Patrick Soon-Shiong Is No Longer the Richest Person in L.A. — and That's Not the Worst of It
Patrick Soon-Shiong is having one bad year.
It wasn't so long ago that the South Africa–born doctor was the richest man in Los Angeles, valued at nearly $13 billion by Forbes. It wasn't so long ago that the same Forbes magazine was asking: "Can Patrick Soon-Shiong, the World's Richest Doctor, Fix Health Care?" (proving once again that the answer to any headline asking a question is a firm "No"). And it wasn't so long ago — June 2016, in fact — that the good doctor's health care technology startup, NantHealth, went public, its shares surging nearly 33 percent in value on their first day on the market.
The surgeon, inventor and part-owner of the Los Angeles Lakers was riding high in the heady days of 2016, so high that he felt emboldened to buy a significant share of a little newspaper company called Tribune Publishing, soon to be renamed tronc, which owns the Los Angeles Times. Soon-Shiong even dined with President-elect Donald Trump at a New Jersey country club, discussing, according to Trump's transition team, “innovation in the area of medicine and national medical priorities that need to be addressed in our country.” There was some suggestion that Soon-Shiong was in line (or perhaps just putting himself up) for a position in the Trump administration.
Then 2017 happened, and everything went to hell.
In January, the health news website STAT (founded by the Boston Globe owner John Henry) published a story attacking Soon-Shiong's "Cancer Moonshot 2020" campaign — an effort to cure cancer — as all hype and no results. According to the story:
At its core, the initiative appears to be an elaborate marketing tool for Soon-Shiong — a way to promote his pricy new cancer diagnostic tool at a time when he badly needs a business success, as his publicly traded companies are losing tens of millions per quarter. STAT also found several instances of inflated claims, with the moonshot team taking credit for progress that doesn’t appear to be real.
Then in March, STAT ran another story, about a $12 million donation Soon-Shiong had given to the University of Utah, $10 million of which was steered back into companies owned by Soon-Shiong. Speaking to the Los Angeles Times, Soon-Shiong called the report "maliciously false." But that didn't stop the NantHealth stock from plummeting all the way down to just over $4 a share — less than half what it was at the start of the year, and less than a quarter what it was at its initial public offering.
The nosediving stock is one reason that Soon-Shiong, according to Forbes, is now worth "only" $8.6 billion, and has been overtaken by Elon Musk as the richest Angeleno.
Last weekend, Politico delivered a broadside. Building on STAT's reporting, the D.C.-based news site accused Soon-Shiong of using his nonprofit research foundation, NantHealth Foundation, to steer money back into his for-profit companies. According to the investigation:
Of the nearly $59.6 million in foundation expenditures between its founding in 2010 and 2015, the most recent year for which records are available, over 70 percent have gone to Soon-Shiong–affiliated not-for-profits and for-profits, along with entities that do business with his for-profit firms.
Among the many suspicious dealings detailed by Politico was a building in Culver City that Soon-Shiong's foundation received as a private donation, which it then sold to Soon-Shiong's company for $6.07 million in 2012 — even though the same building had been sold, in 2006, for $13.3 million. The building is now home to at least 23 Soon-Shiong–owned companies.
A spokesman for Dr. Soon-Shiong tells L.A. Weekly: "The Politico article has numerous inaccuracies and misleading statements." When asked for an example, the spokesman said, "We’re not gonna go point by point on this."
If the allegations in Politico are true, it's unclear how much trouble Soon-Shiong would be in.
"We have a lot of yellow flags here, based on information available," says Lloyd Mayer, a law professor at Notre Dame who specializes in legal issues facing nonprofits. "It’s not obvious that there are any red flags. I don't see anything here that suggests a basis for a criminal investigation or charges. At most, the foundation violated federal tax rules, which could result in federal excise taxes or loss of tax-exempt status."
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The story is, however, yet another headache for Soon-Shiong, who is currently locked in a battle with tronc chairman Michael Ferro over the ownership of the company and the Los Angeles Times , and who is facing a lawsuit over the University of Utah deal.
"Clearly, he’s a brilliant guy who’s achieved amazing things," says USC journalism professor Gabriel Kahn. "But he’s picked all these fights, and they are all coming back to haunt him. He’s putting out fires left and right. At the very least, it’s a huge distraction. At worst, one of these brush fires leads to a conflagration."
The good doctor, meanwhile, has taken to defending himself on Twitter.
We stand by our proven track record of success. See for yourself: https://t.co/lelHssGVza— Dr. Pat Soon-Shiong (@DrPatSoonShiong) April 12, 2017
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