (all the equipment and systems needed to do the first three)

Let’s say, for the sake of argument, that each of those is 1/4 of the budget.

Now let’s say that the city council sells the utility to a private company in exchange for a large lump sum payment up-front.

Now you have:

  1. Water
  2. Distribution
  3. Labor
  4. Operations
  5. Profit Motive (including huge sums for executive salaries and money to stockholders)

You’ve only added another major expense — the profit motive — which actually now is the most important expense to its new owners, Wall Street. The previous four are now secondary considerations.

You have to take money somewhere from 1 through 4 to help pay for 5.

Who gets the shaft? Ratepayers, who end up paying much higher rates even though the Wall Street company has slashed employee benefits and pay, and started cutting corners on Distribution and Operations.

Nowhere, ever, in the history of major public utility privatization, has the public come out ahead. It hasn’t happened. You cannot point to a reliable source that says it has.

So the public, which doesn’t pay attention to the finer points of utility privatization politics, only knows its water bills are skyrocketing while the water tastes funny and the public can’t get anyone to answer the customer service lines at the water company because they’ve slashed payroll.

To the public, the water company is still the government, thereby feeding into the notion that government doesn’t work and we should throw all the bums out in favor of right-wing candidates who scream about “the swamp.”