Bad blood: Theranos CEO charged with massive fraud The woman heralded as "the next Steve Jobs" has been charged with massive fraud, forced to pay a $500,000 fine and been stripped of control of the company she founded. Theranos CEO Elizabeth Holmes was once pictured on the front pages of numerous tech and business magazines as a future leader in the industry. At one point was …
This business of settling and just paying a trivial fine ($500k when she claimed her company was "worth" $9B to investors) is ridiculous. She'd have been more likely to do jail time had she shoplifted a $700 item from a store, yet she just gets a small fine and no jail time for stealing $700M.
She'd have been more likely to do jail time had she shoplifted a $700 item from a store, yet she just gets a small fine and no jail time for stealing $700M.
Re-read the article... The SEC can't impose jail time. However, the state can and is apparently investigating. So, there's still that hanging over her.
if she contributed significant political money, which most famous start-ups do around here in order to hopefully score some big government pork contracts, she'll be allowed to fade into obscurity. Especially if she "reinvests" her 750m into political contributions. Talk of jail time will eventually fade away and nothing served in the Gray Bar Hotel even if they do slap some probation or "house arrest" on.
Unless some local and state pols lost a lot of money on her company. thats the only chance the state will actually prosecute someone of wealth.
> By the way Jimmy Savile was never charged with anything, does that mean he was never guilty of anything ?
Yes, in the criminal law sense. But there as been an enquiry which pretty much wiped out any doubt that he would have been found guilty were he alive.
Dead bodies don't get tried because 1) they can't defend themselves and that would weaken the legal system if that was allowed, 2) they can't be punished in any way 3) they would smell worse than the judges
>the only penalty is 'you can't do that again for 10 years'.
More is yet to come, as stated in the article.
"The SEC is only able to bring civil cases, however it has been reported that the US Attorney for Northern California is also investigating Theranos and could bring criminal charges - complete with a jail sentence - as part of that investigation."
Um, no. She is also stripped of "most" of her shares - although that is probably not really important as her shares are worth less than peanuts.
The really important thing is that she won't be able to negociate another golden parachute before 10 years from now. Do you really think anyone will be interested ?
Honestly, they might as well have put her on the electric chair. Her days as a high-flyer are over.
@Pascal Monett
"Honestly, they might as well have put her on the electric chair. Her days as a high-flyer are over."
Somehow, I suspect that her financial resources are still far larger than those enjoyed by the VAST majority of people in the rest of the US. In other words, while her house of cards has crumbled and she may well (and should) face additional penalties, it is likely that she has more money and assets than most of us could hope for.
"Somehow, I suspect that her financial resources are still far larger than those enjoyed by the VAST majority of people in the rest of the US."
IIRC, that's not actually the case. About a year or so ago she had to take a $25 million loan (from Theranos itself, since by that point no bank would touch her or regarded her substantial share holdings as worth a damn thing as collateral), since she's basically bankrupt. She has sizable bank loans from when she was considered a billionaire, but has no actual income to speak of, and has never offloaded any of her (non-preferential) Theranos shares so despite the epic scale of the fraud, she's not made a penny from all this.
Holmes actually lives a fairly cheap and unadorned lifestyle - she'd be able to manage her living expenses on an average salary without much trouble and doesn't really seem overly interested in taking money out of the company. I don't think this was a scam for personal profit, since she doesn't actually seem interested in cashing in; more just someone over-promising enormously and then desperately trying to keep the charade going long after it was clear that the original idea wasn't deliverable.
" I don't think this was a scam for personal profit"
I think it was a scam for personal profit -- just one that didn't work. But even if I'm wrong, it's still a scam. Whether it was for personal profit or not isn't that important.
"I think it was a scam for personal profit -- just one that didn't work. But even if I'm wrong, it's still a scam. Whether it was for personal profit or not isn't that important."
