ga ♪ tonight on kqed newsroom, p with tmary election over, a busy summer of campaigning lies ahead as candidates for governor, and others battle it out. key takeaways plus analysis from california politics and government teams. also the "wall street journal" investigative reporter talks about his new boo "bad blood" detailing how the $9 billion company deceived silicon valley and the rest of the country. hello and welcome to kqed newsroom. i'm thuy vu. we begins with politics. tuesday's primary results set the stage for some big races in november. wealthy gop businessman john cox finished second behind gavin newsom in thevernor's race.

democrats are sharpening their focus on sev key congressional seats in california that are crucial to winning control of the house this year. in two of those races, the gop incumbents are retiring, giving democrats hope they could flip the seats in the general election. but the gop is fielding candidates they think will motivate the base to turn out in november. joining me for a perspective is republican national committeeman sean steele. he joins us via skype from orange county. mr. stee, nice to hav you with us. >> it is great to be here. thank you. >> well, let's begin with the governor's race. john cox, it is john against gavin newsom, but cox only has out one-tentf the campaign money that newsom has. so what does john cox nee to do to prevail in november? >> well, first of all, cox came from way behind. frankly, none of us in the party thought either republican wouldg have a hans t up there and they came in in the top four, two of the top four. the big oddity was regosa, we thought it would e democra all the way. cox is holding the message.

he put something together that makes a lot o sense to democrats as well and he's talking about the hollowing out of theiddle class, that is the war against middle class. to win, there's a lot of vulnerabilities. newsom certainly didn't have a majority of ddemocrats behin him, so he comes out with that. he's f he's also a sncisco democrat. in san francisco that's a great thing. outside of san francisco, not so greatfoecause moslks understand that san francisco has turned into kind of a trash town, high disease rate,igh alcohol. we got tent cities. it is really dysfunctional and you need a hazmat suit in certain parts of town, that's no exaggeration. at's according to mfrp the chronicle." >> we heard this message before, right, mr. ste let's look at 2014, for example. republican neil cashd challenge jerry brown. he blamed the california mess on governor browni didn't work, he lost. what do you think will be differt't this time if ts the message john cox is sending?

>> goodpoint. he is no longer in california. he was a come-frotbehind tha we have never heard from since. he was appointed by president obama. jerry brown goss worse. 4 million left california in the lastyears, but it has accelerated in the last two aars particular. more peoplre leaving california than coming to california and these are mostly bread winn middle class folks. john cox has to get serious money together.a luckily he is wealthy developer and so he's got a reported wealth of00 million. so he certainly will be there with his own money. republican governor's association would love nothing better to give gavin newsom a hard time because gavin's notre y for governor, we know that. he's running for president. aomatically when y're governor of california you arec nsidered presidential material, even jerry brown thought so. >> he has sgrd on this pro he's not running for president, but as you know we can't predict the future. oh >>yeah. >> let me ask about john cox

again. since we're speaking of presidents, president trump endorsedim during the election. we saw john cox rise in the polls shortly after that. will the republican national committee ask president trump to come the california to campaign on behalf of john cox in the governor's rac in other races around the state? >> probably trump would be best ounty. in orange c trump had he had the time would have campaigned in orange county and plybably carried it nice, but trump made an intelligent decision during the presidential campaign. you campaign where the votes a t, most likelyo get the electoral college. so he is popular in orange . coun it's turned around in the last year. he's been an effective president, even democrats have to admit it is the best unemployment ratio in two generations. african-americans have never been so fully employed since they started measuring the metric. foreign policil-- >> you ask president trump though to come to california to campaign on behalf of john cox and other republican candidates? >> i'm going to let john cox figure that out.ue my g is trump's numbers are

negative in l.a. county and san francisco and that's about half of the votes right there, maybe % of the votes. i would have trump come to orange county where he's popular and we got four congressional races up for grabs. i think it would help us. but cox -- but cox, i'll tell you, maybe trump will do fundraisers for him, he cenly would pack the house. >> let's talk about the congressional races since you brought those up. y what ar biggest takeaways there especially in the seven gop-held seats democrats are hoping to flip in november? >> well, first of all, every single republican seat except for o that are under challenge, seven of them, a majority of vot ts voted fhe republicans who are running against democrats. that's a real tell for the fall. secondly, in orange county there's fouron cgressional seats that have been targeted. three of the four republica are women. all four of the democrats are men. so it is a big change. i think the party has been

