Elizabeth Holmes found guilty
axios.com
axios.com
It's funny to think back to 2015 and the hagiographical void still left in tech journo hearts after Steve Jobs died.
https://www.inc.com/ilan-mochari/elizabeth-holmes-theranos-i...
> How Elizabeth Holmes Became America's New Entrepreneurial Icon
> She represents the part of entrepreneurship that is long-term dedication, when nobody's watching
>... That kind of walk-before-you-talk behavior is refreshing and respectable in today's hype-strewn entrepreneurial landscape.
And how!
https://www.merriam-webster.com/words-at-play/what-does-crom...
Yes... Something like that.
>Speculators might make money on it, but the arguments for its usefulness fail completely.
https://www.currentaffairs.org/2021/04/why-cryptocurrency-is...
>Bitcoin is the greatest scam in history
>It’s a colossal pump-and-dump scheme, the likes of which the world has never seen.
https://www.vox.com/2018/4/24/17275202/bitcoin-scam-cryptocu...
>The Great Cryptocurrency Scam
https://www.forbes.com/sites/jayadkisson/2018/11/20/the-grea...
>Dogecoin Creator Says Crypto Is a Scam
>Jackson Palmer went on Twitter for the first time in two years to remind us that the wealthy are ruining everything—even cryptocurrency.
https://gizmodo.com/dogecoin-creator-says-crypto-is-a-scam-1...
I met Jackson Palmer in 2017/2018 and he had a level head for looking through this mania.
Even the Tether fraud hasn’t stopped the Bitcoin buying frenzy.
OT, but why would Tether impact Bitcoin? They are totally different use cases of crypto.
I’m thinking that in 7 years there will be something built with blockchain tech (not cryptocurrency) that is used by 10M people?
(I know you said cryptocurrencies but many people conflate the two and feel it’s all bogus..)
"A blockchain is a growing list of records, called blocks, that are linked together using cryptography.[1][2][3][4] Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data (generally represented as a Merkle tree). [etc]"
Do you have a definition that git doesn't fit into (without getting too pedantic, e.g., git being a DAG of records rather than a list)?
PS: you know who I'm talking about, just don't want to invite fans here.
I hope to be smarter next time.
Even TED has removed her talk from YouTube. What responsibility do the media bear when their shallow hype turns out to be false and damaging to all parties?
She absolutely was not. It was completely obvious to anyone with any knowledge of the subject that what she was doing was fraudulent.
I do, however, have a strong allergic reaction to motivational speeches from wide-eyed people with enormous grins. Well, from anyone; but the wide eyes and the permanent grin (and the embarrassing grooving-along to MC Hammer) would have driven me away from that firm in an instant.
I'm amazed that anyone fell for her.
... which she started up herself. Read about the Stanford prof who saw through her before she even started the Theranos journey.
Mercury News: "She saw through Elizabeth Holmes. Now Stanford professor is star in Theranos saga."
https://www.mercurynews.com/2019/06/03/she-saw-through-eliza...
There are, of course, a lot of people walking free who have done far worse things. (The Sacklers, for instance, should all be subject to a combination of prison and utter financial ruin. If the world were just, most of them should be living on the street, right now. Instead, they are making quaint arguments about how a third of their drug wealth is fair recompense, and how their plundered offshore billions should be protected from bankruptcy.)
Is physical harm the only harm that matters?
> Are they on the street now, begging for dinner?
That's not how justice works.
Some crimes need physical intervention in order to protect society. It's just reality. For example, a thief that breaches private property needs to be punished, because not only did he steal, but he also caused a loss peace in society, which affects everyone.
https://arstechnica.com/tech-policy/2021/09/theranos-results... https://arstechnica.com/tech-policy/2021/11/theranos-gave-wo...
Generally, when one gets a scary result from a test, another test is done to confirm.
Why? I would add a disclaimer that they don't endorse it and maybe a link to the ruling but at this point it's an historical document.
-- Laura Arrillaga-Andreessen, yes that Andreessen, writing in the New York Times Magazine about Visionary Tech Entrepreneurs with, um, no conflict of interest whatsoever I'm sure.
Turns out Palantir's Alex Karp was also "harnessing goodness through technology." No idea how she missed Adam Neumann.
https://www.nytimes.com/interactive/2015/10/12/t-magazine/el...
[Edit: there is an implied conflict of interest in the spouse of a major venture capitalist hyping startups in a supposedly neutral publication, which is something I'm kind of surprised needs clarification, but there is also an explicit conflict of interest -- if we treat the author as a journalist anyway -- in that one of the five companies thus hyped in the linked article was an A16Z portfolio company. Sorry to anyone who thought I was implying that the Andreessens or A16Z were investors in Theranos, I assumed they were not and I didn't intend to imply that. Nor do I think it is in fact implied, but I obviously should have been clearer since people took it that way.]
I don't know anything about the Andreessens' personal investments but just as a general rule you might question the propriety of someone that close to the VC money using your storied newspaper to promote startup founders. I'm not going to hold up the NYT as some bastion of journalistic ethics, but still.
https://a16z.com/2011/07/24/meet-our-newest-portfolio-compan...
Consider I have five artists in my collection, and I write an article about five artists but four of them are not in my collection. If I were to write about only the five in my collection, I might be called on it. By writing about the others I'm making it seem like the one in my collection just belongs in the group; and maybe the group will elevate my artist by association.
