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Comment by mhneu | Hacker News Reader

Excellent news for American society.

“The Chickenshit Club” by Eisinger recently explained why the lack of criminal charges had emboldened white collar crime.

Basically, individuals need to have the risk of criminal charges if they do something very egregious - they need to have skin in the game.

The US Justice Dept has in the past two decades largely only been fining corporations. And so companies estimate risk and budget for these numbers. So fines are not a completely effective deterrent. The book explains this and how the DOJ policy grew out of backlash to the Enron verdict.

Ps we talked about this in May, and @danso predicted criminal charges would come - and he was right. This is good news for the US DOJ. Too bad the US can’t retrospectively prosecute bankers for 2008 and claw back their size-subsidized, low risk premium profits.

https://news.ycombinator.com/item?id=17123315

Edit: book review here. It’s a really good book. https://mobile.nytimes.com/2017/07/05/books/review/the-chick...

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> Too bad the US can’t retrospectively prosecute bankers for 2008 and claw back their size-subsidized, low risk premium profits.

The Theranos case clearly illustrates why. Fraud by the top executives of a company, who lied about what their technology can do to raise a bunch of money, and endangered patients in the process--that is a story you can explain to a jury. Even if you think there are "bankers" (curiously, you do not identify specific bankers) who broke the law, good luck explaining to a jury exactly what anyone did that was illegal.

I'd also posit that this is a very good thing. You shouldn't be able to put people in jail for a crime you can't explain to a group of a dozen ordinary people.

I don't know that this is a very persuasive argument. We have all sorts of complex, technical "laws" (both in statutes and agency rules extending those statutes). A lot of them are important and sensible.

In a field like finance, once you make something illegal, doesn't the prosecution's argument pretty much come down to:

1. Under the US code, foo is illegal. That's the rule that everybody working in this field has to play by.

2. The defendant fooed, flagrantly and with relish, and in the process made umpteen zillion dollars.

3. At all times, the defendant made it clear that they knew fooing was wrong. For instance, when discussing fooing, they logged into each other's email accounts and wrote drafts rather than sending emails, and shredded their birth certificates after discussing foo.

4. As a result of all this reckless fooing, which we remind you is illegal in the US, 3,392 people lost their houses.

A jury can't follow this argument?

An argument I've read more frequently is that the laws around this stuff aren't clear enough, so that a defense attorney can hopelessly muddle up a case by arguing "we weren't fooing, we were clearly barring". We could make the laws a lot more clear! But in doing so, we'd potentially disrupt the economy, and so it's a tricky balancing act.

>Even if you think there are "bankers" (curiously, you do not identify specific bankers) who broke the law, good luck explaining to a jury exactly what anyone did that was illegal.

Prosecutors who investigated 2008 came away saying that there was no evidence of criminal intent, based on the fact that they didn't break or intend to break any laws in the process of making their really stupid bets. Preet Bharara, former US attorney in New York after the crisis, discussed this in his podcast fairly recently.

Iceland successfully identified, prosecuted, and jailed specific bankers for their roles during the 2008 financial crisis https://www.bloomberg.com/news/features/2016-03-31/welcome-t... and this article mentions "market manipulation and fraud".

A second article mentions, "He argues the crimes themselves are simple matters such as embezzlement, merely with a complicated “wrapping” of financial jargon around them." https://www.ft.com/content/dcdb43d4-bd52-11e6-8b45-b8b81dd5d.... This shows that prosecutions and imprisonment are possible for bank actions related to the 2008 financial crisis. Iceland's special prosecutor also believes that similar crimes were carried out in many other countries so the opportunity for prosecution was therefore possible.

I worked in the industry. Literally, there were employees of 7-11 who stated their income as $100,000 or more in order to qualify for a home loan. This type of fraud was rampant and known by everyone.

Are you implying that the bankers should go to jail for the misrepresentations made by the applicant because they didn’t exercise an “appropriate” level of diligence?

The fraud itself is the crime, but the system set up to profit from it and the inducement to commit the crime are not part and parcel of the act itself?

Perhaps we need better prosecutors who can credibly charge crimes that have broad networks of profiteers eagerly pushing dupes into committing crimes that are precisely arranged so that the profiting entity has no liability for the narrowly construed criminal act other than having engineered a situation where it was incredibly possible and only indirectly soliciting the act itself...

