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Comment by akshayB | Hacker News Reader

I can't recall last time a C-level company executive get into trouble for using deceptive tactics, every S&P500 company does this to some extent. When they get caught, in majority of cases it is a gentle slap on the wrist or given more of a timeout and reallocation of their position. Also unfortunately using public money and delivering a bad product is not a criminal offense, more like being sloppy at what you do. With big lawyers involved she might get sometime in a fancy hotel like prison or some restrictions on trading stock or fundraising.

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> According to the indictment, the defendants also allegedly made numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects. For example, the defendants represented to investors that Theranos conducted its patients’ tests using Theranos-manufactured analyzers; when, in truth, Holmes and Balwani knew that Theranos purchased and used for patient testing third party, commercially-available analyzers. The defendants also represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015; when, in truth, the defendants knew Theranos would generate only negligible or modest revues in 2014 and 2015. https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-a...

If that's not fraud, what is?

https://en.wikipedia.org/wiki/Enron_scandal

Maybe it's time for a new SOX moment.

The point I am trying to make is way things work in US, most likely C-levels and high level officials of companies get away with it. I am sure there are cases when folks got into trouble. Apple had Antennagate for one of the iphones and even with a class-action lawsuit people got like $15 reimbursement. For these huge companies in most of the time amount of fines are more like margin of error in accounting spreadsheet.

These are not remotely comparable.

One is a company that built a product with a design flaw effecting only one aspect of the product (cell radio) that was only triggered under certain circumstances (placing you fingers in certain positions). A civil lawsuit against the company caused the company to issue a fix (free bumper case which insulated the antenna) that retroactively fixed all products that shipped with the flaw.

The other is a medical device company that sold a product that didn’t work, giving incorrect results that directly informed how people treated or even detected health problems. People inside the company knew this and lied anyway, repeatedly, and then those people induced and conspired with others to hide their fraud. Those specific people are now facing criminal charges.

Antennagate and a big fraudulent startup in the medical (!) industry are quite different scale things.

Interestingly Holmes' father was a VP at Enron: https://www.forbes.com/sites/petercohan/2019/02/17/4-startli...

> Also unfortunately using public money and delivering a bad product is not a criminal offense, more like being sloppy at what you do.

They lied to FDA auditors in what sounds like a criminal conspiracy to defraud investors, business partners, and the patients whose blood tests were processed there.

Here's a fun one: a telecom CEO (named Elizabeth, too) was forging customer signatures - signatures of people she had known and worked with in many cases - to show to investors.

And she took money from friends and employees, and told them they were getting shares in the company. In reality she used the money to pay off her lifestyle expenses.

To be fair, she probably intended to make good on the investments once the company was wildly successful.

The amazing thing is, the company had hired a new CEO and is actually still operating. Last I heard.

https://www.bloomberg.com/news/features/2019-10-08/quintilli...

She didn't just "using public money and delivering a bad product". She lied to investors and regulators. That is called fraud and it is definitely a criminal offense. Her defense rests on proving she did not do it knowingly or with the intention to defraud. Nevertheless, yes she could get away with it. And yes, this being the United States race and class is involved but more so class in this case.

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