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  #1  
Old 03-15-2018, 03:54 PM
Omar Little Omar Little is offline
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Should Elizabeth Holmes get jail time?

Elizabeth Holmes is the defamed CEO of Theranos, that settled fraud charges with the SEC yesterday. She will pay a $500,000 fine; return 18.9 million shares of stock to her company, thus relinquishing her control; and not be permitted to hold an officer or director position with a publicly traded company for a period of 10 years.

She is accused of raising over $700 million of equity for Theranos under fraudulent means. The company is basically worthless today.

Let's compare her to Martin Shkreli, famed "pharma bro", who earlier this week, was sentenced to 7 years of prison and required to pay millions in restitution including surrendering his valuable Wu-Tang Clan album, estimated to be worth a couple of million $$. He defrauded several investors out of approx. $11 million through a Ponzi scheme.

Does she get a pass because she's a cute blonde princess looking girl that was backed by some of the Wall street elite. Or was Shkreli penalized not really for his security fraud, but because he's a douche that jacked up certain pharmaceutical prices by 1000x, which wasn't really illegal, but came off really bad.

Last edited by Omar Little; 03-15-2018 at 03:54 PM.
  #2  
Old 03-15-2018, 04:06 PM
Tired and Cranky Tired and Cranky is offline
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One thing to recognize is that the SEC is a civil law enforcement agency. It can't bring criminal charges or send people to jail. That's the job of the Department of Justice. The DOJ can prosecute a case even after the SEC has settled its civil case. I have no idea if that will happen here.
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Old 03-15-2018, 04:28 PM
Omar Little Omar Little is offline
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Thanks T&C, yes, I should have made that clear. It's not that she got off light, but should she receive even harsher criminal penalties.
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Old 03-15-2018, 04:38 PM
RickJay RickJay is offline
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If she committed fraud then of course she should be charged with criminal fraud.

The SEC's major allegations suggest quite a tremendous degree of dishonesty and treachery deliberately put together to deceive investors. If true it's hard to say this is not a crime.
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Old 03-15-2018, 04:39 PM
SamuelA SamuelA is offline
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Originally Posted by Omar Little View Post
Does she get a pass because she's a cute blonde princess looking girl that was backed by some of the Wall street elite. Or was Shkreli penalized not really for his security fraud, but because he's a douche that jacked up certain pharmaceutical prices by 1000x, which wasn't really illegal, but came off really bad.
The reality of the situation is that our society will punish her less, even if the crime was identical. It absolutely hurt Pharma Bro that he has such a "punchable" face and no apparent remorse. Also, he didn't just defraud investors, he tried to jack up the price on lifesaving medicine that patients needed directly.

Amusingly, her defense in court, if it ever came to that, might be a variation of the "blond defense". Basically that as CEO, all the science stuff about the product she was selling being reliable with statistical validity went right over her beautiful head...
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Old 03-15-2018, 04:45 PM
Riemann Riemann is offline
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For what it's worth, the apparently light fine might be because she doesn't have any assets. She didn't take a large salary, and she didn't sell any of her own shares. In addition to criminal proceedings that might land her in jail, I assume that defrauded investors can sue her for anything else she has left?
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Old 03-15-2018, 04:53 PM
TroutMan TroutMan is offline
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To the extent there's any consensus, it seems to be that it's very possible she will get jail time.
Quote:
Whether Holmes could get locked up would also depend on what criminal charges she faces, if any. Based on the size of a $700 million fraud, Baer said, U.S. recommended sentencing guidelines “would almost certainly involve jail time."