We could have such prosecutors were the system not already hopelessly captive to the interests of the criminals.

But what can you do when law is lawless.

No, IIRC from reports years back, there is considerable evidence that this kind of fraud was not often not initiated by applicants but encouraged by lender agents, who were in turn encouraged by lender policies and incentive structure, which was set by lender executives. This isn't lack of diligence, this is setting a policy with reasonably foreseeable consequences.

Fortunately or unfortunately, "encouraged shady behavior" does not directly equate to "illegal". For example, if you encourage someone to steal a car tomorrow you're not doing anything illegal until they actually do it, they tell you they did it, and you fail to report it (accessory at that point). The actual crime part is on them.

It's massively unethical and it feels like people should be in jail, but proving actual crime took place during the lead-up to the recession would be a massive undertaking with little satisfaction as payout, and just as many run-of-the-mill home buyers going to jail as lender associates or executives.

> For example, if you encourage someone to steal a car tomorrow you're not doing anything illegal until they actually do it.

No, you've committed the crime of solicitation at the moment you encouraged a particular person to commit a particular crime. And, if they agree and either of you takes any concrete step to implement the agreement (even short of completing the theft), you've both committed the crime of conspiracy.

> Fortunately or unfortunately, "encouraged shady behavior" does not directly equate to "illegal".

If an expert tells you to break the law and insists it's fine, and you don't really know how all of this works, I don't think we can still call that merely "encouraging shady behavior".

I'm pretty sure we can and do exactly that all the time. Case law established a very long time ago that ignorance of the law is not an excuse for illegal activity. The burden of crime is always on the person committing the crime, not the person inciting it, expert or not (there's a small exception here for entrapment, but that's completely separate from this situation).

I could be wrong here, so if you or anyone else with more legal background than I have can point to specific prosecutions related to this kind of situation I'd love to read more.

“Inciting” is exactly the name given to the crime of inducing someone else to commit a crime.

No, that's only for inciting physical violence (against a person or property) in conjunction with a felony. It would not apply to anything from the mortgage bubble. Unless you've got a specific law to reference?

You lost the jury at “lender policies and incentive structures.”

"Bank employees were instructed to tell prospective clients to lie about their income, drastically, and sometimes helped them do it. Bank employees did this because when people lied about their income, the bank made more money, even though doing so put people at financial risk."

I'm not sure this is a hard case to make.

>Bank employees were instructed to tell prospective clients to lie about their income

But is there explicit proof of this? I didn't think there was, but maybe I'm wrong. I thought at best the argument would be more like:

"Bank executives set up incentives for their employees that they knew would encourage fraudulent behaviour."

I think these people mostly weren't bankers, they were fly by night mortgage pushers who had no incentive not to write bad loans. They wrote crappy loans and then sold the loans on to the banks.

Which is part of the problem with bringing anyone to justice. The actual banks could pretend that they believed they were buying quality debt, which they diced up into CDO and whatnot.

> You shouldn't be able to put people in jail for a crime you can't explain to a group of a dozen ordinary people.

This sounds so wrong. Why shouldn't people whose only virtue (related to the case) is being smart enough to come up with complex crimes go to jail? Are we forgetting just how, well, average the average person is?

If “the big short” can explain it then the DOJ can.

As far as I remember the big short doesn't though.

Part of the premise behind writing the book was to explain to the public what happened and why.

There are several good analogies in both the book and the movie (ie. the chef and the fish) that greatly helped me understand the mechanics of it.

The book and movie do a pretty solid job about explaining what CDOs, derivatives, etc. are.

What the book and movie don't do (unless I'm forgetting something) is explain how anything involved with the 2008 crisis was illegal - the sole exception being that CDSs are very arguably insurance contracts and should be regulated by insurance laws.

The Big Short made it sound like credit rating agencies engaged in intentional negligence, which doesn't strike me as something "too abstract to prosecute" (or whatever the excuse is supposed to be here).

Negligence in general isn't a crime - it does become a crime if gross negligence directly causes death or major injury, but as far as I know, you can't prosecute someone if their negligence merely costs someone some amount of money, no matter how much. It may cause liability for that amount of money, but that's not a crime that the government can prosecute and threaten with jail time, that's a civil case between them and whoever suffered and may sue them for some money.

