Business
How athletes and entertainers like Shohei Ohtani get financially duped by those they trust
R. Allen Stanford is among the most brazen white-collar criminals — and he’s paying dearly for it. The former financier is in the 14th year of a 110-year prison sentence after being convicted in 2012 for selling $7 billion in fraudulent certificates of deposits in the Caribbean island of Antigua.
He also was required to pay a judgment of $5.9 billion, much of which was intended to go to victims of his crimes. Among those affected by his elaborate Ponzi scheme were seven Major League Baseball stars: Greg Maddux, Johnny Damon, Bernie Williams, J.D. Drew, Andruw Jones, Jay Bell and Carlos Peña.
The players invested in certificates of deposit offered by Stanford’s company, and it was that easy to have their bank accounts frozen in 2009 by the U.S. Securities and Exchange Commission while authorities investigated the case despite putting their trust in advisors with stellar reputations and a wealth of experience.
Damon complained during spring training that year that he couldn’t pay bills and told a personal trainer that he’d pay him when “all this stuff gets resolved.”
The questions lingered for months: How long would the accounts be frozen and would funds be confiscated?
“This certainly shakes up every athlete out there,” Robert Boland, professor of sports business at New York University, said at the time. “They’re all thinking: ‘Who’s guarding my money?’ ”
The Stanford episode might have prompted a reckoning inside MLB clubhouses, but the lesson didn’t stick with the entire next generation of players.
Shohei Ohtani has so far been cleared of wrongdoing in the recent illegal gambling probe that resulted in his interpreter, Ippei Mizuhara, being charged with bank fraud for stealing $16 million from Ohtani’s bank account to pay gambling debts. But the Dodgers and former Angels superstar was unaware of the theft until investigators uncovered wire transfers from his account to a bookie and Mizuhara admitted to Ohtani after a Dodgers team meeting March 20 in Seoul that he’d stole the money.
Ohtani was repeatedly described by authorities as a “victim,” but the extent to which the Japanese player was seemingly oblivious about his personal finances and blindly trusting Mizuhara is jarring at first glance. The federal complaint also says that Ohtani’s high-powered agent and financial advisors from Creative Artists Agency allowed Mizuhara to dissuade them from overseeing the account from which he stole.
“In this particular situation, it’s somebody who’s relying on someone to interpret an entire language to them, so they could be taking advantage of documents, wire transfers, all kinds of things that the other person doesn’t understand but is trusting that they have their best interests at heart,” said Kristin Lee, owner of the athletic and entertainment business management firm KLBM. “That’s rather predatory, and blatantly taking advantage of a very vulnerable person.”
Wealth management experts say athletes and entertainers who squander enormous sums fall into three interconnected buckets: They are naive about or inattentive to their finances; they make risky investments; they overspend on family, friends and expensive toys.
An eye-opening Sports Illustrated study in 2009 that included interviews with athletes, agents and financial advisors found that 78% of former NFL players had gone bankrupt or were under financial stress within two years of retirement and 60% of NBA players were broke within five years of retirement.
“Only those you trust completely can rip you off completely.”
— Diana B. Henriques, financial journalist
Wealthy athletes in nearly every sport as well as famous entertainment figures have experienced the same misfortune. NFL quarterback Mark Sanchez and MLB pitcher Jake Peavy were fleeced of millions of dollars by financial advisor Ash Narayan, who was sentenced in 2020 to 37 months in federal prison. Narayan gained the players’ trust because he was active in the Fellowship of Christian Athletes.
Former heavyweight champion Mike Tyson, once worth about $400 million, declared bankruptcy in 2003 when he was still boxing. Prominent entertainment figures have been fleeced by business managers (Judy Garland, Leonard Cohen, Alanis Morissette) or fallen prey to questionable investment opportunities (Robert De Niro, Ben Stiller, Jack Nicholson).
“It’s a heartbreaking tale that’s played out time and time and time again,” said Diana B. Henriques, financial journalist and author of “The Wizard of Lies: Bernie Madoff and the Death of Trust.” “Regardless of the industry, a person’s lucrative talent, lack of financial expertise and sudden access to wealth primes them as a candidate for a scam.
“Whether you’re an athlete, artist, surgeon or even a Silicon Valley entrepreneur, a con artist’s ideal victim is someone who knows very little about money but has a great deal of it,” she added. “You have a brilliant career that’s taken off and you’re making a ton of money from something you love to do, but you’ve never had to deal with this amount of wealth before.
