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CH123 | DI
🕑 Added 2025-05-28 12:40:01 +0000 UTCThere are two primary legal avenues to oust Holmes on the grounds of mismanagement: One is a breach of fiduciary duty lawsuit, and the other is a derivative lawsuit.
Whichever route I chose, one thing was clear—being a shareholder was a prerequisite. And to become a shareholder, I first had to acquire equity in Theranos.
But… There was a small yet significant obstacle standing in my way.
“You’re pushing forward with the investment?”
That obstacle was none other than Pierce.
Just as we were about to wrap up the due diligence process and move into final contract negotiations, he threw a wrench into the plan.
“You’re not unaware of this, are you?”
Pierce lightly tapped the due diligence report on the desk with his fingers.
His voice carried a hint of skepticism.
After all, I was the one who first raised concerns about Theranos’ potential fraud and requested a task force investigation.
In response, Pierce assembled a massive team of fifteen investigators, and their thorough probe uncovered mounting evidence supporting the allegations.
And now, I was pushing for the investment anyway?
It was a contradictory move.
Pierce’s sharp gaze demanded an explanation. I simply shrugged.
“It can’t be helped. It’s a firm client’s strong request.”
My answer was succinct. What could I do?
Regardless of the due diligence findings, if the client wanted it, we had no choice but to comply. Investment banking, at its core, was still a service industry, and in every service industry, one golden rule remained absolute: The client is king.
But then, Pierce let out a cynical chuckle and threw a cutting remark.
“I heard you were talking about mismanagement?”
He was referring to the question I had asked one of the legal team members.
I wasn’t surprised. Of course, I expected the information to reach Pierce’s ears.
In fact, I had deliberately let that slip. It was something Pierce needed to be aware of.
“Are you investing with the intention of replacing the CEO?”
“That’s highly likely.”
“So, your target is the board.”
Pierce wasn’t asking about David’s intentions—our client.
He was probing mine.
I remained silent.
But he pressed further.
“Your strategy is to gain favor with the board through management reforms?”
Well, he wasn’t exactly wrong. Winning over the board was certainly part of the plan.
At least, he had grasped half the truth.
The more urgent concern, however, was capital.
‘But Pierce doesn’t know that.’
As of now, Theranos was only valued at $1 billion.
The fact that, in just a few months, it would be worth $10 billion—only I knew that.
“Replacing a CEO due to mismanagement won’t be easy. The backlash will be severe, and the risks are significant.”
Pierce’s cold gaze locked onto me.
“With things as they are now, you’ll have a hard time achieving what you want—unless you have a decisive move.”
He was right. For this strategy to succeed, I needed an ace up my sleeve.
Like the ‘Black Brand’ maneuver during the Epicura case.
Of course, I had my own trump card prepared.
But there was no way I’d share that information with Pierce.
‘If I tell him, he’ll definitely oppose it.’
Think back to Epicura— If I had proposed triggering a Black civil rights movement from the start, who would have agreed?
The same logic applied here. A weapon too powerful must be kept hidden—even from allies.
I held my silence.
Then, Pierce studied me for a moment before speaking.
“If you’re honest with me, I might be able to help.”
His tone carried a hint of persuasion.
Of course, he wasn’t offering his help out of pure goodwill.
His motives were obvious.
‘So, he wants a seat on the bus.’
He assumed I was using the Theranos deal to establish ties with the board— That I was aiming to connect with heavyweights like Kissinger and Schulz.
And in investment banking, connections were currency.
Not just for me— Even for Pierce, those figures were a tempting prize.
“Corporate governance is my area of expertise. I’ve handled multiple CEO transitions. My advice would be invaluable.”
‘This… is actually tempting.’
Pierce was a specialist in M&A defense strategies.
And in this field, defense and offense were two sides of the same coin— A master of defense was naturally adept at spotting weak points in an attack.
In other words, if I wanted to strip Holmes of her control, Pierce could provide sharp insights.
But his offer was a double-edged sword.
Pierce had more authority than I did. His involvement could increase the likelihood of success— But it also meant risking my control over the plan.
“That’s an offer our client would likely appreciate.”
I maintained the facade of following client directives.
This was my way of making it clear— I had no intention of sharing the finer details of my strategy.
Boarding was fine, but I wasn’t handing over the wheel.
Key information would remain mine alone.
If Pierce truly wanted in, he had only one option: get on blindfolded.
Seeing my firm stance, Pierce curved his lips into a knowing smile.
“If the client is that determined, then I’ll persuade them myself. Let’s set up a meeting.”
***
After the Conversation with Pierce I immediately called David.
“Do you have time tomorrow? The project’s head has requested a meeting.”
[I see. I happen to have business near New York tomorrow, so I’ll visit in person. How about 2 PM?]
That was somewhat disappointing news. I had planned to stop by our newly established RP Solutions office during my Philadelphia trip.
“If you have plans tomorrow, we can postpone to the day after. We’ll come to you.”
[No, tomorrow would be more appropriate.]
Even though I suggested meeting in Philadelphia a day later, David insisted on keeping the New York meeting.
There was something unusual about his voice. It carried a heaviness that wasn’t there before—so much so that I hesitated to ask further questions.
Is something wrong?
The thought crossed my mind, but at the end of the day, we were just business partners. Personal questions weren’t necessary.
