
World’s richest doctor gave away millions, then steered the cash to his company - HarryHirsch
https://www.statnews.com/2017/03/06/soon-shiong-philanthropy-business/
======
OliverJones
I once was on the board of a charity; on my watch we established a policy
giving future boards the right to decline contributions for any reason or
none, and the duty to decline them if they had too many strings attached.

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.

~~~
hamandcheese
Wouldn't they have been able to say no anyways?

~~~
pc86
Yes but they wouldn't have any political cover other than " _we_ don't want to
do that." This allowed them to point backwards in time to say " _that prior
board_ won't allow us to accept gifts with ________ condition(s)."

Parsing hairs of course, and it's likely 90% of the board or more was the
same, but it's enough.

~~~
throwaway729
_> Parsing hairs of course_

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.

~~~
mysterypie
Be careful, because a written policy can cut both ways. It can be used to
attack the slightest inconsistency in your decisions.

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.

~~~
rhizome
_They would have had a better outcome if they had no policy at all._

"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.

~~~
derefr
I believe the parent is arguing for act-consequentialism, rather than rule-
consequentialism. A similar argument is against the usefulness of case-law in
the court system—it often prevents a judge from making the best possible
decision for the particulars of the case.

~~~
rhizome
From the Supreme Court confirmation hearings I've paid attention to, it seems
that there are reasonable questions on both sides of stare decisis, but I
don't think moving to a non-deterministic legal system would be the answer.

------
mikekij
Back in early 2016, I was in awe of many of the "Unicorn" startups that were
defying all odds to raise money and huge valuations, and earning the praise of
the press world-wide. Zenefits, Theranos, Nant Health, Uber... clearly the
founders of these companies were made of some entirely different material than
I was. Their success was so awe inspiring.

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.

~~~
dxhdr
[http://paulgraham.com/founders.html](http://paulgraham.com/founders.html)

"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."

~~~
mikekij
I would argue that:

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.

~~~
burkaman
I think the issue is "they delight in breaking rules". Why delight in it?
There's a big difference between "I'm willing to break minor rules when I have
to" and "I enjoy being naughty for its own sake". I suspect its a lot easier
to break big rules when you're having fun breaking small ones.

~~~
xapata
> I suspect its a lot easier to break big rules when you're having fun
> breaking small ones.

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.

~~~
iopq
Most people don't bat an eye about crossing in the middle of a small street.
It's technically against the law, but hey.

~~~
echaozh
But is it fun?

What rules are fun to break?

~~~
xapata
You've never tried a petty rebellion as a kid? It's fun. Even as an adult, you
can get a thrill by calling in sick and going out.

There's a reason we love to watch crime dramas.

------
no_wizard
I am not defending this doctor. its down right despicable. Unfortunately, the
sponsor of STAT news is no better (not questioning their editorial bias per
se, but i think its worth point out)

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-...](http://highline.huffingtonpost.com/miracleindustry/americas-
most-admired-lawbreaker/)

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://articles.latimes.com/2012/apr/11/nation/la-na-nn-risperdal-
arkansas-20120411)

[http://www.seattletimes.com/seattle-news/ny-ag-janssen-
pays-...](http://www.seattletimes.com/seattle-news/ny-ag-janssen-
pays-181m-over-drug-marketing/)

~~~
shoyer
Most news venues accept advertisements, even from somewhat controversial
sources. This does not mean that sponsors have any editorial influence, which
would be a serious allegation.

Unless you are accusing STAT of violating journalistic ethics, these sort of
comments are off-topic and irrelevant (and hence downvoted).

~~~
no_wizard
I wasn't, which I stated.

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)

~~~
conistonwater
It's a strange road to go down, isn't it, to say I'm not alleging anything,
but here's an allegation. Saying you think it's relevant _is_ the allegation,
which you both make and deny making.

~~~
no_wizard
Here's my mistake, I really am not questioning their editorial. I was trying
to point out that the sites sponsors were Janssen pharma, with the focus I was
trying to swing in as "Lest we forget, STAT news sponsor ___Janssen
Phamasutical_ __...

I can see how it can be misinterpreted

I was red the emphasis to be back on the sponsor not on stat news

------
shawnee_
_The University of Utah deal — laid out in contracts obtained by STAT through
a public records request ..._

 _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](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.

~~~
inetknght
Yes, this exactly.

------
IanDrake
It's unclear to me what was gained by this?

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.

