Yes, it was a silicon valley thing. Their first and chief investment was from Tim Draper who all but invented silicon valley venture capital. Were it not for that investment Theranos would not have happened at all.
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.
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.