# Should Elizabeth Holmes get jail time? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [March 15, 2018, 8:54pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626 "2018-03-15T20:54:08Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [March 15, 2018, 8:54pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/1 "2018-03-15T20:54:08Z")
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. ---
**Author:** ![Tired\_and\_Cranky](https://avatars.discourse-cdn.com/v4/letter/t/a87d85/32.png) [@Tired\_and\_Cranky](https://boards.straightdope.com/u/Tired_and_Cranky)\ **Post date:** [March 15, 2018, 9:06pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/2 "2018-03-15T21:06:39Z")
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. ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [March 15, 2018, 9:28pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/3 "2018-03-15T21:28:18Z")
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. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [March 15, 2018, 9:38pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/4 "2018-03-15T21:38:26Z")
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. ---
**Author:** ![SamuelA](https://avatars.discourse-cdn.com/v4/letter/s/c77e96/32.png) [@SamuelA](https://boards.straightdope.com/u/SamuelA)\ **Post date:** [March 15, 2018, 9:39pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/5 "2018-03-15T21:39:07Z")
> [@Omar\_Little](#): > > 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… ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 15, 2018, 9:45pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/6 "2018-03-15T21:45:24Z")
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? ---
**Author:** ![TroutMan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/troutman/32/6721_2.png) [@TroutMan](https://boards.straightdope.com/u/TroutMan)\ **Post date:** [March 15, 2018, 9:53pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/7 "2018-03-15T21:53:58Z")
To the extent there’s any consensus, it seems to be that [it’s very possible she will get jail time](https://www.forbes.com/sites/elliekincaid/2018/03/15/lawyers-elizabeth-holmes-could-still-serve-time-in-prison/#7df9b22915b1). > [@](#): > > 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.” > [@SamuelA](#): > > 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. ---
**Author:** ![Darren\_Garrison](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/darren_garrison/32/92_2.png) [@Darren\_Garrison](https://boards.straightdope.com/u/Darren_Garrison)\ **Post date:** [March 15, 2018, 10:46pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/8 "2018-03-15T22:46:28Z")
From [this](http://www.bbc.com/news/business-43415967) 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. ---
**Author:** ![ivylass](https://avatars.discourse-cdn.com/v4/letter/i/9de053/32.png) [@ivylass](https://boards.straightdope.com/u/ivylass)\ **Post date:** [March 15, 2018, 11:50pm UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/9 "2018-03-15T23:50:01Z")
I remember reading an article in [Forbes](https://www.forbes.com/sites/matthewherper/2015/07/15/giving-theranos-a-few-tests/#d0ef3c94d2c1) 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: > [@](#): > > 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](https://www.forbes.com/sites/anthonydemarco/2015/10/05/baume-mercier-presents-forbes-doers-award-to-elizabeth-holmes/#6c1ea28d7251). ---
**Author:** ![Sunny\_Daze](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sunny_daze/32/438_2.png) [@Sunny\_Daze](https://boards.straightdope.com/u/Sunny_Daze)\ **Post date:** [March 16, 2018, 1:17am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/10 "2018-03-16T01:17:09Z")
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. ---
**Author:** ![Riemann](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/riemann/32/3133_2.png) [@Riemann](https://boards.straightdope.com/u/Riemann)\ **Post date:** [March 16, 2018, 1:37am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/11 "2018-03-16T01:37:13Z")
For what it’s worth, the underlying concept is not “out there” at all. [Microfluidics](https://en.wikipedia.org/wiki/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. ---
**Author:** ![jtur88](https://avatars.discourse-cdn.com/v4/letter/j/e9c0ed/32.png) [@jtur88](https://boards.straightdope.com/u/jtur88)\ **Post date:** [March 16, 2018, 1:53am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/12 "2018-03-16T01:53:20Z")
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. ---
**Author:** ![Merneith](https://avatars.discourse-cdn.com/v4/letter/m/57b2e6/32.png) [@Merneith](https://boards.straightdope.com/u/Merneith)\ **Post date:** [March 16, 2018, 2:05am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/13 "2018-03-16T02:05:32Z")
> [@Omar\_Little](#): > > 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? ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [March 16, 2018, 3:22am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/14 "2018-03-16T03:22:34Z")
I first heard of her [when Vanity Fair ran a piece about her](https://www.vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive) 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? ---
**Author:** ![hogarth](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hogarth/32/1773_2.png) [@hogarth](https://boards.straightdope.com/u/hogarth)\ **Post date:** [March 16, 2018, 4:12am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/15 "2018-03-16T04:12:25Z")
> [@Darren\_Garrison](#): > > From [this](http://www.bbc.com/news/business-43415967) 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”: > [@](#): > > 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. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 16, 2018, 7:04am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/16 "2018-03-16T07:04:52Z")
> [@Snowboarder\_Bo](#): > > I first heard of her [when Vanity Fair ran a piece about her](https://www.vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive) 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 > [@](#): > > 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. ---
**Author:** ![Dr.Strangelove](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dr.strangelove/32/6613_2.png) [@Dr.Strangelove](https://boards.straightdope.com/u/Dr.Strangelove)\ **Post date:** [March 16, 2018, 9:08am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/17 "2018-03-16T09:08:20Z")
> [@TroutMan](#): > > 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](https://www.sec.gov/litigation/complaints/2018/comp-pr2018-41-theranos-holmes.pdf). From the second paragraph: > [@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. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [March 16, 2018, 9:18am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/18 "2018-03-16T09:18:15Z")
> [@Voyager](#): > > Now, if Boards have any responsibility, maybe some of these clowns should suffer some consequences from this scam. Responsibility is for poor people. ---
**Author:** ![WordMan](https://avatars.discourse-cdn.com/v4/letter/w/e8c25b/32.png) [@WordMan](https://boards.straightdope.com/u/WordMan)\ **Post date:** [March 16, 2018, 9:39am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/19 "2018-03-16T09:39:30Z")
- 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. ---
**Author:** ![JoseB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/joseb/32/1530_2.png) [@JoseB](https://boards.straightdope.com/u/JoseB)\ **Post date:** [March 16, 2018, 10:19am UTC](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626/20 "2018-03-16T10:19:15Z")
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/european-inventor/finalists/2015/holmes.html](http://www.epo.org/learning-events/european-inventor/finalists/2015/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…! [Next page](https://boards.straightdope.com/t/should-elizabeth-holmes-get-jail-time/810626.md?page=2)