I might actually like all five of the artists I write about! They might be true visionaries and altruists besides! They might paint all the time except when they are running!
(Actually this kind of thing happens all the time in the art world, which makes my analogy a little depressing when I think about it...)
I'm trying to find a clear connection between Theranos and Andreessen-related investments. I can't find evidence of an actual investment in Theranos.
I'm not trying to dismiss you -- your theory[^1] could very well be totally right and there truly was a conflict [my duck-duck-go-ing skills only go so far]. And yeah, perhaps a person married to a wealthy tech investor ought not write high-profile articles possibly related to their partner's investments, and that publishers should be more wary of publishing such articles.
Yet I do get frustrated seeing these sorts of vague cynical quips levying specific accusations based more upon a gut plausibility of a scenario rather than a clear outline of information. It's easy to throw bread crumbs into a forest and connect them to make a path, but that doesn't mean you've found a useful path.
EDIT: Here is a somewhat-arbitrarily-selected article I found which discusses this topic: https://www.vox.com/2015/10/29/11620186/nyt-public-editor-bl...
[^1]: Technically you wrote that you were sure there was no conflict of interest whatsoever, but surely that was in jest.
Plausible deniability is useful in this kind of situation.
> I do get frustrated seeing these sorts of vague cynical quips levying *specific* accusations based more upon a gut plausibility of a scenario rather than a clear outline of information.
As an aside, one reply had mentioned plausible deniability… perhaps ‘plausible accusability’ also exists, wherein any hypothetical crime one can imagine is presumed to have factually occurred unless 100% disproven.
> writing in the New York Times Magazine about Visionary Tech Entrepreneurs with, um, no conflict of interest whatsoever I'm sure.
The only assertion is that she was married to a Visionary Tech Entrepreneur and doing puff pieces for Visionary Tech Entrepreneurs. Like seeing an article by Michelle Obama about how democratic politicians these days are great. Nothing deeper than that I think. It was an eye roll in text form.
It’s not an entirely pointless exercise, though, because people should know how powerful figures are related, and why they are motivated to do what they do. Journalists and billionaires are regular people who when exposed to a spouse’s daily ideas and reactions will soon bend in their direction. We should expect this from Laura. And we should be better equipped to dismiss it, because she was wrong.
> I do get frustrated seeing these sorts of vague cynical quips levying *specific* accusations based more upon a gut plausibility of a scenario rather than a clear outline of information.
BTW I totally understand that HN is not Debate Club, and that comments aren't required to be formal, rigorous, evidence-based arguments. Occasionally I just feel compelled to point out times when beliefs about people in general are used to justify accusations against specific people in specific circumstances -- even when I can empathize with the original sentiment, as was the case with the OP.
I re-read it a few times and I don't see one regarding Theranos other than sloppy writing. My "gut plausibility of a scenario" that the author is pumping up her husband's portfolio company in an NYT article is pretty easy to validate by reading the article itself, it just happens to not be Theranos.
Are you seeing something that's not there, or am I failing to see something that is?
BTW I agree with your overall sentiment. Sorry if I was too obnoxious with my post. Sometimes I overthink things (such as with the rest of this comment).
On your comment:
> > She only pauses in her work to run — seven miles a day.
> -- Laura Arrillaga-Andreessen, yes that Andreessen, writing in the New York Times Magazine about Visionary Tech Entrepreneurs with, um, no conflict of interest whatsoever I'm sure.
> Turns out Palantir's Alex Karp was also "harnessing goodness through technology." No idea how she missed Adam Neumann.
> https://www.nytimes.com/interactive/2015/10/12/t-magazine/el...
My issue is only with the first two lines, therein I can only discern one meaningful interpretation given the context.
1. You begin with a puffy quote from the article about Elizabeth Holmes
2. You name the author and publisher
3. You commented that she was writing "with, um, no conflict of interest whatsoever I'm sure" -- which is most likely sarcasm and that you suggest the opposite is true.
Therein is a claim (or at least a stated belief): that the author had a conflict of interest when writing about Elizabeth Holmes.
The nature of the conflict wasn’t clear. I looked it up (and later posted an article which asserted such a conflict) but didn’t find any clear connections between the Andreessens and Holmes/Theranos specifically.
I get what you misunderstood and I think I now get why, but I disagree that it’s what the “verbal eye roll” (love that phrase from another commenter) is actually doing on the, er, page. Guess we can summon the English teachers now, but I’m sticking to my style. Thanks for taking the time to explain.
Laura is from the rich Stanford/Menlo Park VC/Palo Alto crowd, and that's Holmes' base of support as well.
> I do get frustrated seeing these sorts of vague cynical quips levying *specific* accusations based more upon a gut plausibility of a scenario rather than a clear outline of information.
What support did Holmes have in SV?
Yes, Draper put in some early money and Ellison put in some money, but the vast majority of Theranos' money seems to have come from outside the valley. (Yes, George Schultz lives in SV, but he's part of the SV investor "scene.")
However, Schultz was in the Hoover Institute (on the Stanford campus), and he introduced her to lots of other government / defense heavyweights. James Mattis actually testified at the trial, for instance. Once you have a prestigious backer, the others fall in line like sheep.
I actually met Laura once, before she married Marc. Those people all know each other, believe me (I'm not one of them, in case you were wondering; it was some charitable thing).
