Steward

Steward Health Care went bankrupt in May, the biggest failure of a hospital chain in decades. We’ve talked about how privatization of hospital care in this country has been disastrous for patients. Steward’s hospitals sliding into perilous disrepair paint a familiar picture:

Conditions at some of its hospitals have grown dire. In one Florida hospital, a pest-control company last year found 3,000 bats.

This month in Phoenix, where temperatures topped 100 degrees, the air conditioning failed at a Steward hospital, forcing patients to be transferred elsewhere, according to a court filing. Also, the kitchen was closed because of health-code violations.

But while hospital administrators were 'scrounging cash and supplies’ to keep its facilities running, Steward CEO Ralph de la Torre was receiving tens of millions of dollars in payments each year to him and companies he owned, totaling at least $250 million during the four years of his ownership.

Often, it is private equity firms bleeding hospital chains dry while services deteriorate. In the case of Steward, one guy performed the bloodletting.

De la Torre quit his lucrative gig as a heart surgeon to became CEO of Steward in 2008. After years at the helm, de la Torre ‘bought out’ its private equity owners in 2020 with a promissory note.

Once he had control, de la Torre piled Steward up with debt at an alarming rate - he sold its real estate to an investment trust to fuel an national expansion that saw its holdings swell to thirty-one hospitals. Following the PE playbook, de la Torre sold off Steward’s primary assets for a short term cash windfall, saddling it with more debt.

In 2021, while the hospital struggled through the pandemic, Steward paid out $111 million to its shareholders, of which de la Torre personally pocketed around $81 million. In 2022, Steward sold off a healthcare business to a public company, and sent $99 million dollars’ worth of its shares to a company de la Torre owned.

The self dealing didn’t end there. Two of de la Torre’s other businesses received huge consulting and services payments from Steward as the company was hundreds of millions a year in the red:

It was paying a management-consulting firm majority-owned by him at a rate of $30 million a year, a bankruptcy-court filing shows.

Steward said the firm, Management Health Services, employed 16 people, including Steward executives. Steward said they “provide executive oversight and overall strategic directive.” Steward effectively paid its CEO’s firm, which employed Steward executives, for executive-management services for Steward.

This ‘strategy’ company advising Steward, staffed by Steward executives and its CEO, also owned two private jets, which makes sense for a company with sixteen employees.

In the last year before its bankruptcy, Steward paid another company part-owned by de la Torre $37 million for real estate and facility management services. The same facilities that, by the end of that period, were in such disrepair they faced lawsuits, investigations, and regulatory shutdowns.

Some of Steward’s money went to other causes, like $3 million worth of ‘charitable’ contributions to a private school attended by de la Torre’s sons, so it could build a new STEM building named after his mother.

In all, Steward has a staggering nine billion dollars in debt, which it is still trying to resolve via bankruptcy. It put its hospitals up for sale, and sold the physician practice de la Torre once ran. A few of the hospitals have been shut down or seized by the states they’re in. De la Torre and Steward face multiple state and federal investigations, as well as criminal corruption charges in Malta, where de la Torre was apparently also up to no good.

It is a harrowing story of greed, corruption, and bad management, it’s easy to forget these are hospitals, designed to provide life-saving care to thousands of people every day. More than thirty hospitals were caught up in the scandal, left to languish due to one man’s pursuit of riches.

The reason we may se de la Torre suffer civil and potentially criminal consequences of his actions is that he was so egregiously self-dealing, prosecutors could prove corrupt intent. If he were a faceless PE firm, buying and bankrupting hospitals in the standard course of business, it might not even make national news.

Jim Justice

Speaking of wildly corrupt people looting company funds for personal gain, the governor of West Virginia is fighting expensive legal battles to hang on to his luxury hotel and other businesses despite huge debts due in part to his participation in the Greensill fraud.

Luxury hotels are, to be fair, not critical infrastructure like hospitals - if we had less of them, the world would not suffer for it. However, people work at those hotels, often paid poorly to serve their wealthy clientele. Justice has, predictably, been screwing his workers over for years:

Around 400 employees at The Greenbrier hotel received a letter Monday from an attorney representing health care provider Amalgamated National Health Fund saying they will lose coverage Aug. 27 unless the Republican's family pays $2.4 million in missing contributions…

Not content to simply stiff his insurer, Justice has been stealing from his employees:

The letter also said that some contributions were taken out of employees’ paychecks but never transferred to the health fund, which concerned union officials.

Justice is running for Senate while still the governor of West Virginia, serving his second term after switching from Democrat to Republican at a Trump rally nine months after he was elected. He made his money the old fashioned way, by inheriting his family’s coal mines - many of which have been repeatedly cited for safety issues - before attempting to become a real estate magnate by taking on huge amounts of debt and failing to pay partners and vendors. Sound familiar?

The idea that a shady businessman on the verge of financial ruin can both run a state and cruise to a seat in the Senate really sums up how our political system treats privilege. The powerful do what they want, take what they want, and are rewarded for it. Everyone else is on their own.

Fake Elon

It is bad enough when billionaires rip people off with bad cars, or pollute the skies with their satellites, or turn social media platforms into Nazi cesspits. Now, thanks to the wonders of AI, Elon Musk deepfakes are scamming people out of their life savings:

Thousands of these A.I.-driven videos, known as deepfakes, have flooded the internet in recent months featuring phony versions of Mr. Musk deceiving scores of would-be investors. A.I.-powered deepfakes are expected to contribute to billions of dollars in fraud losses each year, according to estimates from Deloitte.

The videos cost just a few dollars to produce and can be made in minutes. They are promoted on social media, including in paid ads on Facebook, magnifying their reach.