I misused the term. How about "fraud," then?

Even speeding tickets or anything most normal people would find a burden are nothing to super rich. But making few days in jail mandatory is a major deterrent.

Then again even people texting and driving are not swayed by fines. In my region of the world a $3,000 fine is not a deterrent to many people. I say jail time would change that attitude.

Compliance is not the goal of speeding tickets (at least in the US). You think local governments would be happy if everyone woke up one day and decided to begin fastidiously obeying all traffic laws?

Putting people in jail costs money and is hence undesirable, so unless you're drag racing through a school zone or driving drunk/stoned, you're not going to jail.

The view of governments in the US toward traffic enforcement as revenue-source was made clear during the Great Recession. When a lot of folks were struggling with unemployemnt, pay cuts/freezes, etc., and morale was generally in the toilet, local governments began jacking up speeding fines in order to make up for lost tax revenue. And people wonder why the relationship between citizens and LEOs in this country has become so antagonistic.

> Compliance is not the goal of speeding tickets

It's the goal of the state policy authorizing them, even if it isn't the goal of the local government issuing them.

Try fining in N% of annual salary, Finland style, and see how long it takes for that tune to change.

What about Mark Zuckerberg who has an annual salary of $1.00?

They misspoke, Finland fines a percentage of income, which would include money from selling Facebook stock to pay for rent, food, yachts, etc.

IANATaxLawyer, but I imagine gaming the system would require you to take out non-taxable loans using that company stock as collateral, and hope that your lawlessness is caught during the living-on-a-loan years rather than the liquidate-and-repay years.

Or liquidate a portion of your holdings and realize your gains in a non-penalty year. Either works.

That's harder to predict especially if fines are based on last years income.

Really though a ~0.1% speeding ticket fine is not going to be an issue even if the press is impressed by a very large number fine.

I’m not Finnish or a lawyer but I think their courts would see right through that sort of bullsbit

Make it a percentage of taxable income or something like that. Lots of people have non-salary income.

Zuckerberg gets his cash from loans against his unsold stock. He could keep doing that his entire life and never pay a dime of income-based tax.

Or a percent of wealth. Although that isn't really effective punishment for people who blow all their income and don't save anyway.

So should jail sentences be done the same way? If I am in jail 10 days, I lose a hell of a lot more money than some bum spending the same 10 days. So the cost of jail is much greater to me on a per day basis. This “based on wealth” concept is fine, assuming that also applies to jail sentences. We can’t expect an egalitarian scheme for fines if we neglect the same consideration for jail. Assuming our goal is inflicting pain proportionally. But people wouldn’t like a rich CEO spending a day in jail and a cab driver spending 25 years in jail for the same crime — even though the relative financial costs would be similar in terms of opportunity cost. Should a CEO pay $100,000 for a drivers license?

This leads down a very slippery slope.

Is there really an epidemic of rich people committing crimes at a higher rate than the non-rich? It doesn’t seem like criminality rates are higher among the rich, thus the premise that rich people should have a larger deterrent doesn’t seem to have much support in terms of evidence.

The idea of jail is that your personal freedom is taken away as punishment for a number of days.

How much opportunity cost those days have, or how much money you lose as a result of your jail time, is irrelevant. The punishment is taking away your personal freedom.

Jail time is a fair punishment: Nobody likes having their freedom taken from them. There is no need to scale it.

But its different for fines. If you drive a 100k€ car, you're not going to give a shit about a 50€ fine for speeding. And my personal experience seems to suggest this is true: Drivers of expensive cars often ignore speed limits and "no parking" signs.

So one thing we could do is add a mandatory jail sentence for speeding. You drive to fast, you go to jail for a day. But that seems a bit harsh, so maybe we stick with the fine, but make it so that it also hurts people who make a lot of money.

> The idea of jail is that your personal freedom is taken away as punishment for a number of days.

In fact, the finnish fining above is a system of day-fine: the sentence is expressed in day-fine, each "day" of the fine is multiplied by the offender's day-fine factor (baseline is about half the daily disposable income — daily income after taxes & basic living allowance) and that yields the fine's actual amount.