“The SEC clearly made an example out of her,” Lutzker said. “I can’t see any compelling reason why the Justice Department wouldn’t bring a case.”
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Originally Posted by SamuelA View Post
Amusingly, her defense in court, if it ever came to that, might be a variation of the "blond defense". Basically that as CEO, all the science stuff about the product she was selling being reliable with statistical validity went right over her beautiful head...
Note that the fraud accusations were not about the effectiveness of the technology. It was for lying on financial statements, so your hypothesized defense is not applicable.
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Old 03-15-2018, 05:46 PM
Darren Garrison Darren Garrison is offline
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From this article:

Quote:
"A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel."
Sounds like something said by Vincent Adultman.
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Old 03-15-2018, 06:50 PM
ivylass ivylass is offline
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I remember reading an article in Forbes when the company first started, touting this revolutionary way of testing blood. It's quite interesting to read now. I liked this line from the columnist:
Quote:
I still have no idea how Theranos’ technology works. But I'm more confident than I was before after spending a day talking to the company's partners.
Sounds like he wasn't the only one bamboozled.

They even gave her an award.
  #10  
Old 03-15-2018, 08:17 PM
Sunny Daze Sunny Daze is offline
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Prison time sounds about right. She committed fraud, for years, amounting to hundreds of millions of dollars. Do we know if any of her bogus machines ended up in causing medical harm to anyone? They did actually sell some of them. I know that many of the machines were actually dummied up from other people's technology, but I think that some of them were not. If any of her machines ended up causing harm, in addition to the fraud, then we can add that to pile. What if we add in the suspicion that she knew that they could cause harm, but kept selling them? After all, she made fake machines to hide her bad ones.

It just seems like there's a whole pile of shit to dig through on this.

Last edited by Sunny Daze; 03-15-2018 at 08:17 PM.
  #11  
Old 03-15-2018, 08:37 PM
Riemann Riemann is offline
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For what it's worth, the underlying concept is not "out there" at all. Microfluidics is already a huge thing in molecular biology. So it's not as though anyone was being taken in by outlandish claims of what technology can do in this field. It's just that their technology evidently doesn't work yet. But without doubt this is the future of diagnostic testing, somebody will make it work.
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Old 03-15-2018, 08:53 PM
jtur88 jtur88 is offline
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One factor might be the extent to which the accused was central to developing and carrying out the criminal act. Allowances can be made for someone who just drove the getaway car.

Last edited by jtur88; 03-15-2018 at 08:54 PM.
  #13  
Old 03-15-2018, 09:05 PM
Merneith Merneith is offline
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Originally Posted by Omar Little View Post
Does she get a pass because she's a cute blonde princess looking girl that was backed by some of the Wall street elite. Or was Shkreli penalized not really for his security fraud, but because he's a douche that jacked up certain pharmaceutical prices by 1000x, which wasn't really illegal, but came off really bad.

On the one hand - how much is 18.9 million shares of Theranos stock currently worth? How much is Elizabeth Holmes currently worth? Does she even have $500k any more? If that's what she's worth now, how is that "giving her a pass" to fine her that amount - especially because she still faces separate criminal charges?

OTOH, Shrekli stole money from his investors to prop up his various hedge funds, stealing from each new project he was involved in, in order to pay off his previous investors. His nonsense with his pharma pricing is irrelevant in his fraud prosecutions. Why are you giving him a pass by saying that he was only convicted because he's the poster child for millennial millionaire douchebros. Shrekli will still be a millionaire when he gets out in five years. Will Holmes?

Why do you think it's the blonde who's getting a pass, here?

Last edited by Merneith; 03-15-2018 at 09:07 PM.
  #14  
Old 03-15-2018, 10:22 PM
Snowboarder Bo Snowboarder Bo is offline
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I first heard of her when Vanity Fair ran a piece about her a couple of years ago, right after the WSJ article hit. The whole thing sounded like a huge scam; how in fuck did it ever have billions of dollars of value?
  #15  
Old 03-15-2018, 11:12 PM
hogarth hogarth is offline
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Originally Posted by Darren Garrison View Post
From this article:

"A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel."