“So it’s tempting when someone says, ‘Let me make it simple for you. Let me handle this messy, complex, confusing stuff so you can focus all your creative energy on being great and getting greater.’ ”
This strategic positioning of finances as a distraction to a star’s performance in their chosen field makes them particularly susceptible. Ohtani acknowledged as much in his only public comments since Mizuhara was charged with bank fraud: “I’m very grateful for the Department of Justice’s investigation,” he said. “For me personally, this marks a break from this, and I’d like to focus on baseball.”
Dodgers designated hitter Shohei Ohtani walks to the dugout after being stranded at second base in the eighth inning against the Washington Nationals on Wednesday.
(Robert Gauthier / Los Angeles Times)
In fact, it isn’t uncommon for the rich and famous to be blissfully unaware of their money’s movements. Take the musician Sting, who was notified by an anonymous tip that his former accountant, Keith Moore, had stolen more than $9 million from the British rock star over four years in order to invest in global schemes and stave off personal bankruptcy.
“He’d created something like 70 different bank accounts in different countries,” Sting said in a 2002 interview with the Independent. “And the money was coming in different denominations — Deutschemarks, Japanese yen — from different sources … touring, recording, publishing, merchandising, TV appearances. So for that kind of money to be siphoned away is not that surprising. And since it took forensic accountants about two years to sort through the complexities, how could a bass player figure it out?”
In cases like Sting’s, “It’s a fractional deceit that happens over the years, where somebody skims off a little bit here and there from a bunch of different types of accounts with different assets in them, and it adds up to a lot of stolen money,” Lee said.
Such complex financial structures often are entrusted to a family member or close friend. Comedian and actor Dane Cook had millions stolen by his half-brother Darryl McCauley, who was convicted of larceny, embezzlement and forgery. Singer-songwriter Jewel said last year on “The Verywell Mind” podcast that her mother and former manager, Nedra Carroll, stole $100 million from her.
“Only those you trust completely can rip you off completely,” Henriques said.
Billy Joel sued his ex-brother-in-law and former manager Frank Weber for unauthorized loans to Weber’s companies, secret investments in speculative ventures and mortgages on the copyrights for his songs — losses that initially went unnoticed and totaled $30 million.
“It was much more of an emotional betrayal for me than financial, because this was somebody I trusted so much,” Joel said in a 2013 interview with the New York Times Magazine. “I always had this sense that OK, I’m an artist and I shouldn’t have to be concerned about something as banal as money, which is baloney. It’s my job. It’s what I do. I didn’t pay any attention to it, and I trusted other people, and I got screwed.”
Billy Joel performs at the 66th Grammy Awards at Crypto.com Arena on Feb. 4.
(Robert Gauthier / Los Angeles Times)
Athletes started signing contracts worth millions in the 1980s. It’s no coincidence that financial predators began to gravitate toward them around that time. One of the earliest instances involved Lakers great Kareem Abdul-Jabbar and several other NBA stars, including Ralph Sampson and Alex English.
Dubious investments initiated by the players’ former business manager, Thomas M. Collins, included Arabian horses and oil wells in addition to hotel and restaurant ventures.
The prize acquisition was the venerable Balboa Inn in Newport Beach, where Errol Flynn, Humphrey Bogart, Gary Cooper and other Hollywood stars once gathered. But the partnership that owned that hotel and others went bankrupt.
Abdul-Jabbar sued Collins, his sole representative for six years, and others for $59 million, charging negligence, fraud and breach of trust, triggering a flurry of legal action.
Collins countersued, claiming that Abdul-Jabbar owed him $382,050 in unpaid commissions and fees. English sued Abdul-Jabbar, and had him served with papers in the Lakers’ locker room. Abdul-Jabbar added English to his suit against Collins and had those papers served while English sat on the bench during a game.
Lakers center Kareem Abdul-Jabbar shoots a sky hook in a game against the Utah Jazz in Las Vegas on April 5, 1984.
(Lennox McLendon / Associated Press)
The players had given Collins power of attorney in administering their financial affairs even though his only background in finance was an entry-level position at an investment information service. Ed Butowsky, managing partner of wealth management advisory firm Chapwood Investments, said giving power of attorney to anybody is usually foolish.
