Theranos CEO Elizabeth Holmes found guilty of fraud: Blood-testing machines were vapourware after all Elizabeth Holmes, founder of US health-tech firm Theranos, has been found guilty of defrauding investors after a California jury found she had lied about her company's technology. Holmes, 37, reportedly showed little emotion when the verdicts were read out. The jury found her not guilty of four charges of defrauding the public …
If you read the book Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou you see just how much of a fraud this was. I read it on holiday a few years ago and was gripped, it’s a great book. My co vacationer read it after me and was to quote her “absolutely f*cking gobsmacked”.
Really hope they throw the book (pun not intended) at her.
During the dot com boom I worked for an established company that was going into development of their websites in a big way. Every week we had a progress update meeting where each area had to explain where they were against targets on their Gantt chart and the department’s master one.* You were encouraged to discuss and cooperate with your colleagues in other areas. You might have an idea to help with what they were working on or they with yours. This actually happened on numerous occasions and if it was a significant thing you’d be rewarded in some way. At Theranos you apparently weren’t encouraged to know what other areas were doing. If you asked too many questions your time at the firm would be limited with an NDA chaser as I understand it.
In the same vein I also don’t understand Crossrail and their timelines. How could they have got so close to their published opening date and failed to notice that there was so much left to do? They were more than a year away from actually being able to open, yet only noticed a few weeks before? Give me a break.
Compartmentalized organizational structures are sometimes justifiable when highly sensitive information is being handled. However, in my experience, they are often a result of people either trying to hide things (Enron and Theranos come to mind) or inflate their importance (In the land of the blind, the one-eyed man is king). In either case, they are likely to work out badly.
In the US, lying for money is fraud, and a crime. Lying to gain political office is free speech and unfettered. Lying to gain contributions to your political campaign funds is an interesting case that I'm not sure has been litigated yet, but this being the US, is probably fine as well.
That's an interesting definition of "lie". I think a lie is: a demonstrably false statement of fact. The circumstance that the person uttering it "believes" it, doesn't turn it into some sort of quasi-truth.
If the statement is on the matter of the utterer's belief, or state of mind, then of course it's not a falsifiable statement. When it's e.g. "Sandy Hook was staged and featured paid actors as victims" or "these horse-worming pills will cure you of Covid-19", then it's a lie. So much of what ails public discourse is because we've blurred those lines. Remember the alternative facts about someone's inauguration audience?
Jonathan Richards 1,
Your definition is too simplistic, as is the discussion on lying in politics in general.
It's complex because it covers the intent of the speaker, but also almost philosphical differences of language and usage.
Just did a quick look on that thar internet at the definition of the word lie, and it might include an untrue statement made with the intent to deceive. But then another definition I found was to create a false of misleading impression. Well even those two are different.
So for example to take a case that everyone's banging on about again, did Blair lie about Iraqi chemical weapons? You've just said that a lie is a statement of fact that can be proved to be wrong. But what about if you act on a reasonable belief? We know Iraq had chemical weapons as of about 98, when they finally kicked the UN weapons inspectors out, because the inspectors hadn't destroyed all the stuff they'd found out about, let alone what was supsected to exist. So pretty much everyone assumed Iraq had still got some of it's chemical weapons left.
However, were they in a usable state? As importantly did anyone seriously believe that they were? That was an area that was more debated, and even harder to prove.
But being wrong, is different to being a liar.
Then we add in M'learned friends. Lawyers put a lot of stress on truth in statements, but also exactitude of languauge. And lots of politicians started off as lawyers. So you get the perfectly crafted statement of truth with qualifiers, which if read exactly will be true, but will then often be used in such a way as to deceive the listener - often by implication or association. So precise wording that almost, but doesn't quite, answer the question - or implying that something else is also true.
Some people see this as just as bad as lying, others as a legitimate tool of politics. It's then up to opponents and jouranlists to ask the right questions, and understand what the answers mean.
However if you want politicians to tell "the truth, the whole truth and nothing but the truth" every time they answer a question, expect political interviews to go on for several days.
Also remember that we criticise politicans for making gaffs. The usual definition of a political gaff being to tell the truth at an inconvenient moment.
So if we want more truthful politicians, we're going to need a better quality of journalists - and also a bit more honesty from the electorate. For example if we keep telling pollsters that we want more money spent on government services, but that we also want taxes to stay the same, or go down, we've not much right to complain if our politicians are less than honest with us.
The Iraq war was kicked off using the fear of nuclear weapons, not chemical. Surely you recall the "yellowcake" and the "tubes""? Also, the marginalization of Hans Blix and his team? The way that Cheney formed his own pseudo-intelligence group to manufacture intelligence because the proper agencies were not on board, they refused to come up with intelligence to suit policies, thinking naively that policies should be formed from intelligence?
Blair was as guilty as sin because he was the British PM and as such was isolated from the political pressure and manoeuvring that occurs in DC. As such he could have acted as a much needed voice of sanity and caution. Instead he pulled the country into a war that nobody wanted and had no justification.
Rumors of chemical weapons and such are more modern in origin and are used to blow smoke (technically, a chemical weapon) over the origins of that war.
>For example if we keep telling pollsters that we want more money spent on government services, but that we also want taxes to stay the same, or go down, we've not much right to complain if our politicians are less than honest with us.
Its not about the amount of money but its distribution. We in the US plan to spend $768 billion on war (sorry -- 'defense') this year alone. The UK government is very good at pleading poverty, its been doing it for literally hundreds of years, but despite this it always has the funds for weapons and colonial adventures.
Iraq is well OT, but I have a theory -ahem- and the theory is my own: The intelligence agencies had a source very close to Saddam Hussein, and Saddam Hussein was being told by his military men that "yes, Great Leader, the country has Weapons of Mass Destruction, all we need is a couple of million more dollars and The Great Satan will be destroyed..."
Nobody was more surprised at the total lack of WMD than Saddam Hussein. The resources that he had been devoting to their development went, umm, elsewhere.
To bring it back to the lying debate: I guess that S.H. was being lied to, but the people eavesdropping on the lies were deceived, too.