Sounds like something said by Vincent Adultman.
It reminded me of the movie "Brain Candy":
Quote:
Well, it reaches into your brain "chemically," and then it locates your happiest memory "chemically," then it locks onto that emotion and freezes it "chemically," and then it keeps you happy, happy.
  #16  
Old 03-16-2018, 02:04 AM
Voyager Voyager is offline
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Originally Posted by Snowboarder Bo View Post
I first heard of her when Vanity Fair ran a piece about her a couple of years ago, right after the WSJ article hit. The whole thing sounded like a huge scam; how in fuck did it ever have billions of dollars of value?
Here is its wiki entry on its management

Management
Quote:
Since its incorporation in 2003, Holmes has been the company's chief executive officer. She recruited Channing Robertson, a chemical-engineering professor at Stanford, to be a technical advisor and the company's first board member during its early years. Sunny Balwani, a software engineer Holmes had met during high school, joined the company as its president and chief operating officer in 2009.[59] In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[60] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman of the board and former CEO at Bechtel Group).[60][61][62] The board was criticized for consisting "mainly of directors with diplomatic or military backgrounds."[16]
That's James Mattis as in current Secretary of Defense. If all these big names signed on, it is not surprising that many investors thought this was a real deal.
Now, if Boards have any responsibility, maybe some of these clowns should suffer some consequences from this scam.
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Old 03-16-2018, 04:08 AM
Dr. Strangelove Dr. Strangelove is offline
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Note that the fraud accusations were not about the effectiveness of the technology. It was for lying on financial statements, so your hypothesized defense is not applicable.
Uh, what? You can read the SEC docs here. From the second paragraph:
Quote:
Originally Posted by Case 5:18-cv-01602
Holmes, Balwani, and Theranos raised more than $700 million from late 2013 to 2015 while deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood. They deceived investors by, among other things, making false and misleading statements to the media, hosting misleading technology demonstrations, and overstating the extent of Theranos’ relationships with commercial partners and government entities, to whom they had also made misrepresentations.
The (in)effectiveness of the technology was very much a part of the case.
  #18  
Old 03-16-2018, 04:18 AM
Robot Arm Robot Arm is offline
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Now, if Boards have any responsibility, maybe some of these clowns should suffer some consequences from this scam.
Responsibility is for poor people.
  #19  
Old 03-16-2018, 04:39 AM
WordMan WordMan is offline
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- She got big science players engaged in her underlying tech - OMFG Stanford!!!
- She got big dogs on the board who looked great and wanted in on a startup destined to be the “Amazon of healthcare.“
- like Bezos, she based her company on a fully end-to-end service and tech model. They not only had the micro fluid tech at the core of testing, but they envisioned fully disrupting lab testing as a starting point for even more services. They painted a picture of building a huge new infrastructure, like Amazon’s done with its warehouses and other logistics.
- Beacuse everyone believed in the tech AND understood that this was a long-term, Amazon-invest-back-into-infrastructure play, they were willing to tolerate a lot of growing pains. And investors were willing to pony up HUGE while looking at a longer horizon, because they were shooting for the moon.

So within this context, at whatever point she broke bad she had a huge juggernaut and a surprising amount of tolerance for subpar performance. I would assume she didn’t start out a con, but got in way over her head then went with it. Either way, yes, jail time for her perpetuation of fraud. But the conditions that enabled her to cause such damage was the massiveness of the vision and the tolerance of the key power players. I have no idea how these cases go, and how jail time gets determined.
  #20  
Old 03-16-2018, 05:19 AM
JoseB JoseB is offline
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Oh, I knew her name was familiar to me... Why?

Because she was a finalist in 2015 for the "Inventor of the year" award presented by my employer, the European Patent Office (in the category "Non-European Countries").

Here is the webpage where her nomination is discussed:

http://www.epo.org/learning-events/e...15/holmes.html

Looking through that page, I can see that her company had 3 patents granted by our office (Patent #s EP2205968, EP1662987 & EP2018188 - they are accessible through the webpage linked above). She also appears named as inventor in all three.