really smart in that. in a distric that's 35% asian american voting -- i don't mean just population ngbut voti, that's in the fuller district, young kim the candidate for the republicans and she did tremely well on election day. the republicans have all endorsed her. we're goingato keep that se, and that's probably one of the toughest seats to keep in california. you have an extraordinary candidate that's bilingual. in the same district we actually kicked out a white democrat, elected ling ling chang and a new senator for the same area. we have a chinese-speaking senator, a korean-speaking senator. not to leave that alone, we have alexandra coronado running for assembly in the same area. she is spanish-speaking ph.d.. she will do well with the spanish-speaking community. >> how much canou rely on asian american voters? because those that do identify ith the party, they still identify as democrats over republicans tw-one.

yous ha you also have a situation whe the gop is the third party in california behind democrats and behind those tho refuseo state a party affiliation. what kind of challenges do those pose for you? >> good challenges and that's actuallyur acce. in orange county the minority are republican. 40% republican, 30% democrat. most asian amecans are republicans or decline to state. a smaller number, number 3, are hemocrats in orange county. in orange countysian americans will have a different set of values. it is very good news that our part-- you saw it in the ""l.a. times"" today is becoming an asian republican party. that's the big -- >> all right. we will leavet there. sean steele, you certainly have a lot on your mind. thank you.or joining us sean steele, republican national committeeman for california. ♪ and r further analysisf the political landscape, i'm

joined now in studio by our own kqed california politics and government team, senior editor scott schafer, reporter maria lasos, nice to have you back. >> good to be here. >> marisa, a lot of national attention paid to the governor's race. california is a blue state. gavin newsom in a prime spot, a strong pion. are there potential vulnerable challenges ahead? >> i mean,owou kn, you would be silly in any race like this to take anything for granted.co john the republican, did get through. it is seeming like he's solving a lot of -- you know, support on the right. he did get the president's endorsement a couple of weeks before the primary.ow you he wants to make this not about trump, which i'm sure newsom would ove to kee talking about. he wants to talk about the affordable crisis, the housing crisis. the message from republicans is that california is doing wellec omically but there's a lot of people who have been left behind and that democrats broke

it and, youknow, they think they can fix it better. so i think that this will be an interesting race. the numbers are not in john cox's favor, you know. republicans have less voter on their rolls now than independents in california, but i think thi -s will be it will be a race. i think it will be interesting to vet cox because he's veryow un and we don't know a lot about him. >> what of the economy, if it s tank for some reason over the summer? >> it could. for ally it takes a whi people to feel that and things are going so well right now in california and the country. tt, you know, we -- one big question ink is the power of the gas tax, repeal. you know, we saw one state senator, josh newman, recalled by his constituents on tuesday by a big marnnd that's a big message that the republicans have between now and novemb. the republicans are celebrating because they no longer havtie a democ super majority in the state legislature for this year. >> exactly. they would like the power of that message. whether it will translate to a governor's race is a different

question. you might be for the gas tax repeal and still vote for gavin newsom. >> so gavin newsom promises to be -- if elected promises to be one of the most progressive governors we have seen in quite a while. could it be a liability though given that in some other local races, district attorney and judges racesor example, we saw progressives not doing that well? >> yeah, you know. i think the thing about gavin neom is he tappento some really grassroots issues that -- where there's a lot of ssion, whether it is marijuana legalization, gay marriage, gun control i think he benefitted from that. you know, the enthusiasm level for gavin newso going back, you know, for the last several years on diffent issues, he's been very adept of getting out in front of issues. >> yeah, i think t pitfalls for him around single payer. people want to know how are you going the pay for this, will it be with tax increases. think those like district attorney races are a different calculion. yes, gavin newsom is running as a progressive but he has the support of a lot of establishment in e business community. you know, as a san francisco mayor, he was pretty moderate.