How does that make Theranos part of the "Stanford/Menlo Park VC/Palo Alto" crowd?
What meets your threshold for a conflict of interest? Maybe I'm being too harsh, but this seems to meet my personal threshold.
It's like if a politician heads a committee that has large sway in government contracts and they are close to someone who happens to invest in companies that bid on those contracts. It's easy to see a conflict exists even if a straight-line to a crime does not. Ethics often boils down to managing these conflicts so there isn't even a perceived avenue for impropriety. A politician breaches ethical boundaries irrespective if there’s unequivocal evidence they let the relationship impact their decision. There does not need to be a smoking gun.
> By breaking down barriers to testing, she’s paving the way for a scalable approach to early diagnosis and therefore lower-cost, less invasive treatments. And by standing up to lawmakers and entities with vested interests for individuals’ fundamental right to access their health care information, Holmes may be doing more than running one of the world’s most successful start-ups — she may be starting a movement to change the health care paradigm as we know it.
The valuations of practically every company that comes out of here until it "goes public" is almost entirely based on this hype media infrastructure, or at least are dependent on somewhere between four and eight 0s in those company's valuations.
This is a parable about sociopaths in society. They are tolerable as long as they are usable fools: useful for war, useful for flogging troops, play within certain rules. But there's a line, and you cross it, you risk revealing all the other vampire sociopaths that are controlling society.
I have no sympathy for this postmodern uncanny valley AI-generated faildaughter CEO person-like matrix construct with empty, flaccid eyes. But she's a fascinating mirror into the CEO sausage factory.
https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...
They're long and mostly not relevant except for the sections pertaining to Holmes conduct.
Here's the indictment:
https://www.justice.gov/usao-ndca/page/file/1135066/download
Holmes was found guilty of one 18 USC 1349 charge, and 3 18 USC 1343 charges; the 1343's she was found guilty on were in amounts ranging from $100k to $100MM(!).
It should be possible to come up with a better guess than the New York Times' "20 years per count, but likely served concurrently".
Also: I'm seeing from various websites that the maximum time-left-to-serve for minimum security (federal prison camp) is 10 years, but nothing definitive - [1] is the most in-depth but only specifies this requirement for male prisoners, whereas other requirements are clearly distinguished between male and female.
[1] https://alanellis.com/securing-favorable-federal-prison-plac...
They're actually even more specific for fraud cases, beyond the general 2B1.1 basic economic crime rule of sentencing according to the most severe count; for fraud, you apparently sum up all the losses from all the counts, which has the net effect of bumping Holmes up 2 additional levels.
Generally, yes.
If her sentence is high she might not classify as minimum security (prison camp) and might have to serve some years at a medium before being moved.
Remember, federal prison sentences are generally "85%" which means you can get 15% off your sentence for good behavior. Almost every prisoner will get the maximum 15%.
I didn't read the indictment. Are her offenses nonprobationable? Usually non-violent offenses are probationable for first-time offenders.
"She faces a max of 65 years (3x20 + 1x5). And it's not at all clear she'll do less than 20."
Apparently the sentences will not necessarily be served concurrently.
https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc...
For another, because the guidelines are pretty specific in this case --- that 2B1.1 crimes are charged according to --- well, here's the wording from the guidelines: "the applicable base offense level is determined by the count of conviction that provides the highest statutory maximum term of imprisonment.". So "3x20" seems off the table.
"They run concurrently except to the extent necessary to serve the full sentence the judge selects."
When he said it's not clear she'll do less than 20, I don't think he meant she might get more than 20, just that she might get 20.
On the flip side, given the huge sums involved, it's not easy to make the numbers make sense served consecutively.
Here's an article about grouping:
https://www.josephabramslaw.com/understanding-grouping-rules...
7 (Base offense)
+24 ($140MM in damages)
+2 (10+ victims)
+2 (Sophisticated means)
+4 (Leading role)
+2 (Abuse of public trust)
+2 (Obstructed investigations)
Consecutive vs. concurrent isn't the issue here; doing a $140MM wire fraud puts you on the hook for an insane sentence.
So this is a case where the whale sushi sentence is... theoretically possible?! Wow.
https://mitchellepner.substack.com/p/elizabeth-holmes-found-...
I think in theory escape risk is a part of it, too, and people with extremely long sentences are presumed to have rather more motivation to escape.
Elizabeth seems the sort of person most capable of executing a plan whereby she pulls off a prison break through enlisting the aid of a bunch of other prisoners who're promised freedom themselves, but in her plan are actually there as decoys to be killed. It seems analogous to stuff she's already happily done. She is potentially a risk even to other prisoners if she carries on as she has done. I don't buy that she's not a risk to others.
I’m not talking about just Holmes here, but about prisons in general. It’s not supposed to be fun, but neither is it meant to support a collective revenge fantasy.
I'm curious where you got that understanding. Would you mind sharing?
Especially since that could put the khibosh on my retirement plans (commit a serious, but non-violent federal crime and receive a lengthy -- hopefully the rest of my life -- sentence at a minimum security "Club Fed"[0] facility).
Free housing, food, health care and clothes with no tax liability for the rest of my life? It makes me want to to massively defraud some congress-critters once I turn 70 or so.
Assuming I could be assured of conviction, I'd even hold on to the stolen money so it could be returned to the victims.
