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?

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.”

No surprise here: businesses are admitting they use inflation as excuse to further jack up prices

The Intercept headline says it all:

“CEO SAYS HE’S BEEN “PRAYING FOR INFLATION” BECAUSE IT’S AN EXCUSE TO JACK UP PRICES.”

THE CEO OF Iron Mountain Inc. told Wall Street analysts at a September 20 investor event that the high levels of inflation of the past several years had helped the company increase its margins — and that for that reason he had long been “doing my inflation dance praying for inflation.”

The comment is an unusually candid admission of a dirty secret in the business world: corporations use inflation as a pretext to hike prices. “Corporations are using those increasing costs – of materials, components and labor – as excuses to increase their prices even higher, resulting in bigger profits,” Robert Reich, former Labor Secretary under Clinton, recently argued. Corporate profits are now at their highest level since 1950.

There has been so much evidence that this has been happening that it’s sort of ridiculous to make a big deal out of another CEO being stupid and greedy enough to say it out loud.

But it’s worth repeating, if only to counter the right-wing narrative that Democrats and Biden are to blame for inflation despite the fact that we know — and evidence for it continues to pile up — that American industry has been raking in record profits despite alleged problems with supply chains and employees demanding increased wages.

Billionaires are funding the first lawsuit trying to block student loan forgiveness

There’s finally been a lawsuit seeking to end Biden’s student loan forgiveness plan. We’ll discover below what the Washington Post managed to gloss over in its coverage:

A lawsuit seeking to block President Biden’s plan to cancel some student debt claims the policy is not only illegal but could inflict harm on borrowers in some states who would be forced to pay taxes on the forgiven amount.

The lawsuit, filed in U.S. District Court for the Southern District of Indiana on Tuesday, is the first significant legal action seeking to invalidate Biden’s policy before it takes effect.

The Pacific Legal Foundation, the conservative public interest law firm in California that is backing the lawsuit, asserts that the executive branch lacks the authority to create a new forgiveness policy and is usurping Congress’s power to make law. The suit was filed on behalf of Frank Garrison, an attorney who works for the foundation and lives in Indiana.

In its lawsuit, the foundation may have the one thing legal experts said was needed to make a legitimate case: a client with the standing to sue.

Garrison said he has been working toward having his federal student loans canceled through a program that erases the debt of public servants after 10 years of payments and service. Participants in that Public Service Loan Forgiveness program do not have to pay federal or state taxes.

However, Biden’s plan could result in borrowers in several states, including Indiana, being required to pay local tax bills, although they would not be subject to federal taxes.

Since Biden’s plan would take effect before Garrison’s debt is forgiven through the public service program, Garrison said he expects to pay more than $1,000 in state income taxes for the $20,000 of forgiven debt that he would be eligible for.

Again, what the WaPo and the New York Times both fail to mention that this lawsuit is being funded by billionaires, according to this excellent piece in Popular.Info:

But what you will not learn from either story is that the Pacific Legal Foundation receives extensive funding from right-wing billionaires. And this “public interest law firm” has a record of filing lawsuits that advance its donors’ economic and ideological interests.

Among the PLF”s major donors are entities controlled by right-wing billionaire Charles Koch, CEO of Koch Industries. A Popular Information review of tax filings from 2019 and 2020, the latest available, found that the Charles Koch Foundation and the Charles Koch Institute donated $2,331,550 to PLF in those two years.

In 2021, PLF filed suit “to strike down the Centers for Disease Control and Prevention (CDC) eviction moratorium, which [was] designed to protect millions of Americans from being thrown out of their homes during the pandemic.” From the outset of the pandemic, Koch Industries began “plowing money into real estate.” The Wall Street Journal reported in March 2021 that Koch “is emerging as a major real-estate investor during the pandemic, using its robust cash reserves to buy properties at beaten-down prices.” The Guardian noted that Koch Industries, “real estate spending spree has coincided with Koch-funded conservative groups mounting lawsuits against the federal eviction ban.”

In this case, PLF’s suit to block student loan forgiveness aligns with Koch’s economic and political interests. Economically, the less money that the government collects from people making under $125,000, the more it may ultimately require from billionaires (like Charles Koch) and profitable corporations (like Koch Industries). Politically, people who attend college tend to be more liberal than the general population. Providing meaningful student loan relief could increase their participation in future elections, potentially damaging the Republican candidates that Koch favors and spends millions to support.