he orcame big budget deficits. i think he's kind of trying to walk s that line,ing he's going to keep the fiscal responsibility of brown, you know, his predecessor, but also try to be ambitious and look towards more progressive solutions for the problems facing lifornia. >> yeah. i look at cox trying to focus in on issues where he this gavin newsom has gone too far left and i think single pay is an example of that. you look at polls where folks are told it will come with an tax increase and they're not going tort suppo it. the gas tax will be on the ballot in november. but those that are tentative about the tax issues, maybe he ewsom.nd holes with n if turnout is high for democrats in november i think it becomes a moot point. >> money is an issue. are republicans g ng to wan when they're battling for control of the house, looking at so many national fights, dohey want to spend money on what is really an uphill battle -- not an impossible one, but an uphill battlop >> and thes already planning to blame democrats and

by extension gavinewsom for the decline of the middle class. how will that likely play out among voters? >> you ow, you look a governor like jerry brown who has, you know, pretty wide ipopularity sti the state and he has done it by huing the middle pa, betting s republicans on board in major deals he struck in the legislature. so i think maybe the task for gavin new son in the months ahead is to say i'm going tofo fer continuation of what jerry brown has done at the state capital, which is fiscal spabod stability andate gains. >> i think the candidates move to the middle after the primary, and i think it will be easie for newsom to do thatha tn for john cox. cox hitched his wagon to donald trump in a big way, and he did to do that to get in the top wo and there's no indication he wants to back away from that. >> his history o abor, other things that maybe are important to the republican base but will not play as well, en not just with democrats but some independent voters, i think will ercome. for him to

>> what you said earlier, scott, i want to expand on that because you said, you know, typ after a race candidates move more towar the middle. do you think it is true for congressional races, too? i mean democrats kind of dodged a bullet, they will have, you know, in most congres races a democrat in the top two, but what do they nee to do between now and november to win the races? >> in a word, turnout. o in ninef the ten congressional districts target by the democrats, if you counted u all of the votes for republican candidates and all of the votes cr democratic ndidates, only one of the ten districts was there a majority of votes for the democrat. but the turnout will be muc bigger, and it has to be. you know, it has to be because it is going to be younger, itwi be less white, it will be more democratic, more liberal. i think that's the key thing, and that's what typically happens in general elections. >> i think too, look, it's been sort of a free-for-all. we had so many candidates in these racesnrunning, iome cases on both sides, right? multiple republicans, multipl democrats. if democrats can coalesce behind

these candidates, get the vote out, i think newsom s s this an opportunity to have a republican opponent that he can focus on some o those down-ticket races. you know, they have a fighting chance. nothing is guarad for either party, but i do think that the electorate will likelyook very different in november than it did in june, and that is going to help democrats in these races. they're going to be talking to the specific issues of those districts, which i think i really important. it is easy to kind of generalize these things, but if you are running against, you know, steve knight in pal dale area, it is going to be a different conversation than even in orangh county ws not that far away. >> absolutely. i think that despite that, you still willil see repubns nationally try to tie the democrats to democratic leadersh in the house, especially democratic leader nancy pelosi. on the flip sideou will see democrats try to tie the candidates to president trump. umbent asier with an i like dany rohrabacher who has votes on the board with the affordable care act.

than lomeone like linging cheng who is a fresh face. >> yes, i think in somes in the districts where there were resn nations, they're i stronger position because they're not tied to trump. in the end, the midterm are a referendum on the white house, especially now because one part conall branches of ment. how do you feel about the president and the country. >> you have been talking about voter turnout, but what abo the message do democratics have? do they need to move to the middleoing back to the earlier question? >> as marisa said, these are local issues. there isn't one national message i don't think the demrats have. it does depend on the local issue. in the central valley it is things like water, immigration of course, but in thend people vote on their guts. do they like this person, do they like the inent, the person running. it is more of a retail politics. governor, you you're going to get your sense from tv and

radio. but for congress, to meet these folks. >> look at jeff dunham. he has been a supporter of the dreamers of t daca deal, but in recent weeks he is moving to push a vote on the issue, wa something h't ready to consider six months ago. i think it speaks to the potency of theino vote in his district and him kind of reading the tea leaves and wanng to say, yes, i voted with trump on the affordable ca act but i'm not going to stick shoulder-to-shoulder with him on immigration issues when my sn district d reflect that type of, you know, feeling or message. >> i'm sorry. s ahead. >> i was going t that's the key, is to have a candidate in a district that reflect the people who liav there. >> i to move on to this before we run out of time because there was something else very interesting happening in this election as well on the local front. there was this criminalustice theme weaving through a lot of the local races, right? despibl efforts by k lives mat per and criminal justice groups and even with help from billionaires like george soros and steve jobs' widow, the

