Tim Draper invested $500K ($0.5M), of the ~$275M Theranos raised in total.

And he wasn't on the board. I think it's reasonable to invest seed capital in unproven but interesting ideas, and it's unfair to blame seed investors if those ideas don't pan out.

I don't know the whole story so maybe there is something more to your argument, but on face value this doesn't sound like a strong argument. Early stage investing is high volume, low involvement, low due diligence kind of thing.

I would be a lot more embarrassed if I invested 100M into a 10 years old company that turned out to be a fraud vs 500K into a brand new pre-product team.