This lawsuit is part of a larger effort in the right-wing universe to stoke resentment among some Americans against other Americans around student loan forgiveness. Because the more time the rest of us spend fighting with one another over our shrinking piece of the economic pie, the less time we can spend concentrating our energies on billionaires and trillionaires who steal from the rest of us so they can have yachts so large the ships have their own helipads and interior spaces to park their smaller yachts within their megayachts.

Amazon’s long-haul trucking contractors have deadly accident records

The Wall Street Journal has the goods on Amazon’s practice of hiring trucking companies with deadly trucking accident records:

Amazon.com has rapidly built a sprawling network to move merchandise around the nation’s highways. Many of the trucking companies it hired for all that driving are more dangerous than their peers, sometimes fatally so.

They include one company whose driver was found with a crack pipe after running an Amazon trailer into a Minnesota ditch. He was convicted of driving while high. Another driver hauling Amazon freight was involved in a fatal accident in Kansas after losing control while braking—two months after his employer ignored a police order to fix the truck’s brakes, police reports show.

A third driver at another company had two crashes during a single trip between Amazon warehouses, ultimately careening across a Wyoming highway into an oncoming truck, killing its driver.

All three companies received unsafe driving scores that raised red flags at the U.S. Transportation Department, a Wall Street Journal analysis of government data found. Between February 2020 and early August 2022, more than 1,300 Amazon trucking contractors received scores worse than the level at which DOT officials typically take action, the Journal found. DOT scores are a widely used industry standard for assessing trucker safety.

Trucking contractors that worked frequently for Amazon were more than twice as likely as all other similar companies to receive bad unsafe driving scores, the Journal analysis found. About 39% of the frequent Amazon contractors in the Journal’s analysis received scores at that level.

Trucking companies hauling freight for Amazon have been involved in crashes that killed more than 75 people since 2015, according to the Journal’s review.

Amazon said its contractors had a rate of fatalities per vehicle mile about 7% lower than the industry average in 2020. It said it offers condolences to families of people killed in crashes that involve its contractors.

There are reasons that Amazon’s product reaches you so much faster than other retailers. and some of those reasons have to do with Amazon putting the lives of its workers and the public at risk.

I’m an Amazon Prime member and I’ve stopped doing overnight delivery on items I don’t need right away. Which is almost everything I buy from Amazon. Why do I need paper towels on next-day delivery?It’s ridiculous.

Corporate executive suites becoming less politically diverse; more Republican, less democratic

From the good folks over at the National Bureau of Economic Research:

Executive teams in U.S. firms are becoming increasingly partisan. We establish this new fact using political affiliations from voter registration records for top executives of S&P 1500 firms between 2008 and 2020. The new fact is explained by both an increasing share of Republican executives and increased assortative matching by executives on political affiliation. Departures of politically misaligned executives are value-destroying for shareholders, implying the increasing political polarization of corporate America may not be in the financial interest of shareholders.

No big shock here. Large corporations are putting out press releases touting how progressive they are, but behind the scenes they support the worst right-wing politicians and their political action committees.

Greed and inefficiency, not higher wages, are the main drivers of inflation

The good people over at the Center for American Progress (CAP) are calling bullshit on the Wall Street-inspired myth that high worker wages are the main cause of inflation, and that the only way to tame inflation is through Fed rate hikes and higher unemployment.

Historically, countering inflation has been left to the remit of the interest rate policy of the Federal Reserve. In recent months, the Federal Reserve has been sharply increasing interest rates in an attempt to reduce demand, slow the economy, increase unemployment, and lower inflation. This risks sending the country into a recession. While low-income households often feel inflation the hardest, a Federal Reserve-induced recession would be far worse, as millions of the most economically vulnerable Americans could lose their incomes entirely.

Alternative methods exist to fight inflation and reduce the costs of essentials over the longer term that would not adversely affect low- and middle-income households. Congress and the Biden administration have pursued some of these alternatives, including through the newly passed Inflation Reduction Act. These measures reduce inflationary pressures by investing in domestic production, boosting the United States’ productive capacity, tackling long-standing issues of corporate concentration, and more. These efforts have been underway for some time now and have already helped ease inflationary pressures. They should also help the economy better absorb some future demand and supply shocks so that it is more robust overall.

CAP points out an economic question that much of the mainstream press seems unable to understand clearly: if worker wages are at the heart of corporate America’s inflation-causing price increases, why are corporate profits at an all-time high?