Yes, I'm being somewhat facetious. But decent assisted living facilities run from USD6-12k/month and once I've spent all my money, it's off to a Medicaid facility that isn't much better than minimum security prisons anyway.
This way, I can give my money to those I care about and not have to worry about spending down my life savings to ~USD2,000 in order to qualify for crappy accommodations at a facility that accepts Medicaid patients.
Just sayin'.
[0] https://www.washingtonpost.com/news/reliable-source/wp/2015/...
Shitty housing, unhealthy, often poorly prepared food, and frequently inadequate health care... when it isn't denied outright.
Being a prisoner in the USA, especially an elderly one, is terrible and shouldn't be joked about.
But being elderly and relying solely on Medicaid also sucks.
If war is politics by other means, I suppose a prison riot is democracy by other means.
Agreed, but most US citizens who have worked at least a few years during their lives will get Medicare, too, which is significantly better.
Note that that is a big except, when you have lots of points, which big $ frauds get you quickly.
Now, it's possible that the court wouldn't agree with that analysis and find slightly fewer points, or that it would agree but would make a downward departure, but...
> Holmes' sentencing date has not yet been set. But she faces the maximum penalty of 20 years behind bars, though legal experts say she will likely face a lesser punishment.
That is, he wasn't arguing that she will serve the max of 65, just that the max is much higher than what NPR reported.
> It is unusual for tech executives to face criminal changes when their startups collapse under the weight of unrealized promises.
That's because it's not illegal to over promise about your future results. It is illegal to lie about simple facts regarding the present state of your business to attract funding.
I'm so sick of so many press outlets framing this as just "fake it til you make it" gone wrong, "a page from the Silicon Valley playbook", or that it's just an over hyped company take to extremes.
No, Theranos was outright, egregious fraud, and most startups that "collapse under the weight of unrealized promises" are not committing fraud.
Most startups don't get the traction and publicity that Theranos got, however. I wouldn't be surprised if a lot of founders would go to similar lengths given the chance; they just happen to have someone apply some reality check on them before things get out of hand.
I saw tons of teardowns of their machine saying how over-engineered it was for something that squeezes a bag of precut fruits and veggies.
That's the definition of over-engineering: https://en.m.wikipedia.org/wiki/Overengineering
Theranos was unique in both the scale of the fraud and how non-investors were potentially harmed. Most of these are just founders who knowingly or unknowingly get in over their head and then basically walk away after having lied about the state of things.
I’ve heard a bunch of stories from VC friends, but the one I was the most involved with directly was probably 10 years ago. My mom mentioned to me that she had been chatting with some senior local government official who mentioned they had a startup datacenter provider taking over a nearby abandoned office complex and converting it to a green datacenter, bringing hundreds of jobs to the area - had I heard of them?
I had not, and after some digging determined that the company had claimed to have a bunch of unique technology, and leveraged that to get preferential terms from the local government - free rent, no property or payroll taxes, and other cash- and non-cash concessions. They had also raised millions from private investors by saying they had active datacenters with customers and they needed money to expand.
Except none of it was true. They had no customers, no datacenters, no employees other than the three founders and one of their daughters. They had made commitments in three different locations over the past three years to build a datacenter while simultaneously raising money by saying they ALREADY had active datacenters and customers.
I shared this with my mom, who shared it with local government, who hand waved it away as nonsense. But nothing ever happened at any of these sites, and after they ran through the money they filed for bankruptcy with revenue of $0 and assets of ~$12k. Their biggest investor took control of their land lease from the local government. Some investors complained online about being lied to, and the local government quietly swept it under the rug. I spoke with a local business reporter who basically shrugged and said, “yup, you’re right, but no one wants to talk about it”.
That would be refreshing! I might pitch to them.
She was going to great lenghts, saying her machine was already ready to production, and able to do acurate blood tests, when she knew it was impossible, and was using regular blood tests to fake results.
She's not convicted of actually, physically harming anyone, esp. patients (which doesn't mean she didn't -- but she wasn't found guilty of that); she's convicted of lying to investors.
That's obviously bad, and should carry some form of punishment. Maybe 5 years? But life?? That's insane.
[0] I read John Carreyrou's book when it came out.
In both theft and fraud, the victim is deprived of of something. That’s why people consider them similar crimes.
Destroying 100 million is best compared to something like a "killdozer"[0] rampage. Holmes' crime was the destructive equivalent of leveling ~300 homes.
[0]https://en.wikipedia.org/wiki/Marvin_Heemeyer#The_'Killdozer...
It was very lucky nobody was seriously injured by that thing.
Even if you're lying to trick some companies and investors to give you millions you're still not as evil or dangerous to society as the person who chooses to terrorize individuals for their gain. The actions are what matters.
“Do you understand what I'm saying?" shouted Moist. "You can't just go around killing people!"
"Why Not? You Do." The golem lowered his arm.
"What?" snapped Moist. "I do not! Who told you that?"
"I Worked It Out. You Have Killed Two Point Three Three Eight People," said the golem calmly.
"I have never laid a finger on anyone in my life, Mr Pump. I may be–– all the things you know I am, but I am not a killer! I have never so much as drawn a sword!"