So, it seems that she was able to bamboozle quite a lot of people, experts among them...!
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Old 03-16-2018, 07:36 AM
Jackmannii Jackmannii is offline
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Elizabeth Holmes is the defamed CEO of Theranos
Nitpick: defame is defined (by Merriam-Webster) as "to attack the good name or reputation of, as by uttering or publishing maliciously or falsely anything injurious; slander or libel; calumniate:"

Theranos' agreeing to the settlement makes it appear that the government's case was not falsely injurious.

This has been a weird situation, with the WSJ getting credit for dogged investigative reporting (Theranos hates the WSJ) that helped lead to the company's downfall.

I don't think Holmes "got a pass" because of her appearance. Some backers and reporters may have been overly enthusiastic about her company "disrupting" the industry because she was a young flashy figure touting a flashy new technology that was way unready for prime time.
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Old 03-16-2018, 07:51 AM
Ravenman Ravenman is offline
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Interesting factoid: James Mattis, current Secretary of Defense, was on Thaneros' board of directors from roughly 2012 until his nomination to Trump's cabinet.
  #23  
Old 03-16-2018, 07:52 AM
JRDelirious JRDelirious is offline
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Originally Posted by Jackmannii View Post
Nitpick: defame is defined (by Merriam-Webster) as "to attack the good name or reputation of, as by uttering or publishing maliciously or falsely anything injurious; slander or libel; calumniate:"


(...)



I don't think Holmes "got a pass" because of her appearance. Some backers and reporters may have been overly enthusiastic about her company "disrupting" the industry because she was a young flashy figure touting a flashy new technology that was way unready for prime time.

(A) I guess OP meant “disgraced”

(B) Would agree that was a factor, many people trying to get onboard early with the Next Big Thing and a good sales face for it.
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Old 03-16-2018, 08:07 AM
RickJay RickJay is offline
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That's James Mattis as in current Secretary of Defense. If all these big names signed on, it is not surprising that many investors thought this was a real deal.
Now, if Boards have any responsibility, maybe some of these clowns should suffer some consequences from this scam.
Far me it from me to defend a Trumpist, but the reality is that part time board members are just as dependent upon the honesty of the CEO, CFO and their minions as anyone else, and can't be expected to hire PI's. If Mattis made honest decisions based on phony information that was given to him by con artists, he isn't legally liable and probably isn't ethically liable.

The accusations against Holmes are that this was not just a few casual lies or one or two bullshit balance sheets, but a sustained and dedicated program of fabrication. They were literally moving machines around their "business factory" when guests showed up to make it look like their tech was doing all the work.
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Old 03-16-2018, 08:17 AM
MichaelEmouse MichaelEmouse is offline
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It does open the question of how much a company can "fake it 'til you make it". How many bidders, especially in government contracts, will promise to do something to given specifications by a given timeline only to fall short on both? Didn't Bill Gates bluff his way into big contracts in the 80s by assuring would-be customers that Microsoft had the software they wanted only to scramble to actually make it afterward?

In research and technology, doing something that's never been done before is likely to involve running into many unknown unknowns. The more revolutionary the technology, the less you know about whether and how you can get there.

From what I understand, Holmes said that they did have a working product, correct? Did no one ask why the company wasn't selling this revolutionary product on a large scale to generate revenue? Or are tech companies presumed to run without much in the way of customer-provided cash until the IPO?