From 1979 to 2019, inflation-adjusted wages for the bottom 10 percent of households rose by just 6.5 percent; the median household saw growth of just 8.8 percent over those 40 years, while the 90th percentile of earners saw a whopping 41.3 percent growth.

Meanwhile, data from the AFL-CIO show that profits of S&P 500 companies rose by 17.6 percent in 2021—and the earnings of their CEOs grew by 18.2 percent. That’s more than twice as fast as inflation that year and almost four times as fast as nominal wage growth for regular workers. There is no evidence that typical worker wages are eating into profits either, as profit margins reached 15.5 percent in the second quarter of 2022 for nonfinancial companies, the highest they have been since 1950. (see Figure 2)

Companies could be using their profits to expand their productive capacity for the future and ease the supply constraints that have contributed significantly to inflation. They could also be using their profits to reinvest in their workforces by paying workers better. As Walmart and many other brands have recently discovered, even slightly higher wages result in lower worker turnover and higher productivity, which ultimately boost overall economic growth. Instead, however, many corporate executives have chosen to enrich themselves.

Some business executives have admitted on shareholder calls and in surveys that they have been taking advantage of inflation to boost profits by increasing prices beyond what is needed to offset any increase in their input costs.

You can read the rest at this link.

Why have the Republicans not yet filed suit against Biden’s student loan forgiveness program?

Thus far no Republicans (or their conservative front groups) have filed suit against President Biden’s student loan forgiveness program, although they are preening for any reporter who will listen about how the program is the end of constitutional government as we know it.

The New Republic’s Matt Ford takes a look at the reasons why the GOP might have a hard time coming up with ways to battle the student loan forgiveness program in court — including a law originally meant to forgive the student loans of people directly affected by 9/11:

Student loan relief appears to be different. No such lawsuit has been filed against the Biden administration to stop the order from taking effect. It’s far from clear whether one can even be properly filed to challenge it. And even if one is filed, the Biden administration has good reason to think it can win. For this apparent victory, Democrats can thank the unlikeliest of duos: former President George W. Bush and the “war on terror.”

From where does Biden claim the power to wipe away so much student debt? The White House pointed to the Higher Education Relief Opportunities for Students Act of 2003, or HEROES Act for short. The law sprang from the September 11 attacks and a temporary measure passed by Congress in 2001 to allow the president to waive certain student loan requirements for those affected by the attacks. In 2003, Congress passed a broader version of the law in light of the then-ongoing wars in Afghanistan and Iraq and the large number of U.S. servicemembers who would have to repay loans while serving overseas. Though it was temporary at first, Congress later extended it in 2005 and then made it permanent in 2007.

From their we go to another TNR article, this time by Julian Epp, who writes that he is one of the fortunate who will be aided by the loan forgiveness program. But Epp also writes of the people who will be left behind. Good piece.

And, finally, Epp links to this New Yorker article I managed to miss: The Aging Student Debtors of America: In an era of declining wages and rising debt, Americans are not aging out of their student loans—they are aging into them.

Crazy how the student-centered student loans from when I went to school have morphed into the blood-sucking vampires of debt that I never would have faced or even thought possible to face.

Will Calif. Gov. Newsom sign bill raising minimum wage for fast-food workers?

I have known personally three people in my life who were fast-food franchise owners. (This was long before the pandemic-related wage pressures that caused many fast-food restaurants to nominally raise wages.)

The owners were all rich. Not “I own my own jet” rich. But “ginormous house with a pool and several expensive foreign cars” rich. “Extra house just for vacations” rich. “Send their kids of to pricey private schools” rich.

I knew none of them well enough to say to them at a party, “Don’t you feel guilty living the way you do and paying your employees so poorly that the rest of us — the taxpayers — have to pick up the slack by providing public assistance to them? Guilty that some of your people are paid so poorly that, even with just one kid, they qualify for government assistance, while you have a four-car garage and a pool? You couldn’t spare just a few more dollars per hour for not that many people on your staff?”

It would have been a rhetorical question, of course. None of them would have felt guilty because that’s just who they were.

Related to that, the California Legislature passed a bill that would, among other things, raise the minimum wage for many fast-food workers to $22 an hour starting next year.

The Wall Street Journal reports of the massive mobilization effort to get Gov. Gavin Newsom to veto the bill, even after the governor and his underlings have already significantly watered it down.

