COO of failed bio-biz Theranos found guilty on all twelve fraud counts

After a four-month trial, Ramesh "Sunny" Balwani, former chief operating officer of the utterly failed blood-testing startup Theranos, was found guilty of fraud on Thursday by a jury in California. Balwani's ex-companion, Theranos founder and former CEO Elizabeth Holmes, received a similar though less severe verdict when she …

[Anonymous Coward]

Methinks it's lawyers all the way down on this one...

From what I've read they are both dodgy, and guilty.

Yes, they've managed to destroy some of the evidence but there's plenty left.

As self-appointed judge, jury and (well let's leave that last one aside) I hope they're found and sentenced appropriately.

Appropriate in my world is guilty and long for those two scenarios.

Happy to hear counter arguments.

[Youngone]

Re: Methinks it's lawyers all the way down on this one...

Both of them are clearly guilty of fraud.

Their biggest mistake was stealing money from rich people, and showing up the greed of others. Sunny's other mistake was not being a pretty white woman, which is why he's going away for longer than that Steve Jobs lady.

[Yes Me]

Re: Methinks it's lawyers all the way down on this one...

From what I've read she was very self-deluding and he was just bad. The two juries seem to have reached a similar conclusion.

[Anonymous Coward]

Re: Methinks it's lawyers all the way down on this one...

From what I've read she was very deluding and he was just bad.

[Azamino]

Re: Methinks it's lawyers all the way down on this one...

Oomph! There's some heavy handed misogyny in one comment, just maybe accept that a jury heard all the evidence and acted accordingly?

Both have been found guilty but the individual 20 years younger and just a teenager when she met her DotCom millionaire (back when millions were worth something) co-conspirator has been found slightly less culpable.

[iron]

Re: Methinks it's lawyers all the way down on this one...

The teenager whose father was a boss at Enron? The teenager who told all her professors they were wrong and quit school when they wouldn't agree with her? Yeah she was corrupted by the foreigner, sure.

[Azamino]

Re: Methinks it's lawyers all the way down on this one...

Sorry Iron, what is the relevance of their nationalities? The rich are borderless citizens of nowhere, to quote Theresa May.

The sins of the father are not especially relevant either, Enron was a corporation not a crime family, so was the father even involved in the off-balance fraud that brought it down?

[Anonymous Coward]

Re: Methinks it's lawyers all the way down on this one...

"Enron was a corporation not a crime family"

So what? Its business practices were little different from a crime family.

[Dave314159ggggdffsdds]

Re: Methinks it's lawyers all the way down on this one...

Its business practices were nothing like those of a crime family. They were fraudsters, not extortionists, violent criminals, and drug smugglers.

Bernie Madoff committed one of the biggest frauds in history, but that doesn't make him a mafia godfather. It makes him a completely different kind of crook.

[Antron Argaiv]

Re: Methinks it's lawyers all the way down on this one...

She was the result of relentless reinforcement "you can do anything!" with not enough failures. You learn from failures, and learn about yourself as well. She didn't, and never learned how to deal with personal failure.

As a consequence, she was convinced she was brighter and smarter than everyone around her.

I actually felt sorry for her, up until she started lying, because she had convinced herself she could not be wrong.

I have had bosses who had the same problem...inability to admit they had chosen the wrong approach to a design problem, and that the one they had chosen was not going to work.

Whatever else Theranos teaches us (and I'm sure it will provide fodder for more than one HBS case study), it should stand as an example of the dangers of hubris, specifically the dangers of schools who don't fail any student.

[Michael Wojcik]

Re: Methinks it's lawyers all the way down on this one...

Two juries, not one. Two trials, with different defense counsel, different prosecutors, different judges, different evidence, different arguments. So they're not directly comparable anyway.

It is certainly possible that one jury found their defendant more sympathetic than the other jury did theirs. It is possible that affected their verdicts. It is possible some or all of age, sex, ethnicity, country of origin, and perceived physical attractiveness played a role, conscious or unconscious, in the calculations of some or all jurors.

It's fine, even probably wise, to be suspicious of these possibilities, human beings being what they are. It's unwise to be certain of them, because there are many confounding factors and because it's generally pretty foolish to indulge in generalizations about people.