“The responsibility lies with these athletes, they should not parcel out that responsibility,” he said. “They should know where their money is, how much they have, where the account statements go and so on. If they don’t, it’s their own fault.”
NBA stars Antoine Walker, Latrell Sprewell, Vin Baker and Shawn Kemp each spent close to $100 million not long after retiring in the 2000s, much of it from excessive partying and showering family and friends with cash. And let’s not forget Allen Iverson, who went broke despite earning nearly $200 million in salary and endorsements and is hanging on to reach his 55th birthday seven years from now when he will receive $32 million from Reebok, thanks to a lifetime contract he signed with the shoe company in 2001.
Those cautionary tales have made an impact, Butowsky said. Fewer athletes and entertainment figures are spending ungodly amounts on jewelry, cars and handouts to friends.
“You have some one-off situations, but because of the publicity, people have become a lot more careful about wild expenditures,” Butkowsky said. “But they are still trusting the wrong people to make financial decisions.”
Financial planners often suggest that wealthy clients create a diverse portfolio. Athletes and entertainers often make the mistake of putting too much money into one venture. Butowsky calls it the “front row” mistake.
“A lot of them see some entrepreneur sitting in the front row at a basketball game and want to know what they did to make it,” he said. “But the idea that they are going to replicate that? It’s not going to happen. The very same thing that got a few people rich gets 20 to 30 times that many people broke.”
Though technological advancements have made it arguably harder for scammers to get away with thefts — “People probably used to be able to shuffle papers around, white things out and make photocopies, but now, everything is maintained in some sort of online system with a solid trail around it,” Lee said — athletes and entertainers still need to stay vigilant to prevent themselves from becoming the next headline-making victim.
“These dubious schemes are absolutely not going away,” Henriques said. “Part of it is that we devote so little attention to basic financial literacy in this country. We don’t train young people to have even the most basic knowledge about how finance works. … No one wants to hear that with great wealth comes great responsibility, but it’s true.”
Sometimes investors are fortunate. The seven MLB players who unwittingly invested $10 million in Stanford’s phony certificates of deposit in 2008 sold their shares before the Ponzi scheme collapsed, according to Kevin Sadler, lead counsel for the receivership appointed by the court to recover as much of Stanford’s ill-gotten gains as possible.
Maddux, a Hall of Fame pitcher who earned $153.8 million during a 23-year career, made the largest profit: $169,000 in 10 months on an investment of $3.5 million. Damon made the least, $70 in two months on an investment of $400,000.
However, the players were among hundreds of investors who had bank accounts frozen until they agreed to return their profits to the receivership. All seven players gave back their profits in December 2009, Sadler said, a small amount of the $2.7 billion that will have been recovered by this summer. About 45% of the principal investments stolen by Stanford will have been returned to the approximately 18,000 fraud victims.
“Starting at zero, to be able to return this much, I really do think it is remarkable,” Sadler said. “It’s taken 15 years, so I don’t think saying the recovery is monumental is overkill or hype.”
In most cases involving fraudulent investments, little if anything is recovered, he said. And when it comes to athletes and entertainers with immense earnings, the money lost is often well into the millions.
“How does a person blow that much money?” Sadler said. “You can do it. It’s possible. You don’t even have to try that hard. You can actually blow it quite easily.”
Business
Kennedy Is Driving a Vast Inquiry Into Vaccines, Despite His Public Silence
Health Secretary Robert F. Kennedy Jr. has said little publicly about vaccines in recent months, at the behest of a White House worried that his unpopular stance will hurt Republicans in November’s midterm elections. But he has not abandoned his quest for evidence that they are unsafe.
Working behind the scenes, Mr. Kennedy is spearheading an intense push, across health agencies under his purview, for government scientists and federal data contractors to examine his long-held theory that vaccines are helping to fuel an epidemic of chronic disease, according to multiple people familiar with the effort.
They said the wide-ranging inquiry is a top priority for Mr. Kennedy, who sees vaccines as a “potential culprit” in various neurological and autoimmune disorders, including asthma and allergies. It resurrects research into a number of ideas Mr. Kennedy has espoused, including whether vaccines are linked to autism and whether thimerosal, a preservative that has largely been removed from vaccines in the United States but remains in some flu shots, is dangerous.