"No, You Have Not. But You Have Stolen, Embezzled, Defrauded And Swindled Without Discrimination, Mr Lipvig. You Have Ruined Businesses And Destroyed Jobs. When Banks Fail, It Is Seldom Bankers Who Starve. Your Actions Have Taken Money From Those Who Had Little Enough To Begin With. In A Myriad Small Ways You Have Hastened The Deaths Of Many. You Do Not Know Them. You Did Not See Them Bleed. But You Snatched Bread From Their Mouths And Tore Clothes From Their Backs. For Sport, Mr Lipvig. For Sport. For The Joy Of The Game.”
Fraud is not a zero-victim crime and less than petty theft is. Just because the investors can 'afford' it, their losses are passed on to society eventually.
Also a very American way of thinking AFAICS.
In that sense, this CEO could be like the Sackler family - responsible for so much suffering across American society for the past decade or so, but because the scale is so large they've effectively abstracted themselves away from the evil and terror they are responsible for. The implication being that the opioid addict gets the full judgment of the law and society for terrorizing individuals to feed their addition, but the people who made the addiction possible get away with being tricksters. The only reason Elizabeth Holmes doesn't approach that level is because she and her startup got caught before they could release their fake products at scale, before the more serious consequences would begin.
If you ask me, I'd prefer to see both being held appropriately accountable, preferably in a way that encourages rehabilitation and not retribution or cruelty.
Above all, I think, because it's so diluted across a lot of people. To me, all these fraud-on-a-grand-scale-apologists are as naïve as Moist von Lipwig in the Pratchett quote in a sibling comment.
Personally, I'm with the gholem.
> Grand theft includes theft of property with a value of more than $950 or theft of a firearm (any value). The penalty for stealing a firearm is a felony, punishable by a state prison term of 16 months, two years, or three years. In all other cases, grand theft is a wobbler and can be charged as a misdemeanor or felony. A misdemeanor sentence results in up to one year in jail and a felony sentence results in prison time of 16 months, two years, or three years. (Cal. Penal Code §§ 487, 490.2 (2020).)
You actually can't get that much time for stealing a car or jewelry. What gives a criminal that much time is that "theft" is often actually "robbery", which involves the use of coercive violence. Violence is generally punished much more harshly.
> California Penal Code 211 PC defines the crime of robbery as “the felonious taking of personal property in the possession of another, from his person or immediate presence, and against his will, accomplished by means of force or fear.” Robbery is a felony punishable by up to 9 years in state prison.
> First-degree robbery includes robbery of
> any driver or passenger on a bus, taxi, streetcar, subway, cable car, etc., any person in an inhabited structure, or any person who has just used an ATM and is still in the vicinity of the ATM.4
> First-degree robbery leads to a California state prison sentence of between three (3) and nine (9) years.5
She should be though. People had unnecessary and invasive medical treatment as a direct result pf her fraud.
The actus reus is her fraud, the original criminal act, and having decided to do crimes she is also responsible for any harm caused.
https://en.wikipedia.org/wiki/Actus_reus
In the US is it up to the harmed individuals or their surviving relatives to peruse this?
Experts have warned from the beginning that Theranos made unrealistic to impossible announcements. Anyone investing at that scale without consulting experts IMO does not deserve protection from the law.
If Theranos is one thing, it is a real life example of why group dynamics and investing don't mix, and why the best thing to come out of r/wallstreetbets is the saying "do your own DD".
Wirecard did the same with accounting statements from the Philippines, and EY accepted them without verifying that the statements are correct at the bank offices, they didn't even cross check if the billions of dollars could even be on the books of the Philippine banking system, and now EY is in hot waters.
If I were an investor and were presented with claims of validation of a technology that is hotly contested, the very first thing I'd do is call up or otherwise contact the issuer and verify the authenticity of that claim. It's like ten minutes to find out the contact information of Pfizer's Investor Relations team and compose a letter - investors who are unwilling to commit at least this little bit of verification deserve to be relieved of their money and office.
You bring up good points (although I think I disagree with your conclusion that people ‘deserve’ to be defrauded). There seems to be active collusion at times between oversight and the companies being audited. This isn’t the first time EY has been accused of this and we see it with credit ratings agencies too.
I think I come to a different conclusion because we all outsource our quality assurance on a daily basis. Did you review the airworthiness certificate of the last plane you flew on? If not, do you “deserve” to crash because you outsourced to the FAA without verifying it yourself?
I’d say the blame should fall to the third party auditors who failed the system, not necessarily to those who trusted them.
Am I a normal airline passenger/pilot or did I sign up as a test pilot for experimental / new / freshly repaired aircraft?
The latter get higher pay simply because that risk is part of their job, and to my knowledge test pilots have the option to refuse jobs they deem to be too dangerous. Same is for investors, with the difference that human lives can irrevocably be lost whereas money is only a virtual thing.
The system breaks down when the third party is corrupted or incompetent in terms mitigating that risk. If we're going to say investors/airline passengers 'deserve' an outcome regardless of the role of a third party verifier, I'd probably say there's no reason for an SEC, FAA, audits, or even journalists for that matter. We've largely said as a society those organizations play an important oversight role in mitigating risk.
Your everyday normal "retail" investor should be protected by the law and regulatory agencies, e.g. requirement that companies offered to trade their stocks for unqualified investors need to follow SEC guidelines on accounting and business best practices, that insider and politicians' deals are regulated/reported, that environmental, consumer protection and labor laws are followed and that such companies are audited for compliance. For investment vehicles (e.g. funds, stock options that are not part of "employee stock" programs), that the risk of major or complete loss is limited (=investments done by these with the assets of normal investors should follow the same rules, and that investments into assets requiring accreditation do not exceed 20% of the assets under management of the investment vehicle). Obviously, that also limits the return of investment aka the pricing of risk.