Restaurant operators and business advocates mobilized Tuesday to try to persuade California Gov. Gavin Newsom to veto a bill that would set wages for fast-food workers, a move they said could increase costs and set a precedent other states and cities might follow.

The effort is being pushed by franchise owners, including many who would have to take on the cost of paying workers a minimum wage as high as $22 an hour starting next year, set by a government-run council created by the bill. Chains that operate their own restaurants, such as Starbucks Corp., Chipotle Mexican Grill Inc. and In-N-Out Burger, would also be affected.

Groups representing restaurant companies and owners said they plan to launch an advertising campaign and deploy franchisees and business leaders to attempt to persuade Mr. Newsom, a Democrat, to veto the bill, which they say is the latest evidence of California making it difficult for businesses to thrive.

“Every resource at our disposal will be used to ensure our entire membership is asking the governor to veto this bill,” said Jot Condie, president of the California Restaurant Association. He said he fears the wage-setting council’s authority could later be expanded beyond the fast-food industry.

The bill, known as the Fast Act, passed California’s Legislature on Monday. It was backed by labor unions, which say a government council setting minimum wages for fast-food workers could create a model to ensure fair wages and other protections for hourly workers in an industry where unions have struggled to organize workers. this to other states,” said Mary Kay Henry, international president of the Service Employees International Union.

Fast-food franchisees have to be complete idiots not to be made fabulously rich by owning these restaurants. They can afford to pay higher wages and still make tons of money.

Aside from that, the costs to society of these restaurants is huge. There are the aforementioned facts about how much society picks up the financial slack — just as it does with Walmart, Target, etc. — when these fast-food employers pay so far below a living wage with few, if any , benefits. But there are also the health care costs of having these awful (delicious, but awful) restaurants everywhere, beckoning passesrsby to eat convenient, grossly unhealthy meals, the low price of which is subsidized by taxpayers everywhere — including the health care costs of treating all that diabetes and cardio-vascular disease.

So what if fast-food owners have to raise prices? That might mean fewer restaurants in the long-term which, overall, would not be a bad thing. But I suspect that even if every hamburger in California fast food had to be raised by a dollar to keep franchisees and their corporate overlords swimming in money, people would flock to the places because they’d still be cheap and fast and easy.

If you’re over a certain age, $22 an hour seems like a lot. But it’s really not, in today’s dollars. It’s a subsistence wage by today’s standards. Remember also that if the minimum wage had kept up with worker productivity, it would be $26 per hour.

You can read the rest of the WSJ article here.

Conservative legal groups are fighting even private industry efforts at diversity

NASDAQ, the tech-heavy stock exchange, is trying to implement very mild diversity requirements for boards of directors whose companies are listed on the exchange.

This is as pure an example of free enterprise in action as you can find. NASDAQ is a private entity taking these steps, not a government agency.

Once again, conservatives are showing their true colors as the true enemies of market freedom as they are fighting in court NASDAQ’s private-industry effort at building diversity:

Lawyers for conservative groups argued in federal court Monday that Nasdaq Inc.’s push to set diversity targets for listed companies amounts to an illegal racial and gender quota.

Two right-leaning groups sued the Securities and Exchange Commission last year, setting up a battle over the hot-button issue of corporate diversity and how far regulators can go to foster it. The groups sued the SEC because the agency approved Nasdaq’s listing rules, acting in its capacity as the stock exchange’s regulator.

“These rules impose unprecedented demographic quotas and disclosure requirements regarding race, sexual preference and sex on companies valued at over $20 trillion,” Peggy Little, a lawyer for the National Center for Public Policy Research, one of the two groups suing the SEC, argued in court.

Monday’s oral arguments in the New Orleans-based Fifth U.S. Circuit Court of Appeals marked the first time that the legality of Nasdaq’s listing rule has been debated in a courtroom.

Nasdaq’s rule consists of two key parts. One part, which took effect earlier this month, requires Nasdaq-listed companies to disclose the gender and ethnic makeup of their boards using a standardized template.

The other part, set to take effect in phases over the next few years, sets minimum diversity targets for company boards. For most U.S. companies, the ultimate target will be to have one female director and one director who self-identifies as a racial minority or as lesbian, gay, bisexual, transgender or queer. Companies that don’t meet the targets will need to explain in writing why they didn’t do so.

You can read the rest of Alexander Osipovich’s article at this link.