The effort is being led by Martin Kulldorff, a biostatistician and vaccine safety expert who rose in prominence during the pandemic as a critic of Covid restrictions and vaccine mandates, and is now the health department’s chief science and data officer.
Career scientists at the Food and Drug Administration and the Centers for Disease Control and Prevention are conducting the research alongside contractors who provide statistical expertise and access to millions of patient medical records. The initiative was described to The New York Times by six people who are close to it, all of whom insisted on anonymity because it is not public.
The work is raising alarms among some vaccine scholars and critics of Mr. Kennedy, who have long accused the secretary of cherry-picking data and misinterpreting studies to claim that vaccines are unsafe and to limit their use. They fear Mr. Kennedy will use the findings to further erode confidence in vaccines, which the World Health Organization estimates saved 154 million lives over the past half-century.
Mr. Kennedy, who came into office saying he would do nothing to discourage people from getting vaccinated, has already taken steps to scale back the number of vaccines children receive. Public health experts complain that by spending money on issues that have already been thoroughly studied, he is taking funds away from research that might answer the very questions he is asking, including what causes autism.
“It just demonstrates that no matter what the general tone is about vaccines, whether we talk about them or not, the secretary is going to continue to try and look at the data and analyze it in a way that will help support the conclusions that he’s already made,” said Dr. Daniel Jernigan, who oversaw vaccine safety at the C.D.C. until he resigned in August. “And that, to me, is a real problem.”
Andrew Nixon, a spokesman for Mr. Kennedy, said in a statement that the effort reflected President Trump’s dedication to advancing “gold-standard vaccine research” that will enable policymakers to “better understand vaccine safety and efficacy and to assess how vaccine exposure, timing and patterns affect health across the life span.”
Mr. Nixon said the work would “inform vaccine recommendations, address critical gaps identified by scientific and medical organizations, including the Institute of Medicine, and strengthen public trust in public health.”
He said the initiative also involved the National Institutes of Health and universities. It remains unclear what the effort will cost and whether it is supplanting other routine government vaccine surveillance.
A former plaintiff’s lawyer, Mr. Kennedy has long said that he wants to build a body of scientific evidence on the harms of vaccines and environmental exposures, which he believes are behind an epidemic of chronic disease. That evidence, he has said, will lay the groundwork for legal action.
“That’s how you really change policy,” Mr. Kennedy said in a podcast as a presidential candidate in 2024. He added, “I’m going to provide that enough science, sufficient science, on each one of these exposures and each one of these injuries, to show who’s causing what and hold them responsible in court.”
During a daylong meeting on the new vaccine research initiative in late February, officials from the Health Department and the C.D.C. gathered to discuss specific studies and methods, including a look at the overall effect of the childhood vaccine schedule. Representatives from major health systems such as Kaiser Permanente were also at the table, given their role in allowing the C.D.C. access to vast troves of data through its Vaccine Safety Datalink system.
As part of the new effort, Mr. Kennedy has tasked some government scientists with studying the health status of vaccinated children compared with those who were not vaccinated. Mr. Kennedy coauthored a book, “Vax-Unvax: Let the Science Speak,” calling for such studies, which he believes will prove harm from vaccines.
Researchers say that such comparison studies would be riddled with pitfalls. Vaccinated children are more likely to receive medical care than those who are unvaccinated, and are thus more likely to receive additional medical diagnoses that could be wrongly attributed to vaccines.
Mr. Kennedy is also asking for the group to undertake new studies looking at the link between vaccines and autism.
The project is also looking at the question of harm from thimerosal, a mercury-based vaccine preservative, according to people close to the effort. The preservative has been thoroughly studied and found to be unrelated to autism, but Mr. Kennedy has remained concerned about it, and has rescinded federal recommendations for flu vaccines that contain thimerosal.
Through the C.D.C. alone, the cost of the project is estimated at $40 million to $50 million, according to a person familiar with the matter.
The project is being overseen by Mr. Kennedy and Stefanie Spear, his closest adviser. Mr. Kennedy’s new senior counselor for public health, Dr. Sara Brenner, a veteran of the F.D.A. who has voiced skepticism of vaccines, is expected to propel the studies forward in her new role, according to people familiar with the plan.
The new vaccine initiative is not the first time the secretary has waged a behind-the-scenes effort to study vaccine safety. Last year, Mr. Kennedy faced significant pushback within federal agencies and from Congress when he deployed David Geier, whose vaccine research is considered deeply flawed, to dig into vaccine safety data to explore some of the secretary’s longstanding concerns.