I'm not trying to absolve her - what she did was defraud a stunning amount of money off some incredibly stupid investors (like Rupert Murdoch, for instance). But Holmes has run profitable businesses previously, and had no real reason to dump those for Theranos. She could quite easily have dumped just 10% of her shares when the company was valued at $10 billion and done a runner; if it was a scam, it worked beyond the wildest dreams of most scammers and she never pulled the trigger.
The only way that her behaviour makes sense is if she hoped to achieve her claims and never really accepted that she couldn't do it, and so lied through her teeth to get more funding to piss away attempting the impossible. That's still wrong - she took people's cash, pissed it away, and then lied about having done so - but it's somewhat less reprehensible than taking other people's money and keeping as much of it as you can.
"Honestly, they might as well have put her on the electric chair. Her days as a high-flyer are over."
What?
Even if her days as a "high-flyer" really are over, that's not terribly severe in comparison with the crime. Not even in the same ballpark as real prison time, and certainly nothing in the same universe as the death penalty.
Fortunately, there is no RTBF in the US.
Yes, and it probably wouldn't apply in her case even if there were, since she's clearly a public figure[1] and the SEC case is notorious. With this kind of media coverage, you surrender much of the expectation of privacy.
[1] Cover of a commercial magazine counts, even if it's Inc.
"Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday."
Magic Leap are you listening?
how dumb people and the media were fawning over this useless entrepreneur because it had tits
I was going to object that your assertion was irrelevant and sexist. And then I considered that Madoff and Abovitz were both sufficiently overweight that you have a very valid point.
Investors are not dumb; it's just that very often they misjudge exactly when to sell to mugs and take the profit. It's like the people who invested in the Albanian Ponzi schemes; they did know about Ponzi schemes, they thought that the government would have to bail them out. Their error was not to realise that the government didn't have enough money.
Your comment is sexist, but it is true that a nice face to be sold to media is always a good PR tactic - usually works because there are too many male jerks in the media, and some female one as well. If she was someone regarded "uglier" by current standards - despite being a mammal or not, it wouldn't have worked so well. Appearance does work.
Today I was ashamed that on the site of one of the main national newspapers here, just below the news about Hawking death, you could watch "the embarrassing fall of Kate Perry". You really need a lot of jerks, mostly male but some female too, to think it was something worth to be put there.
You could really see the abyss...
I heard a comment once from a female friend who is a sales rep, "Tits sell bits".
In the sales world, any edge is an edge.
I don't think his comment is sexist more a comment on sex sells.
In a showroom I was working on the cabling at, one lady with larger than average breasts was talking to a male customer. The male customer then bought a fair bit and the lady was telling me that she was having a good morning of it sales wise. I pointed out that a button had come undone on her shirt and there was more on show than perhaps she intended. She said she was wondering why he wasn't looking her in the face. One of her female colleagues who was passing said that she should do it more often. She was told to "Think of the showroom bonus" as they'd had the same sales by Wednesday as they normally did during an average week.
It work for males too - you don't really need a breast - someone who looks appealing is easily to sell and bring in investments than someone who looks uglier. Media are obsessed with appearance - and just look at how PR people are selected - and often, not only them. Con "artists" also know how much appearance matters.
People have a strange tendency to think "beautiful" people can't be evil - of course only ugly ones are. We are brainwashed into thinking that since childhood.
> People have a strange tendency to think "beautiful" people can't be evil - of course only ugly ones are. We are brainwashed into thinking that since childhood.
My theory is that "beautiful" people don't have to develop a nice personality or intelligence to attract others, and my gut reaction is to mistrust what they're selling. Of course, as an uggo, I'm biased. And I'm not a nice person either, but hopefully I have something to make up for all that...
"true that a nice face to"
"Had tits" was to indicate her sex in my delightfully crude style. They didn't fawn because of her tits or pretty face (although neither hurt) they fawned because she is a woman succeeding in a man's world, she was aspirational, a cause to champion, and a winner, the next Steve Jobs FFS (until she wasn't big time).
You can watch Meredith Perry in a couple of TED videos talking and presenting utter crap and the audience gush and fawn because she also has tits.