Accredited investors / investment vehicles allowed to invest in high-risk assets however? The accreditation should represent an exchange: you get the potential to higher return of investment unlocked, but as a price for that you have to:
1. prove you can stomach significant losses (=you have to own your residence and can only invest 80% of your net worth into investments requiring accreditation)
2. spread investments so that no single or related (e.g. by majority ownership) high-risk investment exceeds more than 20% of your total portfolio. Exceptions can be made for holding companies, SPACs and similar investment vehicles, provided that their investors follow the same exposure limit.
3. prove you/your staff are actually qualified to make qualified decisions: professional education (e.g. a university degree in economics, finance and related subjects or training provided as part of employment at a bank or other financial institution) and the time to adequately review the companies you invest (=someone who works 60 hours a week in a non-finance related job should not be assumed to have enough free time and mental capacity to review and follow-up documents)
4. waive your right to protection by regulatory agencies and the judicial system to a degree that reasonably expectable efforts (such as calling up certification issuers to verify authenticity of a certificate) have to be undertaken.
5. agree to be held fully liable for your loss and the loss of your clients if you violate the rules or act negligently.
That way, the assets of the majority of the population are protected against loss of their investments, actual professionals now have a monetary incentive to responsibly invest their assets, and auditors have the incentive to actually do their job (and if they do not do that on their own, their liability insurance will make them do!).
A case could also be made for an intermediate class of investor to allow people not meeting the criteria to invest a limited portion of their assets (e.g. cap at 20% of net worth excluding primary residence, require a minimum net worth of 200k $) into high-risk investment.
We do the same with other high-stakes jobs (doctors, pilots) and organizations (see e.g. how cyber-security insurances force companies to introduce IT security measures as part of providing insurance coverage) - why don't we do the same with the finance industry? There have been more than enough high-profile cases now, some of which actually caused global crisis events.
ETA: Additionally, "margin trading" should be banned or at least strictly regulated for all investors. The amounts one can see in the "Loss Porn" section of r/wallstreetbets are simply inconceivable. No one should be able to YOLO their retirement funds into Gamestop ffs, and no one should feel forced to off themselves because their bank showed them a 730k US-$ margin call [1].
[1]: https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
Regarding the margin call type investments, I would add it’s not to just prevent endangering oneself but protects society as a whole. As a layman looking at past economic bubbles, it seems the one corollary is excessive speculation coupled with excessive leverage.
As long as the economy, the financial, employment and housing markets behave somewhat reasonable, even extreme leverage is not a problem... but in sudden uncontrolled crashes, that amount of collective leverage explodes backwards and everyone has a problem.
I'm actually not sure if it is possible to regulate margin at all to a resilience degree that stands up to market depressions, given that debt and leverage are essential to the working of any economic system (including all the various forms of socialism!) in a scarcity-based world itself.
As if sending her to prison for 5-10 years wouldn't be enough? Who will give her money or believe anything she does afterwards? She's done for no matter what. 65+ years is just to be cruel and enjoyment of the cruelty.
Even if it is the health sector where harm can easily be done, punishments shouldn't be based on hypotheticals.
Fraud is harm.
I’m an American. As a society, we believe in the deterrent value of punishment (which is proven not to work). We also see prison as a place to put dangerous people in order to protect society. We see only the risk of letting dangerous people out of prison, not any potential benefit. If we have to lock up 1 innocent person to be sure that 9 dangerous people gets locked up, those numbers work for us. It’s a kind of tunnel vision focused on the worst offenders and ignoring the many non-violent or rehabilitated offenders.
So, it’s just this very one-sided view, very risk averse and without much empathy or grace toward the offender.
Do you genuinely believe that high-IQ white collar criminals are exactly the type of person unable to do even the most basic risk-reward analysis?
According to this fact sheet, "the certainty of being caught is a vastly more powerful deterrent than punishment". Elizabeth Holmes and Bernie Madoff probably didn't think they would be caught.
https://www.ojp.gov/pdffiles1/nij/247350.pdf
NIJ is the research, development and evaluation agency of the U.S. Department of Justice.
She didn’t of course, but it wasn’t impossible to do. She just wasn’t good enough.
After all most cells in your body do a few thousand blood tests on millilitres of blood every second. Our technology has a long way to go but it can be done.
Penalizing mass murder also doesn't seem to have worked to prevent 9/11. The question is how representative the perpetrators are in these cases. I'd say not very -- do you disagree?
> According to this fact sheet, "the certainty of being caught is a vastly more powerful deterrent than punishment".
Just because you read it in some fact sheet doesn't mean it's true or even makes any sense. Probabilities and punishments are not commensurable so what does this even mean (without some attempt to describe a subjective loss function)?
Taken literally it's obviously untrue. Examples abound where people don't care much about being caught because the punishment close to non-existent or very light in comparison to the rewards. This is why why gangs like to groom minors, the likely reason why San Francisco has a shoplifting problem, or to bring it back to white-collar crime, why certain types of corporate and individual malfeasance occur over and over again, because the risks, even when caught, are minor but the rewards are not.