For court-ordered fines of sufficient size they can also be converted to a prison sentence at a ratio of 3 day-fine to 1 day in prison (rounded down).

No. Scaling jail sentences based on income would mean that the monetary size of the punishment was (roughly) constant between a rich and poor offender; just like if they were charged the same number of dollars as a fine. However, just as with fines, it would mean that the subjective effect of the punishment is much greater for the poorer person.

If the goal is deterrence, then we need care about how subjectively costly the punishment will be to each person. Having a high income doesn't make your time subjectively more valuable, but it does mean that you can trade it for more money. A rich and a poor person would likely value a day of their own time quite similarly, but they would each value $100 quite differently.

The goal is deterrence, not inflicting pain. If speeding fines where set at $3 people would probably just treat them as a cost of traveling. To someone very wealthy current fines may essential be that.

Jail has both the purpose of deterrence and rehabilitation. Since the method is essentially depriving criminals of their time and freedom then wealth has nothing to do with it. Either way it's probably equally painful for a CEO as a factory worker.

As for driving licenses, they are administrative expenses not fines. I assume you already know this so I'm not sure what your point is.

> Even speeding tickets or anything most normal people would find a burden are nothing to super rich.

I'm not sure how it works in your country but in the UK too many speeding tickets and you will loose your license. The exact number depends on the severity of each offence, but we get max of 12 points over 3 years [1] so they stick with you - repeat offenders are given even stricter rules after getting their license back.

I get a sinister smile when observing rich people in those big shiny 4x4s on some stretches of motorway I know are littered with speed traps... It's a funny equaliser - I do the limit, but those types of people always gota be in front of someone with a shitter car - but the regret is apparent in their latent brake lights after the flash.

[1] https://www.gov.uk/driving-disqualifications

It's a shame this type of law that equalises wealth isn't more common, for instance in a related matter - I've heard plenty of stories about rich people basically using parking fines as parking tickets, there doesn't seem to be a limit or anything beyond a monetary disincentive. It's also more common to see expensive cars parked in places they shouldn't be, and i'm convinced this is the reason.

Is that really equalized? Poor people are much more severely impacted by a loss of their license than rich people. Outside cities, for example, your driver's license is pretty intimately connected to your livelihood. I imagine this is why so many people get busted for driving with a suspended or no license. They have to get to work reliably and at a specific time, or they don't get paid. They have to pick up and drop off their kids.

A rich man can just get a driver, take an Uber, etc., and is not likely to be fired for being late, assuming he works.

If they don't care about driving and they were being a shit driver then didn't the law also work? either they are forced to drive like less of an idiot or they don't drive... I don't really care if they get a professional driver - good, less dead people on the road.

Right, but then you're worried about getting bad drivers off the road, not proportionate impact. For a poor person, losing their license (and not continuing to drive anyway) is devastating and can mean the impossibility of keeping a job or even raising their kids.

For a rich person, it just means they can't enjoy the pleasure of driving themselves around. You were talking about equalized impact to start with, I really don't see how this is a good example.

> If they don't care about driving and they were being a shit driver

These are also pretty big assumptions. I assume because of my demographic category, the times I was driving, and my car, several years ago, I received nearly two dozen tickets in a five-year period. None of the offenses were for speeding, but for various infractions like not coming to a complete stop (I was absolutely positive in every case that I did, especially after #3 or so I got paranoid about it), failure to yield, etc.

The only reason I have a license today is because I had a professional job, which allowed me the free time to go to court every single time without losing money and fight the ticket. I won every single time. Most people don't even know you can do that, they think you have to pay the fine.

If I had lost my license, I ultimately would have lost even that job. I would have to work remotely.

> You were talking about equalized impact to start with, I really don't see how this is a good example.

I am _not_ talking about equalised impact i'm talking about equalised results... the OP was suggesting that speed tickets don't stop rich people from speeding, but if you loose your license it does - that is the purpose of these laws, not to try to figure out how much punishment to deal out in relation to your personal wealth, punishment is a means to an end, not an end in itself - the end being to stop you from doing something damaging to society, in this case endangering other people's lives.

Taking away licences is an equaliser in this respect, because being rich doesn't give you more points to spend.

Licenses are for individuals, if some rich person wants to pay some _other_ individual who can actually keep their license that is fine, the law won because a safer person is driving.