The VC fraternity keep on getting the rules rewritten so that they don't have to worry about things like due diligence and are hence happy to pump money (often belonging to other people) into harebrained schemes knowing that if there is an exit they will make loads of money and even if it flops their losses will be minimal.
In summary: expect more Theranoses in the future.
This. There are too many safeguards in many cases. Yes, this was a case of blatant bullshitting and fraud, on the other hand for VC's it should always be a case of buyer beware. They claim millions of euros of turnover, but not where they are getting that. A VC working in that field should be able to contact some clients and see if ANYONE is actually using Theranos. Why are they protected from being idiots if they are clearly being idiots.
The tech investor world clearly has a very weak spot for reasonably attractive blondes who attended Stanford CS.
What she had in common with Steve Jobs (see "The Next Steve Jobs) is just this, that with a very different set of verbal and visual tools, she had the ability, for a time, to create a "reality distortion field." She did. It's over.
The main difference there being that HER "reality distortion field" created tech that she knew didn't exist and which apparently couldn't exist. Steve Jobs was much more aware of what could be done and (mostly) kept his mouth shut to investors and the outside world about what alternate reality they were developing.
This post has been deleted by its author
(A.C. Clarke)
In this case, the investors just followed the money, assuming someone else had checked the magic. Holmes was happy to lead them along.
Technology will continue to give us great advances in medical diagnostics and treatment, but it takes a lot of work and time to make each little step. Theranos promised it all at once and right now -- that's usually not how science progresses.
Funny that it took a gumshoe from a traditional media outlet (an olde-timey newspaper, no less) to break the reality distortion field around this one. Ars Technica, El Reg, Wired, etc etc, why did the WSJ see through it and not you?
I'm also curious about how Theranos managed to recruit heavyweights (and not, generally, stupid people, even if you detest what they have done in public life) to the board of directors. I mean, I can't just call up Henry Kissinger and say "join my company". Very odd.
Dear Sir,
do you really wonder?
Can I just say that I read 3 articles on ElReg this morning, and I've had my share of bad English for the day... Outfits like ElReg simply regurgitate news (whether that news was already regurgitated or not) for us to swallow. I mean, why in the world would one use the word "artificial" as an adjective to the word "satellite"? Is it to indicate that there are also naturally occuring satellites? In a story about the Keppler Satellite??
It's clear that random people ran write for these media outfits. Nobody needs journalism training anymore... Any twat can write whatever he/she wants and publish it as well (I mean, look at me)... No need for making sure that, at least, the language is sound, never mind the actual contents of the publication.
So old-school journalism *still* is vital to the world, and I for one am happy to see it!
Regards,
Guus
@Guus,
Next time it goes dark outside (and isn't cloudy) nip out side and see if you can spot any natural satellites.
Several are visible to the naked eye, at worst you'll see one, but others are often visible. One is a *our* natural satellite, the others are our fellow satellites around the sun.
That really was an excellent series in the WSJ. What was really fascinating were the comments in the online edition. Ms Holmes had her staunch defenders all through the series, because: sexism, persecution of a visionary, big business is out to get her, etc.
@bobajob12
why did the WSJ see through it and not you?
El Reg seems to have covered this firm from over a couple of years ago...
https://search.theregister.co.uk/?q=Theranos&advanced=1&date=the+dawn+of+time&results_per_page=100
One would think such catastrophic events would alter the appearance of the CEO. I mean look at how Bill Gates aged like 10 years within 2 years around 1998/99, when US vs MSFT almost split MSFT in two companies. Nope. No grey hair, no wrinkles, no indication of stress at all, nothing. This CEO girl has apparently no ethics at all. She seemingly doesn't care. Next stop for her, start the next fraudulent over hyped gig.
Poor, stupid girl, maybe dropping out of college to start this company wasn't the best move after all.
The part I don't understand is where was the FDA in all this? Considering all the hoops most medical manufacturers have to jump through to get something as simple as a blood glucose monitor or wheelchair approved, where was the data on this company's products? We'd be better off if we replaced the FDA with an independent third party like UL or FM
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