As for Martin Shkreli, authorities took a closer look at him after he became infamous for being cutthroat within the bounds of the law. He probably partly paid for the bankers that didn't in 2008-2009.
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Old 03-16-2018, 09:03 AM
snowthx snowthx is offline
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I don't think Holmes "got a pass" because of her appearance. Some backers and reporters may have been overly enthusiastic about her company "disrupting" the industry because she was a young flashy figure touting a flashy new technology that was way unready for prime time.
I am not sure about her legal troubles, but as far as attracting investors and board members, I am willing to speculate that her looks played a part not only in getting attention, but also in luring money and talent into the scheme.
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Old 03-16-2018, 09:16 AM
WordMan WordMan is offline
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I am not sure about her legal troubles, but as far as attracting investors and board members, I am willing to speculate that her looks played a part not only in getting attention, but also in luring money and talent into the scheme.
Meh. Maybe in a Tom Brady sort of way, i.e., his QB performance is what is most important, then his endurance, then his leadership, etc... oh, and by the way, his looks really help his brand.

Think about what happened: she had science that Stanford types loved and which we've heard is a big deal in the field these days. So, at that time, the issue wasn't the value of the innovation, it was the ability to scale the tech so it could be a real business. The fraud began when the tech couldn't function at scale, so they used old tech instead.

It was obviously incredibly tempting to hear about this real, amazing innovation - and all we need is that pesky bit of operational excellence to be able to scale it up. Easy to see how folks would bet that they had figured something out. The fact that this story was told by a "pretty blonde Stanford dropout genius" probably give it a cooler spin.

Charisma matters; just ask Steve Jobs.
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Old 03-16-2018, 10:01 AM
Dewey Finn Dewey Finn is offline
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Sure her looks helped, but the Stanford connection helped as well. And there's the whole "disruptive" aspect of the business, much as Airbnb is disrupting the hotel business and Uber the taxi business (or Amazon disrupted retail). People are more or less looking for the next Big Disrupter.
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Old 03-16-2018, 10:48 AM
Ashtura Ashtura is offline
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She absolutely should. Regular folks have gone to jail for much less.
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Old 03-16-2018, 01:45 PM
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Yes, she should go to jail. What she pulled was far, far worse than what Shkreli did. It's not even close.

Will she go to jail? I doubt it.
  #31  
Old 03-16-2018, 02:00 PM
Voyager Voyager is offline
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Far me it from me to defend a Trumpist, but the reality is that part time board members are just as dependent upon the honesty of the CEO, CFO and their minions as anyone else, and can't be expected to hire PI's. If Mattis made honest decisions based on phony information that was given to him by con artists, he isn't legally liable and probably isn't ethically liable.
IIRC, some members of the HP board did indeed hire PIs to investigate some of the scandals there. The whole point of a board is to serve as a check on the CEO. They should be alert to suspicious items - for instance, when she claimed that the DoD was using the product, they could have asked for confirmation.
Now since they were chosen for star value, not because they knew anything about either the subject or even finance, it is not surprising they failed in their duties. But so many board members take the job because of the good pay for little work, and are shocked, shocked to be held responsible for anything.
Mattis, btw, is about the only member of the Trump Cabinet with a shred of moral decency. I mentioned him because it is interesting he was involved, not because I find him particularly culpable.
Quote:
The accusations against Holmes are that this was not just a few casual lies or one or two bullshit balance sheets, but a sustained and dedicated program of fabrication. They were literally moving machines around their "business factory" when guests showed up to make it look like their tech was doing all the work.
And the Board should have dug deeper. I don't know how legally liable they are, but I hope there is at least an investigation, instead of them getting to say, "oh well, the investors lost hundreds of millions, but the lunches at meetings were real good."
  #32  
Old 03-16-2018, 02:02 PM
Voyager Voyager is offline
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Sure her looks helped, but the Stanford connection helped as well. And there's the whole "disruptive" aspect of the business, much as Airbnb is disrupting the hotel business and Uber the taxi business (or Amazon disrupted retail). People are more or less looking for the next Big Disrupter.
A Times article said that one of the VCs was a neighbor. Did she grow up in Palo Alto, or in one of the even ritzier towns? Being a Stanford undergrad usually doesn't give you super VC connections.
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Old 03-16-2018, 03:36 PM
Stranger On A Train Stranger On A Train is offline
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A Times article said that one of the VCs was a neighbor. Did she grow up in Palo Alto, or in one of the even ritzier towns? Being a Stanford undergrad usually doesn't give you super VC connections.
Her father held “a number of executive positions” at the US Agency for International Development (USAID), her mother was a congressional staffer and political lobbyist. She attended the St. John's School in Houston, a well-regarded preparatory school, and seems to have largely impressed the people she worked with there and at Stanford, where she managed to get an undergraduate researchship with the Dean of the School of Engineering. Her actual technical aptitudes are unclear (she left Stanford after her freahman year, and even the most precocious nineteen year old is unlikely to have enough basis of knowledge to be doing truly ground-breaking work in genomics, a field that has become so diverse in avenues of research that just keeping abreast of major developments is a full time lit review job) but she certainly worked her way into the consciousness of major venture capitalist investors with various promises of what the medical technologies she promoted could do, including advanced non-invasive diagnostics, ‘designer’ pharmaceuticals, anti-aging treatments, and so forth; essentially everything but gene resequencing.

