A Bloody Mess

This Week In Blunders - Feb. 23-March 1

“Never give a sucker an even break.” - W.C. Fields

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Good news for all you A-List dupes who fell for Theranos founder Elizabeth Holmes: She’s staying behind bars.

Holmes, 41, and her business partner and boyfriend, Ramesh Balwani, 59, lost their appeal on Monday after claiming legal errors that they couldn’t prove any better than their overhyped blood-testing device.

They claimed Theranos had a gadget that could detect a wide range of illnesses from just a tiny drop of blood. Their story came apart in 2015 when a Wall Street Journal investigation revealed that her company was using commercially available devices for its test results.

Elizabeth Holmes often dressed like Steve Jobs – as if. (Photo credit: Wikimedia Commons.)

Holmes leaves behind two small children, the 800 employees Theranos had at it’s peak, and a slew of jilted investors, most of whom should have known better.

No sympathy for the aristocrats, media outlets and institutions she fooled. They should be panned for lending credibility to this poser who donned black turtlenecks and affected a deep voice like she was the next Steve Jobs or something.

Good thing the story fell apart before the company could go public and screw retail investors. And when you dupe powerful people, as opposed to average investors, it’s difficult to escape justice.

Theranos’ board included former secretaries of state George Shultz and Henry Kissinger as well as former Defense Secretary James Mattis. Also on the board were former CEOs Dick Kovacevich of Wells Fargo and Riley Bechtel of Bechtel, among other luminaries.

Her major investors included Silicon Valley venture capitalist Tim Draper, media mogul Rupert Murdoch, and the Walton family of Walmart fame, who all invested millions.

And who can believe all the media outlets and institutions that brazenly fawned over her.

• Time Magazine named Holmes among its 100 most influential people. The Harvard Medical School put her on its board of fellows.

• Pepperdine University awarded her an honorary doctorate.

• Forbes ranked her No. 73 in its list of “the world’s most powerful women.”

• She became the youngest recipient of the 2015 Horatio Alger Award honoring distinguished Americans.

• President Barack Obama named her Presidential Ambassador for Global Entrepreneurship.

Holmes, like FTX fraudster Sam Bankman-Fried, proved that Silicon Valley will buy anything. Both are enshrined in the Business Blunders Hall of Shame.

I could go on about Holmes and why otherwise brilliant people swallowed her pills like hungry sharks at a sandbar.

Doesn’t anybody remember Enron? Holmes’ father, Christian Rasmus Holmes IV, was once a vice president at Enron.

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Pee test fraud

I once peed in a cup for a job at the Houston Chronicle. The lab tech held up the specimen to the light to check the temperature.

He nodded with pleasant satisfaction and said: “In my business, this is what we call, liquid gold.”

I didn’t ask how many times he’d used that line, or where he stole it, but urine tests are indeed big business, racking up billions of dollars in medical bills each year. And where’s there’s gold, there’s usually somebody trying to steal it.

Sherif Khalil, 50, of Redondo Beach, Calif., was convicted for defrauding Medicare out of $4 million for unnecessary urine testing.

Khalil, who ran Spectra Clinical Labs in Gardena, Calif., submitted the highest-reimbursing drug tests to Medicare, even though doctors did not want or order them.

No pot of gold at the end of this rainbow. He faces up to 20 years in prison.

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Is Trump sparking a recession?

A headline in today’s Wall Street Journal: “Worries Mount That Trump Agenda Is Testing Economy’s Resilience.”

More worrisome is the Atlanta Federal Reserve Bank’s GDPNow tracker, which is suddenly forecasting a 1.5% decline in the nation’s gross domestic product for the first quarter of 2025.

One widely quoted economist called it “sobering” on X.

The gauge had been calling for GDP growth of 3.9% just a few weeks ago, but now more data has poured in, and it doesn’t look good.

The Commerce Department reported on Friday that personal spending fell 0.2% in January. Economists had been expecting a 0.1% increase.

And on Tuesday, the Conference Board released its latest survey of consumer confidence, showing the largest decline since August 2021 – you know, when Joe Biden was president.

Economic policy, particularly when it came to addressing inflation, was a huge blunder for Biden and cost him a second term. Eventually, this will become the Trump economy.

Another widely followed economic survey, the University of Michigan’s Consumer Sentiment Index, shows a huge jump in inflation expectations to the highest reading since November 2023.

The bond market is also signaling a possible recession, CNBC reports.

All of this is soft data that is apt to worsen or improve with the news cycle and the next set of economic numbers. But it shows Americans are deeply concerned that tariffs, widespread firings of government workers, and mass deportations are not a recipe for the prosperity promised on the campaign trail.

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It rained on a Florida Man’s tax shelter

A Florida man pleaded guilty on Wednesday for running a tax shelter scheme so stupid that it boggles the mind how he got away with it for more than a decade.

Stephen T. Mellinger III of Delray Beach was a financial advisor, insurance salesman, and securities broker. He made millions in fees selling this:

(Chart credit: U.S. Justice Department indictment.)

See if you can follow this chart from “a” to “d.”

a) You give your money to Mellinger. b) He takes a fat cut. c) He sends most of it back to you in another bank account that you control. (This way, no one’s the wiser, see?)

Then, presto! d) You claim the whole thing as a tax deduction and celebrate the rush of sticking it to the IRS.

Idiotic as this sounds, Mellinger and his co-conspirators have allegedly defrauded the IRS out of nearly $40 million since 2013 with this asinine artifice, according to the indictment.

This falls under the category of “Nice Try.” Clients who bought this nonsense were mostly compounding pharmacists in Mississippi who were also involved in yet another scandal.

Mellinger now faces up to 8 years in prison, but it must have been fun while it lasted.

He allegedly bagged more than $3 million in fees from the shelter. With any luck, he saved some of it for the prison commissary, but people tagged with “Florida Man” headlines don’t often plan that far ahead.

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