I have no doubt the only reason why she got pregnant and had a baby and claimed her ex has been abusive was to try and evoke sympathy from the jury during the trial.
She is clearly manipulative and only thinks about herself, As what sort of person would think about having a child when you are facing the possibility of 20 years in jail.
Given the US has absolutely no qualms in imprisoning pregnant women or new mothers I don't think this comparison really applies now does it? There is absolutely no advantage in terms of being sentenced or your overall prison experience in being an expectant or new mother. There is no evidence for this claim and no potential upside. It's pure fantasy.
"There is absolutely no advantage in terms of being sentenced or your overall prison experience in being an expectant or new mother. There is no evidence for this claim and no potential upside. It's pure fantasy."
They stated their supposed upside in the original comment. To attempt to get sympathy from a jury. If that worked, it wouldn't matter what the prison system does because the attempter wouldn't get imprisoned. You can easily disagree with this if you don't believe it would work, but your failure to recognize that as the point they were making is harming your attempt to argue against them.
There are two elements here.
The first is the outright slander that "the only reason" Holmes had a child was to deceive the jury. This doesn't work in terms of timelines, in terms of any hypothetical benefit and has absolutely no supporting evidence or commentary beyond that of a bunch of anonymous commentards. Federal courts are simply not this easily manipulated and there's no upside. Most importantly this doesn't work in terms of basic human decency. You're suggesting this is someone so reprehensibly evil she and her husband started a family for a near-zero chance of slightly better treatment by the court. She committed fraud - she's not a psychopath. This is nothing but misogyny with no basis in reality.
The second is the entirely legitimate defense of manipulation attempted by Holmes and her legal team. She wasn't "seeking sympathy from the jury" on this front. When prosecuting criminal fraud criminal intent is a requirement. If you can demonstrate that you were being manipulated or otherwise not in control of your actions then whatever deceit you may have carried out cannot amount to fraud. It's a long shot defense. It was probably a stupid defense given how it played in court (i.e. the complete lack of hard evidence). But it was a legitimate one, and probably the only one feasible. I wouldn't be surprised to see Balwani try the same thing on his turn.
You shouldn't confuse the two.
There are many stories, some even became famous, of criminal women having babies just to avoid jail.
"belly plea. The plea of pregnancy, generally adduced by female felons capitally convicted, which they take care to provide for, previous to their trials; every gaol having, as the Beggar's Opera informs us, one or more child getters, who qualify the ladies for that expedient to procure a respite." From the 1811 Dictionary of the Vulgar Tongue. Seems it has been used to get lighter/delayed sentencing for a while now.
Paris because, well, why not?
Perhaps someone who wants to have children and is worried that their fertility may not last until they get out (especially as I've seen reports elsewhere that she may face 20 years consecutive for each charge)?
Presumably it will live with the child's father, who happens to be an heir to an enormous hotel fortune. Likewise given she'll probably do her time in fed minimum she'll be seeing it weekends and probably even some evenings because the US Federal Penitentiary system isn't run by sadists and gives some due regard to the rights of the child.
I know this'll accrue the downvotes en masse, but it does need to be said that this some deeply misogynistic shit going down in this part of the comments: "How dare she have a child! At 37! A grown ass woman starting a family! She's a criminal, she should cross her legs and hang her head in shame! Think of the child - better it not exist than have a fraud for a mother!" etc. etc.
You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke.
There is nothing in the article nor in the case itself beyond the usual mitigation concerning her family. This is an unprompted attack on a woman for having a child, simply because she's been convicted of defrauding corporate america.
People have a right to a family life. Even criminals.
" but it does need to be said that this some deeply misogynistic shit going down in this part of the comments"
I disagree. It's not misogynistic at all. If you have been following this case since the start, and have read the book, and watched the documentaries, and read all the reporting - then I don't think it unfair to politely suggest that considering the slippery deceptions and lengths she went to to prevent the fraud becoming fully known; that the timing of having a kid whilst being pursued by the Government COULD be perceived as being a slippery move to put her defence in a more sympathetic light.
Alternatively she could have the kid out of love - and good luck to her. But if she loved Balwani as much as she presented in court - why did she not have one with him? Oh yes, she was spending all the time faking it until she started making it...
There's nothing polite about suggesting parents - both of them - opted to conceive a child purely to deceive the court.
They married two years before the trial began and the child was likewise born before the trial began. You're drawing connections where there are none.
There is absolutely no evidence or suggestion that this is a thing. This is something that has been invented entirely by commentards, and I am suggesting that that invention has more than a whiff of rampant misogyny about it.
>why did she not have one with him?
Because she's a grown ass woman who has every right to decide when and when not to have a child, and under what circumstances. This is also a pretty distasteful comment given Holmes's testimony of abuse within the relationship (though denied by Balwani)
Like for real, of all the things she definitely did do, all the many actual proper crimes she committed and has been convicted of, all the many millions of dollars she defrauded her investors of - people here are jumping onto their belief that the sole reason she has had a child at the age of 37 with her partner is to deceive the jury.
I look forward to the forensic examination of Balwani's family life decisions in a couple of months when he is likewise on trial.
The bit I'm more curious about is how coercion would work out, given it's potential as a valid defence. And perhaps more so had she been found not guilty. Seems a bit odd given Holmes said Balwani made her do it, and Balwani could try the same and claim he was the one being abused.
But I'm sure the justice system has that covered given partners in crime often blame the other people. Seemed to me that few people came out of this looking good. I remember the initial hype though, and being rather dubious. I guess the fraud relied on a thin veneer of plausibility, and HP levels of due diligence. Then again, my medical career was tragically cut short after being fired for eating at my desk in the toxicology lab.
"You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke."
Well, duh. The whole sympathy from the jury thing would not work if she was a bloke. It didn't work anyway in the end. But if you've read "Bad Blood" or listened to The Dropout you can see that's exactly the kind of stunt that she would pull.
For those of us without the spare time to plunge through a 350 page book or listen to 4 hours of podcasts, would you mind explaining some of the context you're pointing towards?
I will say though it's a bit silly to project trial strategy onto the person - that's the domain of her defense team, not necessarily herself. They'd not be doing their jobs to not try anything that might work, especially when the case against her was so strong on the fraud counts.