Although some here have attributed her success to her appearance, the reality is that she was very good at sussing out what investors were personally interested in and promising to deliver with enthusiastic but non-specific claims and purported proof-of-concept that were falsified or grossly exaggerated evidence; a medical “Music Man” as it is, albeit without any clear endgame. It seems to have been well known within Theranos that the diagnostic technology it sold to numerous companies did not work as promised and that much of the research being performed did not show promising results. Aside from fleecing all-too-eager to profit investors (of whom one might be inclined to say “Caveat emptor, motherfuckers!”) Theranos may have put the medical diagnosis of serious illnesses at risk for tens or hundreds of thousands of patients.

Yes, she should go to prison as an example of what happens when you get too deep into a collapsing house of lies, as well as for endangering the affected patients. More than likely she’ll just be censured in some meaningless way, and investors will probably be compensated at least in part from the public purse, because that’s what you do when a lie gets so big that ‘everyone’ believes it.

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  #34  
Old 03-16-2018, 03:49 PM
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...investors will probably be compensated at least in part from the public purse...
I don't see how or why this would happen here?
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Old 03-16-2018, 04:03 PM
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Yes, she should go to prison as an example of what happens when you get too deep into a collapsing house of lies, as well as for endangering the affected patients...
Did she/Theranos endanger patients? My understanding is that they lied about how they tested the blood (how much would be needed, what machines were used), but the results they provided were accurate. Are they also accused of falsifying results or something else that caused harm to patients?
  #36  
Old 03-16-2018, 05:01 PM
Stranger On A Train Stranger On A Train is offline
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I don't see how or why this would happen here?
I don’t see how or why the US government would bail out major banks for making fraudulent estimations of risk on collatoralized debt obligations and mortgage-backed securities and yet hold no one legally accountable, but they did.

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Did she/Theranos endanger patients? My understanding is that they lied about how they tested the blood (how much would be needed, what machines were used), but the results they provided were accurate. Are they also accused of falsifying results or something else that caused harm to patients?
No, the results were not accurate and while Theranos has settled with most of the major claimants it has done so without accepting any liability. It is unclear what recourse individuals impacted by voided or inaccurate results have other than to sue Walgreens or other point-of-sale providers of the testing services. Regardless of who is held to be legally at fault, yes, Holmes and Theranos knowingly provided suspect or bogus medical services as legitimate results, impacting patients’ informed decisions about medical care. Even if these weren’t being used for critical diagnostic applications, it is still willful indifference and yes, Holmes should be held responsible for deliberate criminal negligence for her part in concealing information about the lack of accuracy of test results.