~~~
jedberg
By inflating his numbers he was able to get funding from investors at better
terms. So basically he scammed his investors.

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.

~~~
smallgovt
Is there any proof for this claim: "By inflating his numbers he was able to
get funding from investors at better terms"

The article does state the inflated numbers were reported to investors, but
what makes you think this was material in any way?

~~~
x0x0
from the article

    
    
       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. 
    

Have individual investors been questioned? No. But that's a significant
increase in total orders.

Also, if this was so above-board, want to take bets on whether this was
disclosed to investors as money coming from related entities?

------
Pigo
While just knowing about jerk moves like this keeps me awake at night with
frustration, he will go on to live a fun and comfortable life most of us only
dream about. All the Internet vitriol in cyberspace doesn't equal a slap on
the wrist, unless he gets the attention of 4chan I guess.

~~~
TeMPOraL
Makes me realize that 4chan has been eerily silent over the last years.
Wouldn't mind if they rediscovered their social responsibility, for teh lulz.

------
JohnJamesRambo
GPS Cancer has to be one of the most frustrating combining of two words I've
heard trotted out in a while.

------
sand500
To save you the click and since it's at the bottom:

>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.”

------
jstewartmobile
The n-gate summary of this one is richer than Soon-Shiong:

" _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._ "

[http://n-gate.com/](http://n-gate.com/)

~~~
GFischer
Hadn't heard of n-gate, pretty funny :)

------
kristopolous
You're unlikely to be worth $9 billion through charity and benevolence.

~~~
chc
This is true, but I feel like you're trying to draw an inference here that
doesn't really work. You're unlikely to be worth $9 billion through a love of
hamburgers, but that doesn't mean somebody worth $9 billion is unlikely to
enjoy hamburgers either.

~~~
kristopolous
I was cynically implying lavishly successful business people are often shrewd,
calculating, and clever insomuch as any generous gift is likely also a form of
investment

------
jedberg
The move was ethically challenged and morally bankrupt, but you have to admit
it was a pretty clever hack.

~~~
deckar01
What could they have done differently to make the donation unquestionably
legal and morally sound (while still maximizing their personal benefit)? Does
the company need to donate the services directly?

~~~
smallgovt
I think this is the most interesting question in the thread.

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.

~~~
x0x0
It's less tax deductions (though those should be questioned!) and more using
this to deceive investors into his company.

------
sauronlord
So they all benefited. Win-Win.

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?

------
jgome
Reminds me of Microsoft, USAID and other similar companies/organizations.

------
sjg007
The winner in the cancer diagnostic space is going to be who can sequence the
most cancers vs germlines. At least where cell free DNA is concerned.

~~~
rgejman
We already know the major drivers in most tumor types. These are the early
mutations that you are going to look for in cell free DNA. Additional cancer-
normal pairs are not going to elucidate many new driver mutations.

Only careful prospective trials will identify sensitive and specific
diagnostics. Those will be the winners (and they will probably be academics).

------
alrs
501(c)3 organizations exist for two reasons:

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...](https://www.amazon.com/Revolution-Will-Not-Funded-Non-
Profit/dp/0822369001)

~~~
mikeyouse
So which category does the Bill and Melinda Gates Foundation fall under?

~~~
gaius
Or the Zuckerbergs?

~~~
vkou
It's not _yet_ clear if the Zuckerberg foundation will accomplish meaningful
humanitarian goals, or serve as an ingenious device to funnel wealth to his
relatives.

Melinda and Bill have done pretty well on the humanitarian bit.

~~~
mikeyouse
To date the Zuckerberg foundation has given $75 million to SF General Hospital
as well as committed to giving $3 billion to establish the Biohub in San
Francisco. They've committed to giving 99% of their shares to the Chan-
Zuckerberg Initiative which is currently valued at something like $50 billion.
Paying the smartest doctors and scientists in the world to cure diseases is a
pretty good way to have a humanitarian impact.

~~~
vkou
As far as I can tell, Biohub is a medical R&D company. It will keep control
over all IP developed by it, and sell licenses (As opposed to the Gates
foundation, which makes its work freely available.)

By the same logic, Pfizer is a humanitarian charity - it too employs the
world's smartest doctors to try to cure diseases.

~~~
mikeyouse
Nope -- The Chan Zuckerberg Initiative is a for-profit company which allows
them to lobby, etc.

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.