Do you have a 1 or more recommendations for how to fairly treat poor who are also crappy drivers? Poverty sucks, and I don't have any bright ideas that would keep poor+bad drivers behind the wheel.

So?

What is stopping someone who loses their license from just driving anyway? They've already shown not to give a shit, so they'll continue driving without a license.

My dad lost his license many years ago and never stopped driving. He gets arrested once in a while, doesn't stop him.

> My dad lost his license many years ago and never stopped driving. He gets arrested once in a while, doesn't stop him.

You live in a very strange country, in the UK your dad would have had his car taken away from him and crushed... and if he repeatedly found other cars to drive without a license he would probably end up in prison.

My dad has been to jail before for driving without a license, but driving without a license is not a life sentence so he's back out on the road driving next month.

There is no repeat offenders law?

Really? They take your car and then crush it?

There's probably some youtube video of it. Here's an article from 2011 about uninsured vehicles: https://www.telegraph.co.uk/motoring/news/8247837/Cars-to-be...

I don't know how many they actually crushed, but it was some.

That’s odd. Here driving without a licence is a crime and will land you in prison for sure if caught. Why would you have a licence if there are no consequences for not having it?

There are certainly consequences, but my point was some people have established they don't care about consequences.

My dad has gone to jail for driving without a license before, but he'll go out driving when he gets out of jail. But usually his lawyer finds some sort of technically that gets him out of major trouble. I don't know the exact details, I try to ignore him as much as possible.

Then your father is a selfish individual. If he isn't licensed then he isn't insured. If he caused an accident, even without causing injury or death, he could still make someone else's life incredibly difficult.

Yes, my dad is a horrible person,I thought I was extremely clear about that.

Other family members I know who have lost their license, it's stopped extractly zero people from driving. If you don't care about the other laws enough to get caught breaking them enough to lose your license you don't care about breaking "no driving without a license" law.

Not sure in which country you live. Since the GP talks about the UK, It is good to remid that in the EU/EFTA victims of traffic accident are always entitled to compensation from a state fund, even if the driver or the vehicle is uninsured.

In the US many people purchase uninsured/underinsured motorist policies to protect themselves.

Yes but you know who pays that for fund? Everyone who pays for insurance.

Yes. It makes sense to share the burden among all drivers, instead of letting a few unfortunate people go bankrupt because of irresponsibility of others.

Around here in this part of Scotland it is mostly average speed cameras - I am amazed at the number of people who don't seem to have grasped what this means and slow down at the cameras (which are very visible) only to speed up afterwards.

We have some of those down here too but not many, they do make more sense - I see the same thing though, people slowing down and speeding up after the cameras, i think they just don't read - their loss.

In the US it depends on the state. Most states have a point system like you describe, except some states don’t (Hawaii, Kansas, Louisiana, Minnesota, Mississippi, Oregon, Rhode Island, Washington, and Wyoming don’t).

Losing your license is a major deterrent as well: as someone who finds driving a waste of time I cannot understand why rich people do it, but they do and they get extremely upset if that privilege is taken away. So 3 times and you lose your license for life? That would solve the reckless behavior and cannot be fixed with money. Ofcourse for less well off people this would be very bad (maybe not being able to go to work etc) but then again; they had 2 opportunities to better themselves.

> That would solve the reckless behavior and cannot be fixed with money.

I knew a rich person once with a drinking problem: he kept losing his license but his solution would be to just hire a private driver the next day.

Why is that an issue, it solved the problem. And kept losing means he gets it back: just do not give it back. Then we have one less drunken driver on the streets.

But from the perspective of wanting drunk drivers off the road, it worked, yes?

IDK if that's true. Consider that a real alcoholic drinks all day long and truly can not control this. Typically they tolerate alcohol better than the rest of us, but still, there also comes a time when they are simply bombed and then they are (really) a huge danger.

A casual partier though or even someone heading out and thinking they will take the chance of driving home and getting there ok, then yes I agree.

> I cannot understand why rich people do it

This one's mine: Because it's more fun than sex.

I.. must be using my car incorrectly.