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  #37  
Old 03-16-2018, 05:18 PM
Riemann Riemann is offline
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I don’t see how or why the US government would bail out major banks for making fraudulent estimations of risk on collatoralized debt obligations and mortgage-backed securities and yet hold no one legally accountable, but they did.
Nor do I, but what does outrage at the banking bailout have to do with this?
I can't imagine why you think the government might bail out the shareholders of Theranos.
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Old 03-16-2018, 05:53 PM
Stranger On A Train Stranger On A Train is offline
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Originally Posted by Riemann View Post
Nor do I, but what does outrage at the banking bailout have to do with this?
I can't imagine why you think the government might bail out the shareholders of Theranos.
Because a lot of those investors are politically well connected and are already making the claim that the FDA failed in adequately investigating or imposing restrictions on Theranos’ technology, even though Theranos avoided the regulatory process and failed to respond to repeated requests to sub it their products for evaluation.

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  #39  
Old 03-16-2018, 06:17 PM
TroutMan TroutMan is offline
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No, the results were not accurate and while Theranos has settled with most of the major claimants it has done so without accepting any liability.
Well, that's awful. I was thinking that while what Holmes did was worse than what Shkreli was actually arrested for, Shkreli caused much more harm than her by raising prices of critical medications. That puts them more neck in neck. Thanks for the info.
  #40  
Old 03-16-2018, 06:25 PM
Stranger On A Train Stranger On A Train is offline
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Shkreli directly impacted people who badly needed medication for no reason other than his own dickish arrogance and sociopathy. (It can’t even be attributed to profitability because he raised the price so much that it is arguable that the company lost more than it gained.) Holmes seems to have had some sincere wish for the technology her company was developing to work, but somewhere fairly early along the way understood that she had way overpromoted the capability of that technology and then just kept spinning a bigger web of lies. Both rightfully deserve to be villified, but I’d also like to see Shkreli skewered on a thousand rusty spikes, while I’d just like to see Holmes gently slapped with a wet trout a couple hundred times. Both are likely to come through their particular infamies and find some future ‘success’ scamming the shit out of credulous investors, because that’s how these kinds of people get on.

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  #41  
Old 03-16-2018, 11:20 PM
Voyager Voyager is offline
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I don’t see how or why the US government would bail out major banks for making fraudulent estimations of risk on collatoralized debt obligations and mortgage-backed securities and yet hold no one legally accountable, but they did.

Stranger
The reason they bailed out the banks was that when one bank that was not bailed out failed, the impact was pretty substantial. No one really cares if this company fails, except the investors. Plenty of investors have lost plenty of money on plenty of companies without being bailed out.
As for why no one went to jail, you got me.
  #42  
Old 03-16-2018, 11:36 PM
friedo friedo is offline
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The likelihood of a government bailout for Theranos is nonexistent. Theranos does not have (or appear to have) any systemic importance to the economy, its products (such as they are) are not used by the government in any quantity, and the company has just a couple hundred employees left.

Criminal charges against Holmes are likely. She committed a pretty blatant multi-year fraud against her shareholders. It's always tough to tell who will actually wind up behind bars in white collar cases, even big ones, but it wouldn't surprise me if she ends up doing some time.
  #43  
Old 03-16-2018, 11:41 PM
Measure for Measure Measure for Measure is offline
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Originally Posted by Voyager View Post
That's James Mattis as in current Secretary of Defense.
Matthew Yglesias: James Mattis is linked to a massive corporate fraud and nobody wants to talk about it, including me because he's one of the few sane voices in the administration protecting us from pointless nuclear war with Korea. Shhhh!
Quote:
Now, if Boards have any responsibility, maybe some of these clowns should suffer some consequences from this scam.
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Originally Posted by Robot Arm View Post
Responsibility is for poor people.
Also the middle class, to be scrupulously fair. White collar crimes in general and high flying crimes in particular get kiddie gloves.
Quote:
Originally Posted by Stranger On A Train View Post
Both rightfully deserve to be vilified, but I’d also like to see Shkreli skewered on a thousand rusty spikes, while I’d just like to see Holmes gently slapped with a wet trout a couple hundred times. Both are likely to come through their particular infamies and find some future ‘success’ scamming the shit out of credulous investors, because that’s how these kinds of people get on.
The upthread parallels to the financial crisis were apt. The consequences of large scale fraud can be rather devastating to the economy and by extension our nation's health, but while 6 and 7 figure frauds are the criminal's problem, 9 and 11 figure frauds are the public's problem.