[Eclectic Man]

Re: Methinks it's lawyers all the way down on this one...

In the UK, last century some time, there was a TV series called 'Crown Court', where an actual trial (with actors) was presented, and the TV audience was asked to phone in their verdict as jurors. As an experiment, one broadcast was split between regions with one region having a white defendant, and the other a black defendant. Neither defendant spoke, everything else was the same (judge, prosecution and defence were recorded).

The result was the the white defendant received a much more favourable response from the TV audience than the black defendant. OK, so that was many years ago, and hopefully the UK is much less racist now, but courts in the UK have historically had higher conviction rates and harsher penalties for BAME defendants that white ones.

[Pascal Monett]

"nothing has changed"

Of course not. Why slave and toil away when someone is promising you easy riches ?

A new one is born every minute, as they say, and educating them all on the facts of life is well nigh impossible.

Because "there is no such thing as a free lunch" means you actually have to work to get by, and nobody likes that.

Especially when you see TV/YouTube celebrities living large while producing nothing of value to society.

[Anonymous Coward]

Bloody good test

The legal system is working: check

Fraudsters will be sentenced: check

If only orange-hued insurrectionist traitors could be locked up too.

[mark l 2]

Re: Bloody good test

When right wing supreme court judges can overturn a 50 year constitutional right to an abortion, even after 2 of those judges stated in front of congress at their inauguration they considered Roe vs Wade as a precedent. Im not sure id say the US legal system really is working.

[Dave314159ggggdffsdds]

Re: Bloody good test

The US legal system really isn't working, and hasn't been in decades.

It should be blatantly obvious to everyone that the US constitution requires amendment by the legislature, not the judiciary. Overturning RvW is a step backwards for individual rights in the short term, but is probably necessary to fix things in the long run.

Ultimately, whether you're for or against RvW, the legal system is clearly failing to resolve a contentious issue.

The simple fact is that the 350y/o US constitution doesn't say anything useful on the subjects of abortion, gun control in the modern era, and so-on. It needs amendments. It's time to stop pissing around and admit that the US has to have a serious conversation about what the amendments will say. Maybe trade abortion for gun control. You know, actual politics as it's supposed to happen.

[Dave314159ggggdffsdds]

Re: Bloody good test

Incidentally, the 'right wing supreme court justices' line is a great way for people to avoid engaging with the actual reasons they've lost an argument.

SCOTUS is not currently packed with right wingers. It consists of Obama and Clinton appointments as well as GW Bush and a couple of (actually surprisingly uncontroversial, in reality) Trump appointees. It has a slight lean to the right, perhaps, but there are three centrists, three right wing, and three left wing justices. If the right wing causes have been carrying the day, it's because their opponents haven't been making good arguments in court.

[John Smith 19]

Theranos sounded like bu****it

Was.

Holmes Dad was an Enron VP so career fraud sound quite plausible. APD?

Odds on bet he'll get a harsher sentence (despite NOT being the CEO)

Then again making Rupert Murdoch look stupid and taking him for a bigg(ish) bag of cash still gives me a good chuckle.

[sitta_europea]

This is not to downplay or deny culpability, and I fully recognize that Holmes and Balwani probably helped to cause untold hardships to many innocents and deserve to spend some quality time in prison, but I can't help but think that the pair of them fell perhaps knowingly into a honey trap baited by the financiers, and that the financiers got away with it again.

Forty years ago I went through something very similar in a very similar field. The main difference was that my product actually worked very well, but when the financiers got involved to take the company public they immediately started to spin everything: sales projections in the prospectus were embellished to the point of fantasy - for example I knew that the world supply of components for the product could only meet half the projected sales, and I said so repeatedly - and I knew that when it all came out in the open (after the financiers had spent a small fortune on hundreds of lavish hotel dinners and - I kid you not - 'due diligence' trips on Concorde) there was just one person likely to be the fall-guy explaining why the projected sales hadn't been achieved. That would have been me.

It was clear to me that the business being promoted was itself entirely secondary and just a vehicle for the main objective, which was fleecing investors.

As it happened, through a quirk of legal fate as an existing director and shareholder in the business I had the right to prevent the flotation by a single vote and I exercised it. That left me temporarily unemployed, stony broke, and threatened both physically and by bailiffs but my conscience was clear.