"You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke."
Sure I would, if it seemed reasonable to believe that said bloke acted primarily for the purpose of manipulating a jury's or judge's sympathies. The simple fact is that men have never been given any special treatment by courts on account of getting someone pregnant or having children, so it wouldn't make any sense for a man to employ that as a means of manipulation. Women have often been given special treatment under such circumstances, and in fact that occurred in this very case: the trial was delayed while Ms Holmes completed her pregnancy. If courts had a history of deferring trials or sentencing of men whose partners were pregnant, I would absolutely accuse a male defendant of manipulating the system by getting his partner pregnant if that seemed plausible. They don't, so this argument makes no sense.
Whether Ms Holmes's pregnancy was primarily manipulative is something only one person will ever know, and neither of us is that person. But in light of her past behaviour, it's not surprising that many believe she'd sacrifice the good of others, even her own child, for her own selfish scheme. Schemers employ schemes they reasonably expect to work. A scheming man would have chosen something different.
The "simple fact" you've stated isn't either. The adjustments made for parents in the justice system are complex and cut both ways. Any adjustments in the mother's favor (and to be clear - they basically don't exist), rather than the father's, are rooted in the rights of the child to a family life, not the mother to an easy ride for being a mother. Are you suggesting the child be punished for the crimes of its mother?
The reality is her situation is anything but abnormal. In the last two decades the number of incarcerated mothers has more than doubled. There are hundreds of thousands of parents with dependent children incarcerated in the United States. Usually separated entirely and completely.
There is nothing abnormal about someone having a child in their late 30s and there is a gulf the size of Texas between someone defrauding Rupert Murdoch and them exploiting their own progeny for a 6 week delay on a trial that had already been delayed for over a year due to COVID. A delay, it should be stressed, that was reached by mutual agreement to ensure Holmes received the fair trial and due process that is required to confidently put her behind bars for her crimes.
There is nothing unusual about someone in this position becoming a new mother and not one iota of even a whiff of suggestion by anyone attached to the case that her relationship & family are anything other than a legitimate one. Yet here we are with a gang of men decrying her as an unworthy mother and self-evident abuser of her own child, all because she's been convicted of a financial crime.
Let's call this what it is.
"Are you suggesting the child be punished for the crimes of its mother?"
Why do you consistently fail to understand what people are arguing? You have only one point you keep making over and over, and while it's a valid one and one that can easily be argued, it doesn't respond to what they were talking about.
Of course they aren't "suggesting the child be punished for the crimes of its mother". They never said anything even tangentially related to that. They are suggesting it's possible that the mother had a child for a self-serving purpose, without considering the welfare of the child. This is an accusation without evidence, which they have already admitted themselves, and in this case, the poster has moderated it to a possibility rather than a certainty.
And once again, they weren't saying that, if this happened, it was done to get protections from the legal system. Not a change in prison terms. Not a delay in the trial. The purpose in doing it, if it was done, is to manipulate the people involved. The law doesn't treat pregnant defendants differently, but juries might. I would like to indicate here that I really don't know her motives, and I don't even know the facts related to her pregnancy. I am not agreeing with the posts you oppose. However, if you would like to convince me or others reading it that they're wrong, you'll have to stop arguing against points they don't make.
"The law doesn't treat pregnant defendants differently, but juries might."
This is just hopelessly naive, at least in Federal court. Juries are not that stupid and operate under strict instructions. They're not going to be swayed by dear ol' Liz carrying a diaper bag into court every day.
Let me restate things simply then. Making this kind of suggestion is pure misogynistic claptrap. There is no basis for even beginning to believe that she might have had the child for any purpose other than starting a family. In contrast as a recently married 30-something woman there is plenty of reason for her to start a family, as every woman has the right to do so or not do so.
The people making this suggestion are inferring nefarious motive where there is no basis to do so. What Holmes has been convicted of is a corporate financial crime. Choosing to conceive a child for no reason than to attempt to hoodwink a jury into believing her defense of manipulation would be child abuse, and inhumanity of the highest order. Using one to accuse her of the other without basis is pure and simply misogyny, because nobody here is stupid enough to be under the illusion that she would be attacked in this way were she the bearer of a penis.
"Juries are not that stupid"
Yes they fucking are. They're mostly composed of people who are too stupid to come up with the lamest of excuses to get out of jury duty.
A jury found OJ Simpson innocent. Another decided the Birmingham Six were guilty. Plenty of others were happy to convict hundreds of innocent subpostmasters on the say-so of a bunch of lying bastards.
Juries can be and are manipulated. It's a routine part of courtroom technique.
I don't know or care if that fraudster con-artist Holmes used or didn't use her sprog to get sympathy from the jury. Mind you, conceiving a child when there's a chance of spending 20+ years in jail is somewhat irresponsible. No matter. Both the defence and prosecution will have been trying to manipulate the jury. That's the way the system works.
"Juries are not that stupid and operate under strict instructions."
Juries are given a summing up by the judge and advice as to what the law is. When they get into the jury room their response to that is entirely their own.
"There is no basis for even beginning to believe that she might have had the child for any purpose other than starting a family."
Sure there is. She's a con artist. Con artists are selfish and most are sociopaths. There is plenty of evidence that Ms Holmes is a sociopath and I personally have little doubt of it. That said, being a sociopath is not a crime, nor is having a child for selfish reasons.
"The people making this suggestion are inferring nefarious motive where there is no basis to do so."
I'm not making any accusations. For one, as I just said, having a child for the purpose of deceiving a jury or manipulating the court's sympathies is not a crime. As you correctly point out, every woman has the right to have children. And as I pointed out, why she chose to have a child at this time is not only something I don't know, it's something I *can't* know. No one can ever know (given current technology, and maybe ever depending on the biophysics) what another person is thinking. Therefore I have not only avoided making claims about her motivation but expressly disclaimed knowledge of what that motivation was.