Mr. Kennedy’s team put pressure on C.D.C. officials, including Dr. Jernigan, who delayed Mr. Geier. When Mr. Kennedy ousted Susan Monarez, the agency’s director, Dr. Jernigan and other C.D.C. leaders quit.
Within the C.D.C. and F.D.A., scientists have registered some relief that Dr. Kulldorff, a pioneer in methods to examine vaccine safety, is leading the new inquiry. He worked on research that was groundbreaking in 2009 to monitor the safety of the H1N1 flu vaccine as it was being rolled out. The team he worked with found a slightly elevated rate of Guillain-Barré syndrome, an autoimmune condition associated with some vaccines.
“Martin had been known for decades as a top-notch vaccine safety scientist,” said Daniel Salmon, a Johns Hopkins University vaccine researcher who worked with Dr. Kulldorff on a vaccine data system that predated one the F.D.A. now uses.
Some scientists who worked with Dr. Kulldorff in the past, though, wonder if the evenhanded biostatistician they once knew changed during the pandemic. They point to a federal document, coauthored by Dr. Kulldorff, justifying sharp limitations on vaccines recommended to children in the United States, saying it left out reams of studies supporting flu and hepatitis B vaccines for infants and children.
In 2024, Dr. Kulldorff joined Mr. Kennedy in litigation against Merck, the makers of Gardasil, a vaccine for the human papilloma virus, earning $400 per hour as an expert witness, court records show. Merck, the vaccine’s maker, challenged Dr. Kulldorff’s standing as an expert based on his prior research finding that the vaccine was safe.
Dr. Kulldorff did not respond to a request for comment, and the health department did not respond to a request to make him available. Mr. Kennedy and Ms. Spear also did not respond to requests for comment.
The C.D.C. and the F.D.A. already devote considerable effort to investigating vaccine safety, using a number of databases and research methods. But Mr. Kennedy’s fellow vaccine critics, including Retsef Levi, a mathematician at the Massachusetts Institute of Technology who serves on Mr. Kennedy’s handpicked a panel of C.D.C. vaccine advisers, find fault with the current studies.
“Many of them have serious methodological flaws,” Dr. Levi said.
Mr. Kennedy began raising questions about vaccines’ safety about 20 years ago, and became a champion for mothers of children with autism who blamed the condition on vaccines. People familiar with his thinking say he still feels deeply committed to those women, and cannot reconcile their often heartbreaking stories with the vast body of research that discounts a link.
For parents who believe vaccines have harmed their children, Mr. Kennedy is fulfilling a major promise. Katie Wright, whose 24-year-old son has autism and got to know Mr. Kennedy through her advocacy for parents who question the safety of vaccines, said more research is necessary to restore trust in childhood immunization.
“There’s been tremendous pushback; they say, ‘Well, the research has been done.’ ” Ms. Wright said. “Well, you know what? A lot of families are concerned. I don’t understand the fear of delving deeper into safety research.”
As health secretary, Mr. Kennedy has demonstrated an unorthodox view of what makes for reliable findings about vaccines. He dismissed a major vaccine study of 1.2 million Danish children over 24 years as “a deceitful propaganda stunt,” for failing to highlight a subset of about 50 children who were more likely to have gotten Asperger’s syndrome, a diagnosis previously applied to high-functioning people with autism, after getting vaccines.
In the language of vaccine science, such findings are considered a signal to be examined in more depth. Dr. Kathryn Edwards, a Vanderbilt University expert in vaccinology, said she was concerned that selective attention to such signals could be “used to further erode the confidence that people have in vaccines.”
Mr. Kennedy has also made hasty changes to vaccine policy, often with minimal scientific justification for decision making. Among those pivots was an overhaul in January of vaccine recommendations, reducing the number of immunizations for American children to 10 from 17.
Though the plan was held up in court, Dr. Edwards said it portends a scenario where the findings of the current effort get a big splash in the media or drive new policies before scientists can understand the reasoning.
“What they’ve done is also worrisome,” she said, “because there have been so many things that haven’t been open and transparent.”