If anybody comes to you with a get-rich-quick scheme, no matter how it's dressed up, you have a choice.

I guess Holmes and Balwani chose poorly.

[a_yank_lurker]

Holmes was not baited by a honey trap by vulture crapitalists. She committed fraud. Also, looking at the investors I am struck by how none of the major ones had a biotech background. It seems the major biotech vultures did not like the taste of the carcass; must have been pretty bad tasting. Holmes was chasing after whales who had no business investing in biotech startup.

[doublelayer]

"I can't help but think that the pair of them fell perhaps knowingly into a honey trap baited by the financiers,"

You have it wrong. They were the honey trap for the financiers. There's a reason they didn't get any investors who knew anything about the field. They couldn't get anyone who knew about their product to accept it, from the first professors who told Holmes her idea was infeasible to the FDA investigators who kept saying the product would need to demonstrate efficacy before they'd give licenses. They targeted people who had a lot of money and no knowledge of the field, often those who didn't have much investing background, because they thought it would be easier to lie to them. When people who knew enough about investing started looking at reports, they created false reports and put other companies' names on them to get them out of the way. The financiers have not gotten anything out of this; yes the fraudsters are being punished and there's some chance of taking some money back, but they're still taking a loss from this.

[Anonymous Coward]

"I can't help but think that the pair of them fell perhaps knowingly into a honey trap baited by the financiers"

Think again. They were the ones who operated the honey trap, not the financiers. Holmes and Balwani knowingly defrauded them. And their customers. Theranos had to use competitor's machines to process the blood samples because their own didn't work. Holmes and Balwani knew this and it didn't stop them from duping investors or business partners. Or lying to the FDA.

Read Peter Carreyrou's "Bad Blood" if you want to know the truth about these two crooks.

Holmes and Blawani didn't choose poorly. They were greedy criminals who got caught.

[Eclectic Man]

Does it actually work?

The thing that I can never understand is that they were trying to convince people they were producing a biometric product that actually worked, when it did not. Eventually the defendants must have known that it would be evident that the thing was not working, and people were being misdiagnosed and many would probably die as a result, yet they continued with their 'fantasy'.

Like the manufacturers of the fake bomb detectors (https://www.bbc.co.uk/news/uk-29459896)*, do these people not understand that reality bites? I'm just glad that Theranos was found out before they killed anyone. I don't doubt the fake bomb detectors allowed many bombs to escape detection and killed many people, but we'll never know the full truth.

*FWIW I did think an appropriate punishment for them was to be left in the middle of a dense minefield, with no food or water, and a selection of their own products, and told they may leave any time they like. But that would have been sadistic and vengeful, and we aren't supposed to be like that.

[Doctor Syntax]

The fall of Balwani, Holmes, and Theranos may look like comeuppance for Silicon Valley hucksterism and hubris, but the cryptocurrency industry's floundering effort to get people to trade fiat currency for speculative tokens governed by buggy code suggests nothing has changed.

Silicon Valley where nothing is ever too good to be true.

[iron]

Racism is inherent in the system

What a surprise that a US court found the brown man from another country guilty of 3x more charges than the pretty, white woman from a rich family who was actually in charge.

Oh wait...

[Anonymous Coward]

Re: Racism is inherent in the system

You do realise that the brown dude was 20 years older and a very successful self-made multi-millionaire businessman?

In my experience children from rich families are fools to soon be parted from any inheritable wealth. Your mileage may vary.

[Anonymous Coward]

When you appeal and lose, your sentence should be doubled for wasting the court's and society's time.

[quxinot]

Or your lawyer should share in the punishment. Would be nice to see the risk:reward ratio altered a bit to prevent so many of the obviously wasteful lawsuits/appeals bogging down the courts.

[Dave314159ggggdffsdds]

Ditto if you put up a defence and are found guilty? Hell, why bother with the trial? Life in jail for anyone who denies anything.

[John Smith 19]

do these people not understand that reality bites?

You really don't get how psychopaths* think.

They simply don't care.

There definition of "reality" "Whatever gets me the result I want".

If the actual facts conflict with this they will a)Ignore them b)Deny them c)Fabricate their own

*Other personality disorders are available which exhibit similar symptoms