Your original claim is tantamount to saying that people don't react to incentives. Which beggars belief. That is not to say that criminals in particular respond to incentives in a way that maximizes their life outcomes or is intuitively obvious, or that for many crimes lowering penalties and investing in other things instead (like detection or prevention) wouldn't produce better societal results. But on the whole I'd expect high-flying financial criminals to respond to incentives set by justice system in a way that is more aligned with their actual utility function than say crack addicts committing robberies to finance their next fix.
Part of the reason is because punishment is so wildly variable and also sentences are almost always shortened drastically. It never looks like justice prevails. A "20 year sentence" is never actually "20 years", it could easily end up being a few years + probation, or even less.
Also, america sure as shit better not go light on a rich lady who sold profit dreams to old men while giving outrageous sentences to poor people everyday. You want to talk about criminal Justice reform she is definitely last on the list of people who deserve leniency.
If you assume average salary of 100k per year per person with 1/4th of time work per year. that's effectively 400k per year per person. He stole a hundred million which would be 250 years.
"Notably, Theranos’ investors weren’t the usual-suspect venture capital firms. Rather, her funding came from individuals like former Secretary of Education Betsy DeVos, billionaire media mogul Rupert Murdoch, former Secretary of State Henry Kissinger and the Walton family, among other wealthy elites. Some evidence showed that these investors were willing to give Theranos money even when Holmes evaded their more probing questions."
https://techcrunch.com/2022/01/03/elizabeth-holmes-verdict-g...
And there we have the crux of why she was prosecuted...
You're much better off screwing average people, then it's just "capitalism".
From people who could easily afford to lose it and who should have known better. None of the people she defrauded have a materially worse quality of life than they did before.
Her biggest crime was making rich people look stupid, and they REALLY don't like that.
Who in turn gained their money from trickle-up economics targeting the working and middle classes, in all likelihood.
I don't get this apologetic comment.
The crime she was convicted of isn't a crime you should spend effectively the rest of your life in jail for. It's as simple as that.
Not if you're a young(-ish) and relatively good-looking female billionaire CEO, at least.
Apparently, judging from the fact that I haven't seen all you people spouting this line on the barricades fighting for more lenient sentences for ordinary lowlife ugly middle-aged male fraudsters.
That's how simple it is.
It does not matter at all that they could afford to lose it. Her biggest crime was the one she just got convicted of, being a fraud and lying for profit.
One side of this conversation is unnecessarily harsh, I get that, but the other side of this conversation is playing mental gymnastics to try and downplay what she did. Both are wrong.
Otherwise it signals that wantrepeneurs can keep doing it with minimal repercussions.
Meanwhile the only real sticking crimes are the one she commit against Betsy Davos (dirty corrupted rabbit hole warning if you Google her name). Obviously Bets placed few phonecalls. It it wasn't some VIP, she would get away with that too because all investments comes with risk.
Not fair to frame her sentence as Betsy pulling strings, even when I’m no fan of that woman for obvious reasons.
I couldn’t care less or sympathize with billionaires who have already made back magnitudes of the money they lost on Theranos with other investments.
For example, Larry is up $14 billion(!) on a $1 billion investment in Tesla in 2018.
https://markets.businessinsider.com/news/stocks/larry-elliso...
If Holmes had decided to reinvent herself as a Robin Hood figure, she might be feted in Jacobin by now.
In fairness, Betsy was 16th in line for for the US Presidency when Holmes was being charged and everything set up. And were it not for COVID-19 she would have been in that position for the entire trial. I'm sure with that kind of political power she was pulling some strings for vengeance.
The prosecutors are not stupid. They have to come up with charges that actually stick, otherwise they risk losing this case in a spectacular fashion. If they went with an angle "X is morally bankrupt and her actions caused some deaths", it would make so much harder to prove and get the jury to agree to it.
I'm no fan of Holmes, but what good does it serve to lock up non violent criminals for decades?
With all the charges grouped, including the conspiracy charge, we'd be looking at an offense level around 35 --- 168 to 210 months.
I'm not saying I agree there should be a downward departure (imo, her pregnancy came across as a "Pregnancy Of Convenience"), just that there could be.
Never having a baby seems better than having a baby you won't be able to be a mother to for 10-20 years. It's not unlikely the kid would hate you when you get out of prison.
I would also expect leniency if you got the child after you were charged, even though that implies people could just get kids to look for leniency, there is the idea that once someone gets a child they calm down and become more cautious. Maybe not so important in cases of non-violent, monetary crime.
However as it is commonly thought in society, and backed up by science ( https://www.psychologicalscience.org/publications/observer/o... ), that women take on a more nurturing role for the children and the absence of a mother would be more traumatizing (statistically, in the case of my son he freaks out if I leave but doesn't care much about the mother), the father can expect less leniency than a woman.
If we really think of it, shouldn't single person get leniency because him being in jail doesn't hurt others. So that can be considered in thinking about planning of crime. As others clearly aimed to hurt their families and friends by getting in jail in first place.
Perhaps the judge can factor that kind of thing into the sentencing; I'm not sure.
In an ideal world (not that we live in anything resembling a perfect world) it seems to me that the harm you're talking about would be remedied in separate criminal and/or civil trials. Certainly, unless I'm mistaken, the victims of the fraudulent tests could still file civil suits.
I'm not a lawyer, in case it wasn't blindingly clear.