progressive challenrs for example for district attorney races largely lost. what happened? >> theyid. we still have a run-off in contra costa so there's one outstanding hope of the races that were targeted by george soros. ayu know, i think that this was in some ws perhaps an overreach by these groups. these are national groups tcaha in. you know, they targeted nancy o'malley in alameda. she is a democrat with the support of jerer brown and o folks that pushed criminal justice reform. so i think there were some schisms within that left progressive community who pushed a lot of the things we have seen statewide, and i do think in some ways it was the first shot. li think we wil expect to see it come back and more challenges and perhaps better, stronger cans. >> yeah, i think it is something you will see kind of slowly progress over time against districtttorneys. look, d.a.'s can push back and we saw it with nancy o'malley in the closing t weeks o campaign. she was on tv, getting in front of the voters. it is different than in judicial races where maybe judges are hesitant to be overtly

political. that's not the case with district attorneys. >> in general it is good that the impact of district attorneys was elevated because most people don't knowven a d.a. is elected much less what they do. they have a lot of power. it is wortven if the candidates lose it is worth having a conversation with the voters about what kind ofdoalues ou want in your d.a. >> speaking of, you know, elections of p ple that maybe the public doesn't always raalize are elected, the case in santa cla county of judge aaron persky. he was recalled. it was a ce watched nationally, very closely. he was recalled over what maybe many people thought was a lenient sentencing of a stanford student convict of attempted. rape what does this mean, scott, for judicial independence? >> i don't think it means a lot. this wasne particular case that had a lot of passion. there were some people against judgsky who felt very strongly, this was in a me-too moment. i don't think we're necessarily going the see all kind of judges being swept out of office. we saw four in san francisco who were targeteduby pc defenders and all four were re-elected, reconfirmed. >> strongly. ro

>> stly, yeah. >> yeah, i think that the persky thing in addition to the me-too movement was chfluence wit black lives matter. there was concern over that sentence and whether it had tdo with brock turner's race and after influence. >>privilege. privilege, yes. >> again, it is something we fulud becd,ut taot b roueadye g tlkoin atgre lot of thetics that this will change the game entirely. >> i think the political realiry he judicial and district attorney races, it is easier to get an incumbent out of office when you are going after themer ov one perceived egregious decision in the case of judgepe ky than to make the argument about an over-arcg need to focus on racial disparity which is what district attorney's races were about. >> san francisco mayor's race? >> a hair between mark leno, lyndon breed. we are getting results every day at 4:00. it could be days until we know

e actual winner. >> all right. boy, you guys had a busy week busier.eps getting thank you all. >> thank you. in 2015 founder elizabeth holmes she would transform blood testing by using a single drop of blood to get fast, low-cost mest results for everything fro cholesterol to cancer. but in march the securities and exchange commission called it an elaborate year's lg fraud. holmes persuaded investors to sink hundreds of millions of dollars into her company. "wall street journal" investigative reporter broke that story. he has a new book out chronicling the company's collapse called "bad blood, secrets andives in a silicon valley startup." good to have you here. >> tnks for having >> what was the game-changing technology that the company was pitching? >> so elizabeth claim to have invented technology that cou run the full range of laboratory

tests, which if you speak to experts can range from a few hu fred tests to a thousands, from a drop of blood or two nicked from the finger and to return results to doctors and patients very quickly and at a fraion of the cost of other laboratories. this would have been ha game-cnging technology because no one had been able to run that many tests off a tiny sam of blood. >> and it was revolutionary because down the line eventuay walgreen's and safe way signed on as well and became clients. your book though rsed in gre detail all of the red flags along w theay about deliberately misleadi misleading test results, the failure by ceo ezabeth hols to produce contracts she said she had with pharmaceutical companies. >> right. >> yet ittill attracted an all-star cast of investors.