This comment made my day. Thanks :)

Yeah, I know quite a lot of people who have that opinion, but they are talking about the edge cases; they speed, handle phone calls (dropped concentration), text, chat, etc and then say they have so much freedom. But they use illegal ways to not make things boring. If it’s not commuting then I can see how it would be ‘interesting’; I drove sportscars and terrain wagons, but most driving is a->b and without doing something illegal I cannot even stay awake generally. At least that is why in my friend group everyone speeds; they would pass out otherwise. And that’s basically one of the things we are discussing here.

But if you are a model driver AND find it more fun than sex, damn you are lucky.

>Losing your license is a major deterrent as well:

People still drive when they lose their license. They have to.

In Australia we have 'demerit points', so if you rack up enough of them, you can lose your license, which takes away your right to drive a car. If you drive without a license and get caught, you have no insurance and you can go to jail as it's considered contempt of court.

So the fines are no big deal to the rich here, but the right to drive is incentive enough to stop being an asshat.

In Australia, one reasonably well known business identity kept getting infringement notices from speed cameras. The car was owned by the company, and the company would never identify the driver and just paid the fine. So the driver never received the demerit points.

I believe that because of this, the fines were made significantly higher for companies that did not identify the driver.

there is the same system in the US and Canada... not sure if it is in all states and provinces though...

Actually, rich people in Sydney just paid their employees to say "oh, I was driving that car at the time". Pretty scandalous.

Surely that is a criminal conspiracy; most places would rate that as far more serious than a license confiscation. There was a case in the UK where a politician did this with his wife and it resulted in prison for both! https://en.wikipedia.org/wiki/Chris_Huhne I think that if money had changed hands and if guilty pleas hadn't been entered it would have been a longer sensor.

Wow. That's a divorce that went rather poorly.

He has an affair. They get a divorce. To get revenge, his ex-wife tells a journalist that he once cheated a speeding ticket. Investigation reveals she knows that because she helped him do it. They both go to prison.

This revenge idea was planned with a lawyer/judge friend of the ex-wife. When the plan backfired, the judge falsified documents to mislead investigators. The judge got the longest sentence of the three of them and was disbarred.

What a trainwreck.

That's another good reason to forbid photo-only fines. Force police to actually stop the car. Also if you lie authorities to protect another person, it's a stronger offense than speeding. Give jail to those and few people would take the risk.

Not even rich people do this, but I wouldn't want to be party to either side of such an arrangement. Between the cameras and tracking of phones, if someone's out to get you they can get you on fraud.

It was in the news a while back, so I'm not sure why the skepticism. It's not super-widespread - I don't think you can just do it with any car. Maybe the rort was set up to involve a company car.

A $3000 fine doesn't matter if no one ever fines you, and while I have no statistics, I'm pretty sure its very rare for a cop to pull you over for texting while driving. Like the seatbelt laws, it only ever comes into play as additional item to a stop, and afaik, only really when the cop is being a dick, or you are.

I'm sure it'd come up if you get in an accident as well, but probably the bigger fine in that case is the insurance company will use it for fault.

The primary detterant of it is likely that, because its a fineable offense, its less accepted by the general public, and you'll do it less flagrantly.

An interesting, though inhumane twist, would be to seek a shorter but more severe punishment, like 1 year in a maximum security prison.

Jails are already overcrowded understaffed in most places though.

And you would almost certainly be wrong.

Today isn't a statement about white collar crime in general, only white collar crime that impacts wealthy people.

Compare with white collar crime that involves defrauding minority home buyers, for example. Not only did the perpetrators there not get prosecuted, one of them is now our Treasury Secretary [1].

1. https://theintercept.com/2017/01/03/treasury-nominee-steve-m...

For the record I have been predicting criminal charges in these threads for over a year now. You can’t make blatant misrepresentations that result in hundreds of millions of dollars being transferred to you without criminal charges eventually coming.

I don’t think she did it out personal greed (except perhaps greed for publicity) - I think she believed she would probably make the tech work and just never got there. But regardless of the reason, investors are out a ton of money as a direct result of material misrepresentations. You cannot “fake it ‘til you make it” at least where investors are concerned.

Because of the amount of money involved, these two defendants are looking at a stiff sentence. The federal sentencing guidelines would easily put them at the maximum (20 years), though they may get something like 10-12 years if they take a plea early in the process and don’t make prosecutors work too hard to prepare for trial. This will not be a Martha Stewart type of sentence.