Not content to clone Musk, scammers are using videos of Warren Buffett, Jeff Bezos, and Donald Trump as well. And, like most things, this is less a story of the scammers themselves than the platforms that enable them.

Twitter has been essentially taken over by bots and scammers, as Musk eliminated most of its ad safety and risk teams and allows pretty much anyone to hawk their wares on his website.

Facebook and YouTube, however, say they spend huge amounts of money to ensure their platforms aren’t hawking scam ads or videos, but a steady stream of news stories contradicts those claims, including this one:

After former President Donald J. Trump spoke at a Bitcoin conference Saturday, YouTube hosted dozens of videos using the “live” label that showed a prerecorded deepfake version of Elon Musk saying he would personally double any cryptocurrency sent to his account.

At the heart of these problems is their business model - they make money off content produced by their volunteer workforce of users. Facebook and Google could easily tighten restrictions on who could post photos or videos, or who could search and find those posts, but that would crush engagement, which is the metric they use to sell both ads and investors on their stocks.

Put another way: if every scammer who made an Elon deepfake video could only post it to their personal account, which never made it into the YouTube or Facebook search algorithm, they’d never find few victims. If every QAnon or right-wing hate group could only invite their small circle of connections to a Facebook group for the purposes of radicalization, they’d barely make a ripple. Platforms amplify scam and hate content not because they want to, but because failing to is at odds with their business strategy.

The solution to scams proliferating online was never really to create better tools to stop them, it’s just the excuse companies can give without admitting that their businesses would collapse without the ability to monetize all the dumb shit we spew forth onto the Internet each day. Even the scams.

Food Prices

As I write this, the final day of the DNC is happening. As you are reading this, it will be over, and the political press can go back to doing whatever it does from their offices and not a convention center in Chicago. One topic that has created an interminable amount of what passes for debate among the pundit class is the Harris campaign’s promise to fight price gouging, more specifically the cost of food.

Which is welcome news, because we love talking about food prices around here. One question worth asking is what the average American really believes when it comes to the causes of ‘inflation’, a term so overused at this point as to be almost meaningless. The FT has done some encouraging polling on the topic:

Look at the FT’s poll of US voter attitudes. The cost of living is by far the most important factor people report (53 per cent of respondents) in deciding their vote for president. A huge majority (78 per cent) say food prices have the biggest impact on their financial situation. And three in five (the most popular answer by a big margin) say “large corporations taking advantage of inflation” are most responsible for price increases. While a majority think Harris, if elected, should modify her predecessor’s economic policy, they overwhelmingly want her to do so in the direction of focusing (even) more on prices and the cost of living.

I simultaneously hold the opinions that the average person does not give a shit about how the price of everything seems to be so high but does understand how they are. I think it is savvy to come out and say you will take on companies that are very obviously price gouging, while not being specific enough to give your enemies a clear line of attack against you.

Very few American voters are going to be on the side of an industry which is raking in near record profits while the cost of everything they buy has gone up:

So, how do you tackle high food prices without imposing caps on what companies can charge? Consolidation and monopolies have crushed competition and allowed companies to profiteer with little fear of consumer backlash:

Data presented by MSCI shows that the biggest four companies account for 40 per cent of sales in the food, beverages and tobacco manufacturing sector, and nearly 80 per cent in the food and staples retailing sector (with Walmart alone at more than 45 per cent).

Antitrust probes of food producers would be both politically popular and well within existing laws (until the Supreme Court gets involved, but that’s another set of problems.)

Simply put, Harris and her team have picked a winning issue, and are addressing an issue that drives the contradictory sentiment in polls showing people think the economy sucks for them despite all indications that it is doing well writ large.

Does this mean we get to talk a lot more about food prices? One can hope.

Short Cons

404 Media - “Donald Trump accepted fake endorsements from AI-generated versions of Taylor Swift and her fans. Under a recently-enacted Tennessee law, the AI-generated images could be illegal.”

WaPo - “Social media platform X is shuttering its operations in Brazil “immediately” after the country’s top judge allegedly threatened to arrest the company’s legal representative in secret for not complying with orders to shut down certain accounts, the company posted Saturday.”

WSJ - “The $13 billion that Elon Musk borrowed to buy Twitter has turned into the worst merger-finance deal for banks since the 2008-09 financial crisis.”

NYT - ““Let me give you the data points,” [Lewis] said. “The book did poorly. It never found its market. Football people don’t really read books, compared to baseball people. And if they’re going to read one, they don’t want a chick flick in the middle of it.””

Balls and Strikes - “Eva was made to undress and change into one of the jail’s green jumpsuits, and was handcuffed. Then, King pantomimed a court hearing, complete with an attorney assigned to act as Eva’s faux-representation. And he asked her peers for a show of hands on whether Eva should spend time in jail. “I’m thinking maybe she needs to go to the juvenile detention facility,” King said. “You do understand we have a jail for kids.””

NYT - “This month, F.B.I. agents searched the homes of two prominent figures with connections to Russian state media: Scott Ritter, a former United Nations weapons inspector and critic of American foreign policy, and Dimitri K. Simes, an adviser to former President Donald J. Trump’s first presidential campaign in 2016.”

CNN - “Sixty percent of 651 foods that are marketed for children ages 6 months to 36 months on 10 supermarkets’ shelves in the US failed to meet recommended World Health Organization nutritional guidelines for infant and toddler foods, according to the study, which was published Wednesday in the peer-reviewed journal Nutrients.”

The Atlantic - “Although no one ideology has a monopoly on AI art, the high-resolution, low-budget look of generative-AI images appears to be fusing with the meme-loving aesthetic of the MAGA movement. At least in the fever swamps of social media, AI art is becoming MAGA-coded. The GOP is becoming the party of AI slop.”

Thanks for reading!