Business
Fears of an AI breakthrough force the U.S. and China to talk
CHONGQING, China — Three years ago, in the idyllic town of Woodside south of San Francisco, the United States and China held their first high-level talks on the dangers posed by artificial intelligence. President Xi Jinping and his longtime foreign minister appeared serious in their conviction that a channel should be a established between Beijing and Washington — a red phone for AI in case of emergencies.
They authorized a diplomatic effort that would begin in 2024 in Switzerland, only months before the U.S. presidential election. A large U.S. delegation arrived with high hopes that were abruptly dashed, according to four sources who attended the talks. The Chinese contingent dismissed American concerns over runaway AI as academic, almost theoretical, quickly turning the conversation to export controls seen in Beijing as yet another U.S. effort to hold China back.
“They naturally view any American diplomatic initiative involving limitations or restrictions of one flavor or another on a capability as being a trap,” Jake Sullivan, U.S. national security advisor under President Biden, said in an interview.
Despite the distrust — and Democrats losing the White House to Donald Trump — an accord was struck in November of that year in Peru, where both sides agreed to keep AI out of the command and control of nuclear weapons.
“It was a breaking of the seal that we could actually do something on AI,” Sullivan said. “In the transition, I told the incoming Trump team that they should really pick up that dialogue. But the Trump administration’s view was just far more laissez-faire, and they didn’t seem particularly interested in it.”
“That’s all changed in the past few weeks,” he added.
A Trump administration once eager to gun for technological supremacy is now, for the first time, reckoning with the power AI could unleash if left unchecked.
In a surprise reversal, quiet discussions have taken place ahead of President Trump’s state visit to China this week to explore reviving talks on an emergency channel, officials told The Times, prompted by shared alarm in Beijing and Washington over the debut of Mythos, Anthropic’s powerful new model.
One senior administration official told reporters Sunday that the White House was looking to create a channel of communication for AI like others that they have “in many areas that have intense focus with the U.S. and China.”
“I think what that channel of communication looks like, its formality and what that looks like, is yet to be determined,” the official said, “but we want to take this opportunity with the leaders meeting to open up a conversation. We should establish a channel of communication on that matter.”
Mythos’ capabilities are seen across the industry and government as those of an unprecedented cyberweapon, able to infiltrate and exploit digital communication systems — including government databases, financial institutions and healthcare programs — with untold consequences.
Whether an announcement will come to fruition this week is not yet clear. Any talks between the United States and China over AI regulations — designing some kind of arms control agreement governing the use of a technology that neither side fully understands or controls — will be fraught with suspicion, misunderstandings and risk, experts say.
“Right now, there is almost no support from U.S. policymakers to engage in formal discussions on AI governance with China,” said Aalok Mehta, director of the Wadhwani AI Center at the Center for Strategic and International Studies.
“The logic is that this is a winner-takes-all race,” Mehta said, “and that it’s imperative to accelerate AI progress to ensure that the United States wins that race.”
America in the lead
China would enter those discussions with a powerful argument, that U.S. leadership in AI — and the prevailing strategy of American AI companies — is propelling the world to a fraught frontier.
Every major U.S. player in the arena — OpenAI, Google, Anthropic, Microsoft and Meta Platforms — is racing to be the first to build a model capable of artificial general intelligence, or AGI, a threshold without a common definition, but that most agree will require a model to perform any intellectual human task.
The prevailing theory is that the first to achieve AGI will secure a prize that multiplies itself: a self-training, recursively improving intelligence, growing exponentially and leaving all competitors in its wake.
Chinese companies, by contrast, are following a state-sanctioned strategy focused on integrating AI into siloed industries and systems, training models to improve individual tasks and accelerate growth in a more tailored approach.
“The Chinese believe there is no single race, but multiple races,” said Scott Kennedy, senior advisor on Chinese business and economics at the Center for Strategic & International Studies. “The U.S. is focused on achieving AGI, while China is focused on diffusion and applications of AI into the rest of their economy — manufacturing, humanoid robotics, all aspects of the internet of things.”
China scholars, AI industry insiders and successive administrations have questioned Beijing’s strategic thinking and forthrightness.
“It’s so baked into the community here that AGI will have this transformative potential that people can’t believe China isn’t focused on this, as well,” said Matt Sheehan, a scholar of global technology issues at the Carnegie Endowment for International Peace with a focus on China. “It says it’s focused on applications, but is that a fake out for an AGI program hidden in the mountains somewhere?”
But most insiders believe that Beijing’s guidance to Chinese companies reveals its true intentions.