It’s a sad day for everyone involved.

I agree with all but one of your points, the projection of her mindset. I've known many good technologists driving for the next big thing, hell I've done it more than once. Usually we're a bundle of quivering insecurities with an unhealthy focus on all the things that are failing in the approach and a level of fear approaching utter terror that the entire thing is going to end ignominiously. My take is that she may have had a vision, but no real understanding of the process to get there, hence 'she' never would have made the tech work and would have known that she could not anchor any of her claims to reality. That's pretty much deliberate fraud. The other alternative I see is she was pretty much brainwashed by her partner, which might be some defense.

Interesting take. It's certainly possible that you are right. I based my thoughts on my impression from listening to her in a couple of interviews. I like to think I have a good BS meter, and it seemed to me (and apparently to her investors) that she believed in what she was saying, and was deeply passionate about the issues her company was trying to solve. I think she probably had a healthy dose of naïveté, and thought that with enough money, anything was possible.

Regardless of what was going on in her head, she seems to have made provably false statements in order to induce massive investments in her company. That's fraud, and she'll pay a heavy price for it.

Thanks for the overview I always enjoy reading your informative comments, and bookmarked you in the times of GDPR conversations.

It doesn't seem that Holmes boyfriend is ready to plea, but even with 10-12 years, with all their fame and connections and financials behind, what do you think is final reality? Some 3-6 years for good behavior??

In the federal system, the most that an inmate can earn for good behavior is 15% off of their sentence - so the best behaved inmates serve 85% of their sentence. If the feds can get one of them to testify against the other (probably the boyfriend against Elizabeth), they may offer that witness a deal for perhaps 3-5 years. But at least one of them is going to do over a decade. Anything less would cause a huge PR problem for the US Attorney's office for the Northern District of California, precisely because she is well connected. They'd be accused of doing favors for a formerly wealthy, well connected person.

Amen. The risk reward is crazily skewed towards breaking law. Most relying on ethics and social pressure.

Yeah, it was crazy to me that Lazlo Bock not only came out with a book about Google’s “hiring culture,” but even started his own HR company AFTER being involved with Google’s wage fixing scandal. Absolutely shameless.

It's not just a problem in the US, either. I recently learned of a New Zealand concrete company who deliberately don't bother with environmental compliance and instead just cop a fine and pay it. They budget for the fine every year, rather than spending the money to get into compliance.

Edit: change of wording

don't co2 certificates work this way? You can reduce your co2 output or buy certificates instead. If government wants to reduce co2 output they just increase the price of co2 certificates.

While not entirely related, this reminds me of some of my friends who park illegally and just pay off the tickets rather than paying for an expensive legal parking pass.

Many people on HN and outside "predicted" that criminal charges will follow FTC case, that was no-brainer. But not many know that what truly made it unable for DOJ to "turn the blind eye on", is that many medical decision on real-life patients has been made mostly based on results from Theranos devices that had been wrong so many times.

At least 4 times I wrote about Holmes being charged by DOJ on HN -- now I predict within 3 months they will find victim(s) that are dead today because of improper results of Holmes' devices.

I think medical-related crimes are very different. Especially when they directly affect patients. Few people have gotten away with fraud on the cash side in this industry though. Valeant Phamaceuticals. Shkreli

> Few people have gotten away with fraud on the cash side in this industry though. Valeant Phamaceuticals. Shkreli

I don't think Shkreli was defrauding regarding his pharmaceutical practices. (though he has security charges). He was using shady practices that were totally legal. Completely different game.

Also iirc the shkreli case is strange since no one actually suffered any damages.

According to him (in an interview) he only jacked the prices up for insurance companies.

Which makes every single person with insurance a (diffuse) victim. Let's not pretend that exorbitant pricing doesn't have any relation to the high cost of medical insurance/care, which in turn of course indirectly kills people.

Drop the tone. All I said is his pharmaceutical practices were 1. legal 2. didn't have direct effect on the consumers of the medicines.

Skherli said he gave the medicine free to those who have no insurance. I don't think by good heart but rather to avoid a major bad publicity from the inability of non-insured to pay.