What I was explaining is that there's no sexism in thinking that a sociopath who happens to be female might choose to conceive a child for selfish reasons. Sociopaths act without regard for the interests of others, which could certainly include a child. They do so regardless of their sex chromosomes, genitalia, or self-perceived gender. The exact manifestations of this disregard for others vary from person to person and situation to situation. But I stand by my assertion that those manifestations will reflect reasonable expectations about what will and will not be effective, which means that a male con artist and sociopath may choose to act differently from a female con artist and sociopath *despite having the same underlying motives and essential disregard for the welfare of others*. That is, equal evil, different actions because society will respond to their actions differently.
"...nobody here is stupid enough to be under the illusion that she would be attacked in this way were she the bearer of a penis."
You need to go check out other articles, then. The crowd here, like society overall, is generally quite harsh to con artists, liars, schemers, sociopaths, fools, and assholes regardless of their genitalia. I am certain that a male sociopath who acted in a similar way would be attacked at least as aggressively. If anything, there are probably many people who loathe Ms Holmes just as much as they'd loathe such a man but are holding back precisely because they know they'll otherwise be subject to baseless, senseless accusations of misogyny. And sure enough, here we are.
"with a gang of men"
Sexist much? How do you know the gender of the posters? There are a number here who may be women, at least some of whom have said so. I suppose they could just be a gang of men pretending. Some of those who haven't identified as women may well be, you can't really tell from their posting names.
I must admit I am tending towards the feeling that some of the comments are leaning towards the misogynistic side of the scale, but I'm not prepared to definitively claim those comments all come from men, or little blue furry aliens from Arcturus.
> You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke.
Well, no, because - last I checked - a bloke can't get pregnant.
But maybe Theranos invented a machine to make that possible.
How much is Ms. Holmes' PR team paying you to post this shit?
Obviously, we are moving on to the next phase of the trial: sentencing. Translation: trying to milk the pity-party all she can.
I'll give you this: there is something fundamentally sociopathic in her overall behavior and attitude. She is capable of lying with a straight face without showing any sign of discomfort.
Watch the documentary The Inventor - Out for Blood in Silicon Valley.
One obvious giveaway of her deliberate lying is that she purposely does not blink and does not move her eyes when she lies. She also lowers her voice - more so than when she is not lying. That's trained. She trained to make herself appear genuine when lying by controlling - and mostly hiding - the most obvious discomfort indicators.
Given the demonstrated evasiveness of her answers when she faced questions about Theranos - long before this trial even started - she is not someone naive and inexperienced who got carried away by their own dreams and aspirations. She is a pure breed con artist, and she knows it.
For someone who has exhibited, and exercised, sociopathic behavior, for such a long period of time, and solely for the purpose of personal enrichment, using pregnancy to extract sympathy from the jury would not be surprising at all. To the contrary, it would be a perfect fit for her pathology profile.
"You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke."
Without commenting either way on the rights and wrongs of the relevant comments, similar allegations were raised by commentards with regard to Assange and his fathering of two children while in the Ecuadorian embassy. He's subsequently has been given permission to marry while in Belmarsh prison, buy the Governor.
>You chaps wouldn't dream of saying the equivalent if Ms Holmes was a bloke.
The sheer disparity between the number of incarcerated males and females (certainly in the US) gives us some idea of how unbalanced our system is. Its not that there are necessarily more male than female criminals but rather men are not assumed to want or need "a family life".
Rights are not absolute. They come with responsibilities. So starting a family when one is facing possible significant jail time is an attempt to use a 'right' to avoid a 'responsibility'. Using a child as a pawn in such a gambit should be illegal but there's no way to accurately define such a situation so we're just stuck with public disapproval. It is a gambit that's been used repeatedly which is why we've had such a problem with minors at the border ("bring a child so you don't get immediately deported").
She may face up to 65 years (3x fraud @ 20, 1x conspiracy @ 5) if the sentences are set at their maximum and applied consecutively rather than the more usual concurrence.
Because this is not a particularly egregious example of fraud (i.e. she deceived sophisticated investors, not your dear old gran/did it on a relatively modest scale), because most of the more serious charges didn't stick and because she has an otherwise clean record the likely number is reckoned by most observers to be in the 4-6 range.
However this is federal sentencing so there's a level of witchcraft involved beyond the ken of mere mortals.
Federal sentencing guidelines are a lot more sensible than you might imagine. There's emphasis placed on a range of factors when considering economic crimes like this. The bulk of the sentence will be determined by the sheer amount she is found to have defrauded the investors.
As someone accused of a nine-figure fraud Holmes faces a significant sentence here. The $145M figure quoted in some articles would land her a stonking 24 "levels" right off the bat. This would land her right into the 10+ year range.
Most of the remaining exacerbating factors are things like whether or not she put anyone in significant financial difficulty (e.g. robbed your gran) or put a bank or other company at serious risk. Luckily for her those probably don't apply.
This is also where the complexity of the offence itself gets involved, because the figure on which the sentencing should be based is the actual material loss incurred, not necessarily the funds received. So there'll be a whole boatload of horsetrading establishing actual loss levels, and it could end up being the case that on the specific counts where she's been convicted the material loss is a lot lower than what the headline figure suggests.
That's why all the sentencing figures we've seen so far have been purely speculative.
"Most of the remaining exacerbating factors are things like whether or not she put anyone in significant financial difficulty (e.g. robbed your gran) or put a bank or other company at serious risk. Luckily for her those probably don't apply."
On the BBC today, they interviewed a woman who, on the advice of her boss describing Theranos as the "next Apple", invested a 6-figure sum in shares from her salary as a secretary, ie pretty much everything she had. I presume she lost all of that. There may well be others in the same situation, so based on what you described, there may be more points for that.
"it could end up being the case that on the specific counts where she's been convicted the material loss is a lot lower than what the headline figure suggests."
Good point. It'd be interesting to see "the books" for those big investors and how much they put in and "lost" and compare that with their tax liabilities and how much of said "loss" was written off against tax.
Doesn't US sentencing come down heavily on that?
US securities law treats sophisticated investors differently than if you or I are buying stock. Investment banks and VCs are in another class, and such sophisticated investors are assumed to have the ability to perform due diligence beyond what you or I could do via digging through financial statements, 10K disclosures and the like.