Regretfully, I had to put off the office visit for another time.
***
The Next Day – 2 PM Sharp
David arrived at Goldman.
But he looked… different.
I was used to seeing him in casual attire, but today, he was wearing a suit.
A black suit— In the middle of a scorching summer.
I should recommend some better wardrobe choices later.
As the face of RP Solutions, his appearance mattered. If we were going to work together long-term, some guidance on tone and manner seemed necessary.
While I was mulling over this, we exchanged brief greetings before diving straight into the conversation.
Pierce’s sharp gaze locked onto David.
“I hear you’re pushing forward with the investment in Theranos. Why insist on investing in a company suspected of mismanagement?”
His words carried undeniable pressure.
His intent was clear— To corner David and extract information about my plan.
But David remained unfazed.
“Because I believe in Theranos’ intrinsic value. If the management is replaced, it will be worth the investment.”
“So, you intend to replace the CEO yourself?”
“At this stage, yes.”
A brief silence fell.
Pierce studied David intensely.
The air was heavy with discomfort.
Finally, Pierce spoke again.
“Proving mismanagement isn’t easy. No company operates flawlessly. The real issue is the degree of mismanagement…”
“Are you saying the current evidence is insufficient?”
“That’s correct.”
His response was firm. Then, he elaborated further.
His reasoning was… compelling.
“The first step in addressing mismanagement is persuading the board.”
By the book, I was supposed to take this evidence to the board and convince them.
The goal was to have them voluntarily push Holmes out.
“But the fact that such prominent figures serve on the board of a small startup suggests personal interests are at play. That means they might turn a blind eye to minor infractions.”
It was a fair point.
To them, Holmes was like a granddaughter. Would they really oust her over this level of evidence?
Pierce’s tone suddenly dropped.
“If you fail to convince the board, things get complicated. Then, you’ll have to hold not just the CEO but the board itself accountable. That means turning those powerful figures into your enemies.”
He was right.
If I failed, I wouldn’t just be fighting Holmes— I would have to accuse the entire board of mismanagement.
These were people whose names alone were enough to intimidate.
“Are you prepared for that level of risk?”
It was a scare tactic. Pierce was trying to shake David.
But—
“Yes, I’m fully aware of that possibility.”
David responded without a hint of hesitation.
Pierce faltered for a second.
Then, he resumed his warnings disguised as concerns.
“If it comes to that, legal battles will be unavoidable. But with the current evidence, I can’t guarantee a favorable ruling.”
“You believe the evidence isn’t strong enough?”
“Correct. Courts apply the Business Judgment Rule—which assumes that executives make decisions in good faith and in the best interest of the company. Even if their decisions lead to losses, courts usually don’t hold them accountable. To overturn this presumption, we need indisputable evidence. Right now, I don’t see enough to build a strong case. If this goes to trial, you’ll be relying on luck.”
Pierce then fixed David with a piercing gaze.
“Of course… unless you have a secret weapon.”
There it was.
The part he had been dying to know.
His eyes scanned David’s face as if trying to read his soul.
“If there’s anything important you haven’t told me, now would be the time.”
“There’s nothing.”
David answered calmly.
A faint smirk flickered across Pierce’s lips.
“You don’t know either, huh?”
Damn.
He saw through it.
He realized that even David didn’t know about the trump card I was keeping hidden.
But that was the entire point.
A secret weapon stays secret— Even from allies.
“If anything goes wrong, your relationships with these influential figures could be permanently damaged. Are you still proceeding?”
“Yes, I am.”
David’s answer was unwavering.
Naturally.
He would never refuse my request.
Because I controlled the financial lifeline of the Castleman Foundation.
“If you’re that hesitant, we can always take our business elsewhere. Another firm might be more willing to cooperate.”
David pushed a step further.
It was an implicit threat— If Pierce refused, he’d take the deal to another investment bank.
Pierce fell silent.
Now, he had to decide.
Would he board the bus blindfolded? Or would he hand over the golden opportunity to another firm?
His decision was swift.
“Proceed with the final contract.”
He was in.
Obstacle cleared.
“However, I have conditions. First, I’ll need a signed acknowledgment from you stating that Goldman advised against the investment based on due diligence findings…”
Pierce slid over a stack of legal disclaimers.
Once David signed them, the process was complete.
“We’ll contact you once the final contract negotiations are concluded.”
“Understood. I appreciate your cooperation.”
David shook hands with Pierce—Then turned to me.
His expression was unusually heavy.
“Sean, can we talk for a moment?”
Pierce gave me a curious look, but I pretended to be just as clueless.
Once the conference room door shut behind us, David and I were alone.
His expression remained grim.
Suddenly, I recalled his somber tone during our call yesterday.
“Did something happen?”
It only felt right to ask.
David let out a bitter smile.
There was deep sorrow in his eyes.
“Someone I knew passed away. I’m stopping by on my way to the funeral in New Jersey.”
“I see… My condolences.”
I offered my genuine sympathy.
But David remained silent for a long moment.
After about ten seconds, he finally spoke again.
“Amelia passed away.”
Amelia.
The name hit me like a hammer.
Amelia.
She was— Our first Russian Roulette patient.
The first casualty.
“Her funeral is at 5 PM today. Will you come with me?”