Yes, we need new laws and a bigger supply of pitchforks. I'm not even especially vengeful: I think 1-3 year sentences handed out to scores of executives might focus minds a tad.

Last edited by Measure for Measure; 03-16-2018 at 11:43 PM.
  #44  
Old 03-17-2018, 06:53 PM
rbroome rbroome is offline
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She cheated investors. People who are assumed to be knowledgeable and sophisticated. Given the number of people who went to jail after the 2008 financial meltdown (ie none), I would have a very hard time sending her to jail.
  #45  
Old 03-17-2018, 07:18 PM
Jackmannii Jackmannii is offline
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White collar crimes in general and high flying crimes in particular get kiddie gloves...we need new laws and a bigger supply of pitchforks. I'm not even especially vengeful: I think 1-3 year sentences handed out to scores of executives might focus minds a tad.
While I've been disgusted to see light sentences being given to some of these people, it's an illusion that "white collar crime" has little consequence. From a WSJ blog article:

"Here are the 10 longest prison sentences for white-collar crimes. Let us know if we missed any.

1.) Sholam Weiss, 59

Sentence: 835 years

Release date: 11/23/2754

2.) Keith Pound

Sentence: 740 years

Died in prison in 2004 at the age of 51

3.) Norman Schmidt

Sentence: 330 years

Died in prison in 2013 at the age of 78

4.) Robert Thompson, 47

Sentence: 309 years

Release date: 12/29/2277

5.) Bernie Madoff, 75*

Sentence: 150 years

Release date: 11/14/2139

6.) R. Allen Stanford, 63

Sentence: 110 years

Release date: 4/17/2105

7.) Will Hoover, 62

Sentence: 100 years

Release date: 5/13/2049

7.) Richard Harkless, 69

Sentence: 100 years

Release date: LIFE

8.) Karen Bowie **

Sentence: 80 years

Release date: n/a

9.) Frederick Brandau, 68

Sentence: 55 years

Release date: 8/08/2047

10.) Scott Rothstein, 51

Sentence: 50 years

Release date: n/a

10.) Thomas Petters

Sentence: 50 years

Release date: 4/25/2052

10.) Tim Durham, 51

Sentence: 50 years

Release date: 1/25/2056

?.) Keith Simmons, 48

Sentence: ???

Release date: ???

11.) James Koenig, 61

Sentence: 44 years

Release date: n/a

12) Martin Sigillito, 64

Sentence: 40 years

Release date: 2/15/2047

*Notice that Mr. Madoff lands at the center of the list. Douglas A. Berman, a law professor at the Ohio State University, pointed out that his sentence has become an important benchmark. “Nobody can say, ‘Well Madoff only got 50 and I wasn’t nearly as bad,’ ” Mr. Berman said."


*to save you having to look up Sholam Weiss, this is part of his Wikipedia entry: "On February 15, 2000, the Middle District Court of Florida (Orlando) sentenced Weiss, to a term of imprisonment of 845 years, for racketeering, wire fraud, and money laundering, and a restitution of $125,016,656 (amount of loss is attributable to him but did not take into account any liquidated assets recovered by the receivers), and a fine of $123,399,910, in connection to the collapse of National Heritage Life Insurance Company.[2][3]

On July 28, 2016, the government acknowledged by "notice to the court" that Weiss' $125 million restitution had been paid in full."

He was originally sentenced to 845 years but got 10 years taken off, which makes all the difference.

Last edited by Jackmannii; 03-17-2018 at 07:20 PM.
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