They obviously didn't do enough in this case, but there were some people she talked to who turned her down so they either turned up something that looked bad or more likely didn't receive sufficient proof that Theranos' technology worked to pull the trigger. I am sure some of her investors didn't really care whether it worked. They just wanted to get in early, ride the hype train up, and sell before actual results mattered.
US federal judges (such as the one who’d adjudicated this case) aren’t elected; they’re appointed by presidents and require Senate approval. However, rich people could be the sort who anonymously contribute significant sums to issue-based political action committees. (Direct contributions to candidates or political parties for federal contests are not anonymous and have monetary limits per candidate/political party per contributor.)
Yes but the judges are appointed for life, so they don't have to responsive to those who helped them get there once they are there.
Something Trump failed to understand, he seemed to think that judges he put on the bench would "owe" him, and he's constantly pissed off when judges he appointed don't take his side. He probably is used to how things work in New York City and New York state where judges ARE elected and that is probably why he's been able to skate around the law so many times for decades.
This post has been deleted by its author
These crimes had absolutely nothing to do with COVID-19 or COVID hysteria. They occurred years before either existed; Theranos had ceased to exist for over 2 years before the first person is known to have been infected by Sars-CoV2. Are you a bot or just grossly ignorant of the entire case?
As for whom she defrauded, that has little or no bearing on sentencing. To the extent that it does, it would be based on whether they were placed in grave economic jeopardy as a result of the fraud; rules specify greater penalties for taking a bunch of people's life savings than for bilking a VC firm or random rich dude for 2% of their assets, even if they're roughly the same amount of money overall. The fact that the people she stole from are probably rich and seem to you to be powerful doesn't work the way you think it does. I'm sure some of them are angry with her and her former partner but they're also undoubtedly embarrassed because these losses were preventable had they been diligent, and at the end of the day these are people who expect to lose their entire investment 80% of the time or more. That's the nature of the business; losing one's investment to fraud is not ultimately any different from losing it to failure, and the kind of people who have billions and invest $10m or $20m in a mid-stage startup understand perfectly well that most of those investments are going to be losers. They also know that neither putting Ms Holmes away nor "setting an example" is going to make their money any safer in future. I doubt most of them care very much what happens to her, certainly not enough to risk getting involved in something shady like bribing a judge. Absent that, as I and others here have explained, ripping off rich people has if anything the opposite effect you're assuming when it comes to sentencing.
The self-righteous indignation is a bit cloying. She's committed some crimes, she's going to do some time. Probably a few years in some minimum-security joint. Not pleasant, not horrid. Hopefully in that time she'll finally understand that what she did was wrong and why; it's apparent that she has yet to grasp that. The people she stole from were fools who should have known better. That doesn't excuse the theft, nor is it sensible to try and apportion blame. Each of them is wholly responsible for their own actions: Ms Holmes (and Mr Balwani, assuming the next court will see it that way) for the thefts, the investors for their casual indifference and lack of diligence. The investors have been punished already; they lost what is to them them a small amount of their money. Now Ms Holmes will be punished as well. If you think she's a sociopath, you're probably right. If you think she's a scoundrel, you're certainly right. But get a grip. This is nowhere near the worst crimes in human history or even the last decade. It's just another fairly mundane case of corporate fraud; there are many such cases and most are rightly considered fairly dull. Nothing about this particular case warrants the excessive outrage I see here.
"applied consecutively rather than the more usual concurrence."
When I keep seeing reports of multi-decade and century-plus sentences in US media, I always assumed it was the other way around. Is it just media bias that tends to report 100+ year sentences because "big numbers"? Or is this more of a difference in sentencing at Federal level compared to State/County level?
The media report what will get people to look at ads. That means "man bites dog" gets reported while "dog bites man" does not, even though -- in fact, because -- the latter is thousands of times more common. So yes, they will report anything anomalous, especially if it's likely to trigger outrage; that certainly includes 100-year-plus sentences. Nearly all multi-count convictions result in concurrent sentences, not consecutive. Also, there are numerous ways for most prisoners to get their sentences reduced below what the judge initially orders; it's common to serve no more than half to two-thirds of the original sentence before being released on parole or other early release programmes. Relative to the total number of people who serve time in prison, very few die there.
Pretty much by definition, anything you read about in a US newspaper is anomalous. It's certainly so in Canada, and I have to believe almost everywhere.
Because this is not a particularly egregious example of fraud (i.e. she deceived sophisticated investors, not your dear old gran/did it on a relatively modest scale), because most of the more serious charges didn't stick and because she has an otherwise clean record the likely number is reckoned by most observers to be in the 4-6 range.
In the US, if you defraud dear old gran, you skate off with a tiny fine. If you defraud rich people, you get the book thrown at you. 120 years for Bernie Madoff.
"If you defraud rich people, you get the book thrown at you. 120 years for Bernie Madoff."
Wrong, and a bad example. The Madoff scheme involved lots of people, many of them not rich at all. Some invested most or all of their life savings in his fake fund, which is not a wise way to invest but they had reason to think it was at least an honestly-run one. Many others had their money invested without their choice by investment managers, including institutional pension programs. Madoff's scheme did not limit itself to rich investors. The number of victims and the scale of the damage done to them was a large contributory factor in the sentence.
She got some out of Larry Ellison too.
The board of directors had some star names on it which might have gone some way to making it all seem legitimate. These included:
Henry Kissinger (former United States Secretary of State);
Jim Mattis (retired Marine Corps four-star general);
George Shultz (former United States Secretary of State);
Richard Kovacevich (former CEO of Wells Fargo);
William Perry (former United States Secretary of Defense); and
William Foege (former director of the Centers for Disease Control and Prevention).
https://news.crunchbase.com/news/theranos-elizabeth-holmes-trial-investors-board/
As far as I know they were all taken in by Holmes’s and her boyfriend and there’s no suggestion that they did anything wrong.
they did plenty of due diligence - unfortunately someone was faking documents, faking contracts and relationships and press announcements and that person was Elizabeth Homes - she personally did all the underhand stuff and didnt even try to get others to do it.