“They are not as AGI-pilled as the United States is, and I think that remains the case today,” Sullivan said, “so they regarded a lot of the conversation in the U.S. around extreme frontier risk — misalignment and loss of control — as a bit abstract, and not really as relevant to how they saw AI diffusing in China.”
President Biden greets Chinese President Xi Jinping in Woodside, Calif., in 2023.
(Doug Mills / Pool Photo)
Although China’s progress has exceeded U.S. expectations — especially since DeepSeek released its model over a year ago — the state has focused computer power on specific applications rather than the broad strategy needed to develop more powerful models capable of advancing toward AGI.
“It’s not just chips. It’s money,” Sheehan added. “China’s leading companies are much more financially constrained than U.S. companies. There’s concern over a bubble here, but OpenAI is valued at something near $800 billion. Leading Chinese companies that have gone public are valued at $20 billion. There’s just an orders-of-magnitude gap in available financing.”
Still, some in the U.S. government fear China won’t need comparable computing power if it simply steals the technology wholesale.
Doing so isn’t simple. But last month, in a memo, the White House Office of Science and Technology Policy accused Chinese actors of “industrial-scale campaigns to distill U.S. frontier AI systems,” in effect replicating the performance of the most advanced existing models “at a fraction of the cost.” The memo did not accuse Beijing of endorsing the activity.
In the process, the memo added, carefully constructed security protocols are deliberately stripped away.
China’s negotiating advantage
Whatever its strategic calculus may be, China would enter talks with the Trump administration trailing in the race — while disagreeing on the nature of the finish line.
AGI, in theory, could reach a stage of recursive self-improvement that results in a loss of human understanding or control. But if it is only the Americans, and not the Chinese, seeking to reach that threshold, then who is responsible to stop it?
Daniel Remler, who led AI policy at the State Department during the Biden administration and took part in the Geneva talks, cast doubt on Chinese claims of disinterest in AGI and ignorance of its risks. China falling behind in the race is no strategic design, he said.
“Chinese technologists are close observers of the U.S. AI ecosystem, and sometimes they say what they think,” Remler said. “Many were impressed by the [Mythos] model to the point of despair. Leaders in China’s top AI labs have been vocal in recent months, even before Mythos, about how compute-constrained they are at the frontier. Some have said they may never catch their American competitors.”
Talks at this point in the race could follow a familiar pattern in the recent history of U.S.-China diplomacy, in which Beijing claims it is behind the United States in development, ultimately securing a handicap and greater concessions at the negotiating table.
In other competitive domains — such as with China’s entry into the World Trade Organization and in cybersecurity negotiations between Beijing and the Obama administration — agreements were ultimately reached that Washington believes in hindsight disadvantaged American companies.
The Trump administration, Remler added, “needs to approach AI diplomacy with China with clear-eyed expectations anchored to our own national interests.”
Silicon Valley itself is divided over regulating AI. Anthropic, which was founded on concerns that other AI companies were failing to take safety and alignment concerns seriously, raised alarms over Mythos, its own model, to the Trump administration, a moment that has prompted reflection at the White House on the best path forward.
Spooked after meeting with leaders from America’s top banks over their vulnerabilities, Treasury Secretary Scott Bessent internally advised U.S. government reviews of future model releases — a practice already underway in China, where the training parameters for models, known as “weights,” have been publicly released.
Even the suggestion of government oversight sparked backlash from Silicon Valley. Last week, the White House sent out a memo to reassure industry allies that submitting new models for federal review would be strictly voluntary.
If talks ultimately resume between Washington and Beijing on AI, experts believe the negotiations would be far more complex than those that resulted in arms control agreements governing nuclear weapons in the Cold War.
The superpowers would not only be discussing threats of instability to the global financial system, but also fears of proliferation — advanced AI tools getting into the hands of bad actors interested in using bio- or cyberweapons that could target both countries.
And they ultimately would have to decide whether to discuss regulating the integration of AI into the Chinese and U.S. militaries, an almost unfathomable goal between the world’s biggest adversaries, where trust is lowest and verification would be hardest.
Those in the industry who most fear what artificial superintelligence could bring have told the Trump administration that talks with China are an existential necessity.
Dario Amodei, the chief executive and co-founder of Anthropic, speaks at an event in New York in 2025.