the board consisted of those like general james mattis. how many we so duped along the way? >> what elizabeth was adept at, it was winni support of someone older, experienced, with atareat repuon, and then leveraging that association to get her own credibility.fi tht pesh person she did it with was her stanford engineering professorhanning robertson. then a few years in, she met don lucas, the venture capitalist who grew mariel i son and held him bring oracle corporation public in the mid '80s. in 2011 she met george schultz, the famous former secretary of state, who crafted the reagan administration's foreign policy and who many still credit with winning the cold war. plhat many pe don't know about george schultz is that he is passionate about science. his house is right off the stanford campus. when he met elizeth, i was wowed with her claims about what eer technology could do and

quickly agrd to join her board and then introduced her to his buddooies at the hr institution, which is a think tank housed on the stanford campus. that's how she came to meet the likes of henry kissinger and sam nun and bill frisk, bill perry, etera. they soon joined the board, too. >> and was timing a a factor in all of this? because around 2010 we see facebook rising,tter being very popular. >> right. >> investors were basically looking for the next unicorn starretup and thet was. >> right, and money was gushing into the valley because in large part we had had the great recession in 2008, 2009 and if federal reserve lowered interest rates and traditional investments like bonds no longer turned good money s investors were looking for higher turns elsewhere. >> so the valley becde the gol rush. >> the valley became the gold rush, and one of the companies theemed so promising was

theronos. in late 2013, early 2014 the company achieved a valuation of more than $9 million and elizabeth holmes managed to keep half of the equy so she was worth almost $5 billion and thih fulfille yearning there was for the first female tech founder who became a illionaire. there were other women in the valley who had achieved, you beow, fame and wealth. sheryl sa, who is number two at facebook, marissa mire, but they had not creat their own companies. elizabeth holmes was going to be the first tech founder who was a woman and who achieved great riches. >> do you tnk she was intentionally trying to mislied investors or was she consumed by her own ambitions and thought she could make it happen? >> i mean it is a mixture of both. this is not a madoff long con, you know. madoff esstially ded in the late '80s he was no longer really investing money and built a poncy scheme.

elizanth holmes whe dropped out of stanford had a insion and set about creating a company and h people to make the vision happen, but along the way encountered setbacks as entrepreneurs do, and refused the admit t reality of those setbacks and continues to overpromise to investors. it got t point where the gap between her promises and what she said she had achievedechno logically and what the reality of the technology was got so enorhemous that by t time they went live with the finger stick blood test in wall green's stores in the fall of 2013 it had become a massive fraud. >> sos there a possibility that there could be criminal charges stemming from this? heecause sec, of course, charged her with massive fraud. she agreed to pay a $500,000 fine. are there criminal investigations going along - g on right now though? >> right. there'sn investigation spearheaded by the u.s. attorney's office in san francisco that's been goingn since december of 2015.

so we're now two-and-a-lf years into it and my sources tell me that that investigation is very active and very advanced, andt may well result in criminal indictments of elizabeth holmes a her ex-boyfriend, who was the number two at the company. >> and we aust haveittle time remaining, but you say in your book it is t biggest corporate fraud since enron. what do you think is the bgest lesson to learn from this? >> enron was a bigger company certainly andy more mone was involved. it was the seventh largest u.s. company at the te. theronos is obviously a startup, albeit a startup that attracted nearly a billion dolrs in investing, a billion dollars that went poof. but the most egregious part of the theronos scandal is the w the company was cavalier about yutting patients in harm's way. in the course ofeporting i came across more than a dozen cases of patients who had ver questionable test results and who had health scares and

whether or not anyone was harmed is still an open question. and i think thathe big lesson is that you can't employ the silicon valley vapor ware, fake it until you make it pybook in the realm of medicine. when you are -- >> there are lives at stake. re >> the are lives at stake. >> john carey rou, author "bad blood." thanks for being here. >> that will do it for us. you c find more of ours coverage. i'm thuy vu. than ♪ u for joining us. ♪

>> america first or america isolated+si pn trump's trade policies and his nod to russia angers u.s. allies. as the president travels abroad we did into what it means there and at home. pres. trump: they don't mention the fact that they have trade barriers against our farmers. they don't mention the fact that they are judging almost 300% tariffs. >> president trump comes face-to-face with world leaders that he has infuriated onsu series of ises. from the iran nuclear deal to new tariffs on steel and aluminum. some say president trump is stoking division