I think the wool was being pulled firmly over everybody’s eyes. Theranos were faking results, using other peoples established tech or just lying to convince investors etc. Walgreens signed a deal with Theranos despite their own hired in expert saying he had serious concerns. The executives just ignored him I suspect because the potential was too good and they were worried about rivals getting in there first.
Seriously recommend reading the book on this if you want to get the full story.
The Walgreens deal still smells a bit off for me, especially with potentially huge downsides wrt liability and reputation. Or if Theranos just agreed to cover those losses.
But it's also something due diligence could have exposed easily. Contract a neutral testing lab to compare current best in market testing machines against Theranos, compare results. It's a pretty common way to benchmark in many industries. Bigger the deal, the more closely you'd want to look.
As a company producing medical devices, wasn't there some agency required to look at and test this equipment before licencing it for use? Or can any old snake-oil salesman make any claims they want without retribution?
On the other hand, there does seem to be a culture of "fake it 'till you make it" in Silicon Valley. Lots of big claims being made to attract the VCs and frequent total failures to produce the goods.
I think it's as you say, ie it's a late stage req to bring it to market. But there's also a huge market in non-medical medical devices that skirt regulations. Like Himalayan salt lamps that promote well being rather than doing anything quantifiable. Sales probably has more safeguards.
And yup, but VCs are supposed to know what they're doing, and should be able to detect bs. But early stage investing is high risk. I think there's also a problem with priorites. If it's a short-term investment it doesn't really matter if something works or not, only that you can exit cleanly and profitably. So hype up the investment pre-IPO, and get out before the market open bell's finished ringing. But there are much bigger potential frauds around, from Tesla to pretty much the entire 'renewables' industry.
"As a company producing medical devices, wasn't there some agency required to look at and test this equipment before licencing it for use?"
Yes. The short version of the licensing situation is that they failed to get licensing for nearly all of their stuff (they sometimes lied about having it or the reasons for not having it yet). The one product that did get used was licensed because the machines they used only collected blood from people and sent it to a lab that had received a license for being safe (though not for being good at the job). Investors didn't know the extent of the problems because the licenses take a long time to get, leaving the company a lot of possible excuses for why they weren't ready. Had they not been exposed, that would probably have been their largest issue and caused a similar set of problems only a few years later.
"As a company producing medical devices, wasn't there some agency required to look at and test this equipment before licencing it for use?"
yes, it was the FDA and theranos hid this from them. they claimed on the paperwork they were using their own devices when in fact they were using modified Siemens devices - modified so as to breach the Siemens licencing by the FDA.
And when anyone asked, she used the 'Trade Secrets' excuse to avoid answering the question.
This post has been deleted by its author
Not everybody's. There seem to have been a lot of people saying it wasn't working but they were either told to shut up or ignored.
No as I said people were wise to it but in the case of Walgreens for example they ignored their expert who raised concerns. If you raised any concerns as an employee you didn’t last long. Take the case of Tyler Schultz (nephew of board member and former Sec State George Schultz) who worked for the company. He complained to Holmes that the company was a fraud and was given more than the middle finger when he decided to leave. He also became a whistleblower to the authorities (& the WSJ) and blew the lid on it. It all but destroyed his relationship with his uncle.
https://www.wsj.com/articles/theranos-whistleblower-shook-the-companyand-his-family-1479335963
I doubt they were actually the "working" board, just "names" to go on the headed note paper, non-executive directors with little to no power. Happens all the time in the UK too, primarily with ex-politicians being paid large amounts of money for a few hours "consultancy" per year and their name prominently on the letter-heads.
Murdoch is worth over 100x that much though, so losing that money doesn't affect him at all other than maybe his ego.
It is worse if you or I lose $20, even though we're worth much more than 100x as much, because we (or at least I) don't have a "never need to ask the price of anything ever again" level of net worth.
"Murdoch is worth over 100x that much though, so losing that money doesn't affect him at all other than maybe his ego."
Or maybe he needs an ego boost by showing the rest of the zillionaire's club how much money he can afford to lose? How much did he lose on myspace, $500M? $600M?
Did Google's founders lie? Did Facebook's? There are plenty of startups that were pretty honest about what they were doing - not just ones who succeeded wildly like those two but ones that succeeded moderately and those that failed.
There's a big difference between a meal delivery startup saying "we will have a million customers in 18 months" but ending up with only 10,000, and a startup saying "we have technology that can read your mind so keyboards and voice input will be obsolete in five years" and being utterly unable to deliver anything close to that technology - and cheating in product demos or claiming success in testing that never occurred. What she did was pretty much the latter. Lying to that level is quite rare in any sphere of investment, because it is so clearly and easily provable as fraud - because Theranos never had the technology they claimed even as a one-off in the lab.
The former where you vastly overestimate your customers was simply being wrong - you did have a meal delivery business it just wasn't nearly as competitive or able to expand as quickly as you claimed.
"Did Google's founders lie? Did Facebook's? There are plenty of startups that were pretty honest about what they were doing - not just ones who succeeded wildly like those two but ones that succeeded moderately and those that failed."
Depends. It's part of the "fake it 'till you make it" ethos. The ones who succeed didn't "lie" because they did eventually "make it". Many, possibly most, don't. It's not necessarily lying if they don't make it either. It might just be having no business acumen in the company. Then there's the successes where the founders got kicked out by the people with business acumen and may or may not then go on to better things or crash'n'burn because they got rid of the pesky techy founders.
I suspect what we have here is something that started as a good idea then spiraled out of control. Not saying that is any excuse but it is a reason.
So the good idea a machine that could test for a number of conditions rather than just one. The process probably stated off something like this:
1. The concept is sound after all you can do these tests for some specific conditions, but there's no machine that will do the same for lots of separate conditions. Somebody will make it work one day. Why not us?
2. What you need to develop the concept is money.
3. We don't have any money.
4. Find somebody to invest in the idea.
5. OK so we have some money lets try developing it.
5. Damn we're getting nowhere. Maybe if we had more money?
6. Well lets just tell a few white lies to potential investors, after all the concept is sound if we just had more money we could make it work.