(Michael M. Santiago / Getty Images)
But even within Anthropic, which has championed diplomacy, there are concerns that Beijing could exploit its current disadvantage to entangle American industry at the cusp of its crowning achievement.
Rather than pushing for a single sweeping agreement, industry insiders are advising the administration to pursue targeted deals with Beijing to mitigate specific risks, like the pact on nuclear command and control, two industry sources said.
In private, both Xi and Chinese Foreign Minister Wang Yi seemed to understand that the gravity of the emerging technology before them required some form of cooperation, Sullivan said.
“At a conceptual level, I believe they had a conviction on that and authorized it,” Sullivan said, “but I believe their level of urgency was considerably lower than ours, and saw this as a longer-term process that would play out over time.”
“Their level of urgency and their stake in it has gone up,” he added.
Business
Why Some People Are Allergic to ‘Peanut Butter Raises’
Both peanut butter and salary increases are widely loved, but put them together and you may get some grumbles.
“Peanut butter raises” are across-the-board pay bumps to employees, spread out thinly like a creamy condiment on bread. The term popped up all over business media this year after a report from Payscale, a compensation data company, suggested that some employers would be giving such raises instead of larger merit-based increases to a select few.
This metaphorical use of peanut butter has been lurking around corporate America for years: In 2006, Brad Garlinghouse, then a senior vice president at Yahoo, wrote an infamous memo criticizing the company’s strategy of “spreading peanut butter across the myriad opportunities that continue to evolve in the online world” — in his view, failing to focus on priorities or reward top performers with higher pay. “I hate peanut butter. We all should,” he wrote in what he called the Peanut Butter Manifesto.
How it’s pronounced
/pē-nət bə-tər/
Are peanut butter raises fair? It depends on whom you ask, said Nick Bloom, an economist at Stanford. Are they a best practice? Not really, he argued.
“Good management involves setting tough targets, evaluating employees against this and rewarding those that make their targets,” Mr. Bloom wrote in an email. “This means some folks will get paid and others won’t.”
Firms turn to peanut butter raises in two situations: when they can’t really distinguish strong performers from weak and when managers just want to take “the course of least resistance,” Mr. Bloom said. Generally, he added, a well-managed firm will pay its top performers well and keep an eye on the market.
Kevin J. Murphy, an expert on compensation at the University of Southern California’s business school, argued that peanut butter raises “send exactly the wrong signals,” telling top performers that their employers “just don’t care that much.”
Still, the idea that only stars should get pay bumps is not a law of physics. In previous generations, the notion that people across an organization — not just the top performers — should get consistent raises was common, said Peter Cappelli, a professor at the Wharton School.
But, he said, “that has changed over time,” starting in the winner-take-all, Jack Welch management era. Lately, executives who see themselves as top performers deserving high pay apply that framework to their employees.
Mr. Cappelli is skeptical that peanut butter raises will be a new norm in corporations — they actually strike him as a more generous approach than leaders are likely to take right now. In a tight job market, employers felt pressure to give everyone a little something, he said, but now, in a low-fire, low-hire job market, so few openings are available that bosses are not too worried that employees will quit to go elsewhere.
“Efforts to retain people have faded,” he said. Even peanut butter may be more than some should expect.
Framing raises around peanut butter “takes away some of the seriousness” of discussions about compensation, Mr. Murphy said. Peanut butter is cheap and ubiquitous. It is also associated with children, Mr. Cappelli noted, so it reads as a pejorative in a business setting. It’s not as though executives, he added, are referring to Grey Poupon or caviar raises.
-
California5 minutes agoGOP California governor candidates to face off at Clovis forum ahead of primary
-
Colorado11 minutes agoCoworking firm Industrious takes former WeWork space in Denver
-
Connecticut17 minutes agoNew Haven man found with ‘Super Mario’ meth pills to serve federal prison time
-
Delaware23 minutes agoWho governs matters: Why school board elections deserve your attention
-
Florida29 minutes agoSouth Florida officers sue Ben Affleck and Matt Damon, claiming details in ‘The Rip’ are too real
-
Georgia35 minutes agoGeorgia Democrats seek answers from Justice Department over Fulton election worker subpoena
-
Hawaii41 minutes agoMan killed while changing tire after crash in South Kohala
-
Idaho47 minutes agoDelicious New Menu Item Expected To Hit Idaho Costcos Soon