I won't. The notion that Shkreli did next to nothing wrong because he only gouged insurance companies is one I have seen echoed too much. It bears refuting when it comes up lest people see such assertions go unchallenged and don't consider the implications.

Shkreli is not in jail for that. The "shkreli case" specifically refers to a securities case, unrelated to retrophin. And it is that, specifically, where there were no damages.

specifically referring to the securities case. He's not in jail for manipulating the price of pharmaceuticals.

I'm curious about the "backlash" against the Enron verdict. I don't think there was any public sympathy for that company when it happened. Was the feeling of unfair justice largely concentrated in elite circles outside of the view of the public?

No, the result of the Enron verdict put Arthur Anderson (their consulting firm) out of business also. Only a small number of AA knew and participated in the fraud, but the thought is in retrospect, the government should not have punished all of the employees and the shareholders

This is profoundly interesting and so disgusting that companies are eager to do the wrong thing and even plan for it by having contingency budgets to pay the fines. Think what we as a collective could do with all of that money; feed the poor, water for everyone, clean the oceans, stopping child sex trafficking...Ok, I'm becoming angry thinking of all this gotta run!

> the US can’t retrospectively prosecute bankers

AFAIK there were poor decisions and bad investments but not straight up fraud.

Nobody needed to be jailed; there were a few that needed to be allowed to fail.

You're forgetting robo-signing foreclosure affidavits in the wake of the financial crisis. That's potentially hundreds of thousands of counts of fraud. The banks were only forced to settle, and were not prosecuted. [0]

[0] https://en.wikipedia.org/wiki/2010_United_States_foreclosure...

I thought the robo-signing meant fraud for mortgage companies not banks. But perhaps I was wrong.

poor decisions and bad investments but not straight up fraud

LIBOR rigging?

And FX rigging ...

Speaking morally, rather than legally, the packaging of loans into CDOs was clearly fraudulent, basically the equivalent of tampering with the mile meter in your car before selling it. The fact that there is apparently no law to prosecute people under is a failure of our various legislatures and judicial systems.

But for both Libor and FX people went to jail. I think the original poster was refering to banker going to jail for causing the 2008 crisis.

I was hoping the bankers can still be charged under the Patriot act, there is a provision for something to the effet threat to cause financial risk or damage if I remember. Paulson made a direct threat of financial doom if there was no bailout to President Bush. I think there is a way we can declare them enemy combatants and send them to gitmo for their trial. Sorry for typos, typing with a bad finger the last few days.

That is pretty far fetched.

Using your sketchy rationale, one could claim that you are threatening Paulson and have you charged with a threat to kidnap Paulson to put him in Guantanamo Bay.

And in any legal dispute between you and Paulson, you would be incidental roadkill, in view of his deep pockets.

That is why the legal system has semi-reasonable heuristics that govern the range of interpretations that are acceptable.

Well I don't have the legal authority to do this. The DOJ would have to look into this. I guess people don't remember how it went down. There was an emergency meeting at the whitehouse, I remember Bush and Nancy Peloski, and a few senators. After the meeting, one of them (perhaps a congressman) was interviewed on the whitehouse lawn and basically said that Paulson told them, if they didn't do this, the entire economy and country would collapse. So he said it in a way that would give him plausible deniability, but if there was evidence that he knew otherwise or coordinate to create a crisis situation, (that is probably the stretch you are missing to connect), which I allege -- because later on we found out that the banks were both buying and shorting securities knowing they would default (and this is a fact), I think this would be evidence to charge him. This is a specific area in the Patriot act for dealing with terrorism threatening financial crisis. Since there is no statue of limitations on this, it would be an avenue to charge him. There is no provision in the Patriot Act for normal citizens to kidnap people and have access to Guantanamo Bay, that's a bizarre and bewildering statement/counter argument to what I am saying. Perhaps people are to young or don't remember how the financial crisis went down. There are plenty of people at Zerohedge that remember.

Edit: https://www.youtube.com/watch?v=oYrDtpAkppM

BTW. It may sound flippant but if you used more paragraph breaks your arguments would be more persuasive.

"Wall of Text" ~= "Probably an incoherent rant"

Zerohedge is mildly entertaining, but is prone to anarcho-syndicalist conspiracy theories.

It is slightly more credible than the Onion.

And Congress-persons are slightly less credible than the Onion.

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