7. Right we have more money.
8. Go to 5.
And of course the "white lies" at 6 just kept on getting bigger. If I'm being charitable I would say that they remained confident they could make it work. Less charitable and I think they were just too scared to go back to their investors and admit failure. If I'm being realistic (or maybe cynical) I'd say they just got addicted to the money that comes with being in charge of a big company. Either way they just couldn't stop lying.
Mmmmh, it was more alike:
1. I dreamed about a machine nobody has built till now!
2. ?????
3. Profit!!!
The real problem is if she ever had a clue about creating such machine. I could think a "warp engine" is feasible, but if I have not any breakthrough idea about building one, just thinking that throwing a lot of money at the problem will eventually let me find someone who has it, it's pretty idiotic and megalomaniac, Unless you're going to scam people, of course.
I think it started out as a good idea, based on some semi-plausible tech.
So yesterday I went for my regular INR check. That's a <click>, drip on a test strip, wait for the <bing> and get the result. That's then used to calculate how much rat poison I should take for the next course of treatment. But the instant test is convenient, but limited accuracy, so if the result is out of range, it's a blood draw. That gets sent off for a more thorough analysis in a bigger machine.
Then walking home, I felt rather wobbly. So another drip on a strip, and the glucometer said I was rather hypo. So one Crunchie washed down with some sweet coffee later, and normal reality service was restored.
So the idea of reliable testing from a single drop of blood is reality. But so are the limitations for accuracy. So Theranos took that concept and ran with it. Take one large drop of blood via a mini vacuutainer. Then use micro capillaries to divide that blood into various testing units, and you get a quick blood panel. Sit back, and watch the money roll in.
Meanwhile, Nyquist and Shannon are rolling in their graves because another idiot is ignoring basic sampling theory. So the smaller the sample, the harder it is to produce accurate results, and the error rate goes through the roof. A lot of people know this, and presumably Theranos eventually hit this reality checkpoint. Ye canna defy the laws of physics, or sampling theory Captain. But anyone who pointed that out got threatened with legal action and fired.
Snag was Theranos had already told investors, customers and the market that full self-driving...I mean testing works, and is available today. Which in technical terms is a bare faced lie, and the basis of the fraud. Which should have been obvious to industry, or any engineer or scientist who's done any sampling theory. It's probably my favorite theory, but can sadly also be widely ignored, eg most climate dogma.
To be fair a different measurement technology can reduce the needed sample size. For instance back in the late '60s we were doing carbon dating by radiometry. We needed samples of several grammes. Subsequently mass-spec came along to enable a direct measurement of isotope ratios. Presented with the smallest sample we could work with they'd have to sub-sample it as it would have been too big to work with in its entirety.
In forensic science glass comparison depended on being able to measure the RI microscopic chips to precession orders of magnitude better than the manufacturers' QC labs were measuring bulk samples. By using various attachments we were able to get IR spectra from about 2mm of individual synthetic textile fibres whilst manufacturers' QA was using films about the thickness of photographic films. In that case our spectra were indeed of poorer quality (ye canna defy the laws of physics) and we couldn't see the halogenated monomers that were added as tracers - but when I left my colleagues were proposing to use SEM/XRF to see if they could pick them up another way.
The point is, of course, that for each analysis that sort of transformation requires a lot of development work. There isn't going to be a magic bullet that hits all the anions, cations, simple organic compounds and enzymes that blood analysis involves. Given the number of specialist companies working in this field and the hundreds of existing man-years of experience at all levels is shouldn't have been credible than someone with no background could come along and do what they couldn't. It simply takes disrupter theory too far.
Hmm. If I ever get rich & shameless, I want my own materials lab. Luckily hand-held XRF machines are still too expensive for me to impulse buy. Same with Raman spectroscopy. Plus there's probably paperwork or just awkward questions to answer around why I want them. Not sure if my failure to convince anyone to gunk up their spectrometer with a sample of Marmite would help my case.
But it's something that's fascinated me since being a kid watching experts pointing at peaks marked 'unknown'. Then learning a bit more and realising the location would be highly improbable for anything alien. So I learned some good science from bad SF. Much the same with fantasy forensics vs reality, which is where Theranos came unstuck. Testing has consequences, and what's possible in CG can be impossible in reality.
A lot of the claims seemed to be around microfluidics. OK, that's old tech although used in new applications. So it helps keep optical chips cool. It draws blood across reagents. I guess for INR testing, you might be able to measure how far blood gets along a tube before coagulating and gunking that up. But that'd also be a problem because blood goes off, and I suspect that's why the test database vanished, ie by the time samples got tested, they wouldn't be viable. For glucose testing, I read the standard docs and learned the strips use an enzyme to generate a voltage, which the meter can measure and convert. But their are accuracy and sample volume limitations.
And yet somehow, Theranos would be able to reliably and quantifiably run 100+ tests from a single drop of blood, using a machine not much larger than a microwave. Which based on my limited knowledge as an engineer who's regularly sampled seemed highly implausible. So I'm still puzzled why Theranos took so long to implode.
Again, a "concept" works well in marketing only - maybe fashion.
If you have no breakthrough idea to turn a very difficult concept into reality, you can't hope to find it along the way, especially, as you are told by experts in the field that there is real science working against you. Of course that should not stop you if you discovered something that could let you break through, but should if you didn't. Maybe your discovery doesn't stand validation, but if don't have really any?
And even breakthrough ideas may not work under actual technology constraints. We all know nuclear fusion is possible because we see and use it every day, creating it and controlling it outside a star is quite complex. Still this kind of failures can still advance knowledge. Hiding failures, and selling scams doesn't.
The fact that today people are ready to follow someone because they have a "concept" instead of an "idea" supported by sound researches shows how fool the world become. All you need is something appealing to show on the internet. What's behind is not important - at least until people start to worry about what's behind after putting money on the facade....
I guess there are different definitions of a scam but I'm not sure this was one. A major fraud yes. But a scam... I'm not sure.
There was after all : a company, a working lab, a research and a product development division, and a product - albeit that it never worked.
I honestly believe that she set out to try to achieve what she wanted to achieve, but was unable to accept that it wouldn't work - at least in the timescales that she was presenting to investors, and then caught herself up in a web of lies that she couldn't escape from due to her own publicity seeking ego.
I've not read anything to suggest that she was actually trying to scam anyone. She definitely "misled" out of desperation to buy herself some time - but not to con people out of money and then do a runner with the proceeds.
I do however agree that she is guilty of what she has been found guilty of. If nothing else - for the manner in which she conducted herself to protect her own interests.
You're right and the the jury evidently agrees. The counts on which she was acquitted were those of defrauding the public - the overall diagnostic services being sold were genuine, they just weren't using the wonder-tech Theranos were shopping to their investors as underpinning the process.
"the overall diagnostic services being sold were genuine, they just weren't using the wonder-tech Theranos were shopping to their investors as underpinning the process."
This is very, very wrong. The tests they sold not only didn't use the devices they claimed to use (a technical detail the public wouldn't care much about anyway), but they were also frequently inaccurate. The company had changed the protocols to use less blood in many of the tests, but the machines couldn't produce reliable results from the smaller samples. They knew this, as they frequently had to fake the results for important people (people who could give them money). The diagnostic services were flawed and sold to the public knowing they would at times receive incorrect medical information. That the company offered a couple tests that weren't knowingly fraudulent doesn't make the rest of their services genuine. They were not.
I'm curious what your definition of scam is. In mine, scam and fraud frequently go together. Basically, if the answer to "are you taking money for a service you know you won't provide" is yes, it qualifies as a scam for me. It's in the law books as fraud, but I don't really see those as separate things.
You can't claim to have a working product with a high rate of success, when you have something that performs no better than chance based on the "we'll figure it out by the time we get to market". Whether you call it fraud or a scam is splitting hairs - it is equally illegal either way.
A company - which never produced any audited accounts.
A working lab - nope - it failed FDA approvals and was shut down. She even hired lab directors and kept them out of the lab and threatened them with legal action when they threatened to go public. Not mentioned in the trial as the judge would not allow it, was the one internationally credible lab director who said it was a scam, and unreliable so she sacked him, had him hounded by lawyers and private investigators - until the chap committed suicide. the lab was not full of her machine but of modified third party machines which were used outside of their approved capabilities.
A research and a product development division - not - it never delivered a working device. Anyone who threatened to tell all was attacked by lawyers,.
...... and a product - as you say, they delivered nothing working.
She did a runner with the money every year - several corporate jets and massive personal expenses - not the actions of an entrepreneur trying to make a company success but of one bleeding a company dry of investment while refusing to show its books.
She did a runner with the money every year - several corporate jets and massive personal expenses - not the actions of an entrepreneur trying to make a company success but of one bleeding a company dry of investment while refusing to show its books.
Don't forget the large security team etc. she had as well.
I honestly believe that she set out to try to achieve what she wanted to achieve
I do too. Her aim was to achieve fame and fortune by spending other people's money. Job done! Conning investors and selling machines she knew didn't work was just a means to those ends.
There was no need to "do a runner with the proceeds". All you need to do is persuade gullible investors to buy a slice of the pre-IPO stock you hold through some shell company registered in a tax haven. You don't need to loot the company's working capital. That approach is just too crude and easy to spot.
"There was after all : a company, a working lab, a research and a product development division, and a product - albeit that it never worked."
I'm suddenly reminded of Feynman's words explaining cargo cults.
"I honestly believe that she set out to try to achieve what she wanted to achieve"
You also have to ask yourself, as she should have asked herself, whether she had the requisite background to achieve that.
In order to successfully direct the development effort to produce that sort of machine would need decades of experience in the field. In fact, that experience would be needed to decide whether it was even feasible. She didn't have that. So what was her role? I think the jury's answered that question.
I was walking down Tottenham Court Road many years ago when a nice man asked me if I’d like a “personality test”. I said okay and I ended up holding two metal cans in a retail unit next to Goodge Street station. I said “Ooh you’ve got a Wheatstone Bridge” which is the correct name/term for the device the cans were attached to. He told me that it’s an E Meter and I said that may be their trade name for it but it was definitely a Wheatstone Bridge. I asked him if it was being used to measure skin conductance/conductivity. I was asked to leave at that point………
Sounds really strange. By the time she was 20 years old she had already raised several million dollars,by the time she was 30 the company had a valuation in the billions. However the promised product required a technical expertise that only few researchers with decades of experience have. How come so many expert investors turned such a blind eye on the lack of qualifications? Were they fooled or were they accomplices?
Expert investors generally have zero technical experience in clinical research, they are very good at persuading people to invest in the company and very good at making a lot of money from their investors. As far as people who have just won a PhD go, they have just become a Pumpkin head Doctor so you can't expect too much accurate research immediately - certainly they work hard at it but research takes a lot of work, getting investors to sign checks is much easier than getting research to produce the results you want most of the time.
"How come so many expert investors turned such a blind eye on the lack of qualifications?"
Because in general they're experts (allegedly) in investing, not the stuff they're investing in.
Sometimes VC firms will just take a punt on what seems to be a market disruptor. The fear is missing out on an investment in what turns out to be the next google or whatever. If everyone else is piling in, better climb aboard - and quick! Besides, losing millions on a handful of duds like Theranos is no big deal provided you've spread your bets and one of them reaches the over-hyped valuations of a facebook or tesla or uber.
"Sounds really strange. By the time she was 20 years old she had already raised several million dollars,by the time she was 30 the company had a valuation in the billions."
Considering she never even completed her degree, never mind did actual research or a PhD, I wonder how she managed to raise those early millions in the first place?
Her father was a VP at Enron, which went bust three years before she started raising her millions. No connection, no point being made, just chucking some facts out there to chew on :-)
Not suspect. That US - patients were people looking for cheap health tests, maybe with a low-level or no insurance, so they deserve what happened to them, they could have become rich too and buy top level health services.
Now, defrauding rich people violates Amendment Zero....
Good idea, aggressive pursuit of capital, greedy investors that didn't bother doing their due diligence, salting the samples to gain time, investors getting nervous and pulling the rug. Happened so many times before, will happen many times again.
The only thing I do not understand is why is this in criminal court instead of being a civil litigation between the two parties?
The Register 
Biting the hand that feeds IT
Copyright. All rights reserved © 1998–2024