Because words have meaning and fraud is non-violent no matter how much you stretch it
65 years in prison would be a fair sentence for her. Homeless people in America have been sentenced to over 15 years in prison for stealing $100. Holmes stole an order of magnitude more than that. The US justice system needs to send a clear message to the would-be fraudsters that there are indeed some very serious penalties for being a criminal in this society.
Using an existing injustice in the US to defend another does not make it right.
I am no fan of Holmes or what she did, but locking away people for life is clearly not a winning strategy.
>
> Using an existing injustice in the US to defend another does not make it right.
While that is true, it is also true that the law must be fairly enforced on everyone. Having some people receive lighter sentences for similar-in-intent but larger-in-scale crimes is not fair enforcement.
Though, it was my intent to communicate on the interwebs with a writing concept often referred to in some circles as 'a figure of speech'...
Do you have a link for that? I can't tell if this is hyperbole or not.
In general we prosecute violet offenses (including the threat of violence, even if the gun wasn't real) more seriously than nonviolent offenses. While 15 years seems excessive (as do most prison sentences in the US, IMO), there's a lot of important context missing in your statement. Hyperbole might not be the right word, but I'd call it "substantially misleading".
I get the vibe you are a white-collar criminal apologist, I could be wrong, but am I?
No. SIX OR SEVEN orders of magnitude.
Our system is ludicrous, but within its current bounds, over 10 years would be just.
Absurd statement. Of course it does, if the punishment is harsh enough.
If you're stealing hundreds of millions of dollars, is anything less than a decade really a deterrent? Especially since sophisticated actors are the most likely to be deterred by long prison sentences.
Heck, does it really do any good to lock up someone who comes home to find his wife cheating and kills her and her lover for 20-plus years? I would contend that locking up the white-collar criminal does more good.
But I'll take on your specific example. Any crazy rich people out there, I will serve 5 years in a minimum security Western European prison for 143MM USD safely accruing interest in accounts for when I get out.
Because people are bad at estimating low probability and high outcome expected values. If you are old you might even not deterred at all by a very long sentence if there is only a small chance that you actually both get caught and have to serve the time.
“non-violent” criminals can do much more widespread damage individually than violent criminals are likely to, but are also more likely to be rationally deterrable with a sufficient consequences (which anything you'd willing gamble against the potential upside of the massive crime is not.)
How did you come to that conclusion? It seems like a difficult argument to support.
In terms of human life, probably not, right? I mean hypothetically the investors could have gone on to spend their money on lifesaving ventures and charities but that seems like a roll of the dice.
They may not not technically be criminals because the government and judicial system protect this class of people, so in the interest of liability let's not allege they committed any crimes, but in the context of the the question yes white-collar or non-violent "whoopsie daisies" can do much more widespread damage.
In the context of the broader discussion here, though I find it unsatisfying -- Holmes was specifically found guilty of defrauding the investors, and (as far as I've seen) acquitted of defrauding the patients. I don't think the main punishment for tobacco, etc company execs should be based around, hypothetically, ripping off investors (actually I guess their investors don't feel ripped off in many cases).
The main victims, in the case of tobacco and asbestos, seem to be people who've essentially been poisoned. This ought to be considered a violent act in my opinion. Unfortunately the legal system seems to see it differently, so again you are correct, but again I'm left a bit unsatisfied...
For many (though certainly not all) of the investors victimized by Holmes, I'm not terribly sympathetic. As implied by "qualified investor", if you write such a big check, it's sort of up to you to do the homework.
I do have some sympathy for people who got Theranos tests and were mislead about their efficacy, but on the charges of defrauding patients Holmes was found not guilty! (Similarly, I have some sympathy for employees who went to work at Theranos and ended up bullied and threatened by the company, as with Tyler Schultz, but they aren't represented by any of the criminal charges!)
Maybe the takeaway is that criminals (and humans) aren't entirely rational, and 65 years is just a great "headline" for deterrence. But framing this as about deterring rational criminals strikes me as then putting a high burden of proof on the argument for 65 vs 10.
The only thing that has a small deterrent effect is how likely a potential offender think they are of getting caught.
My understanding is that even in cases where deterrents are known to work poorly, there's still some effect. For example, with drug addicts, there are diminishing returns in as little as a couple days, but I think there was still SOME effect.
It just winds up being mostly pointless, because a weekend sentence works pretty much the same as eg. months to years or more. You should be careful about extrapolating from behavioral studies, and other crimes.
It's not just about deterrent IMO. I also care about justice, fairness, and making it not worth it to commit white collar crimes. If the sentence is not substantial, you've basically gotten away with it to me.
It's worth 1-5 years in prison to spend 5-10 years in luxury, being told how amazing you are. Maybe not for me, but it certainly is for a lot of people. A ton of white collar criminals end up better off for their crimes, if you're not harsh enough.
We should destroy her life for cavalierly playing around with other people's lives in that manner. Theranos intentionally destroyed the database of test results, but their clear goal was to yolo out medical tests.
See eg [1] or [2]
[1] https://mondaynote.com/theranos-trouble-a-first-person-accou...
[2] https://www.theverge.com/2021/9/21/22687026/theranos-patient...
Hopefully screwing around with medical tests will have much more serious consequences than stealing money. Hopefully this was just the first step, and having her in jail will prevent her from tampering with the evidence for the more serious crimes. Hopefully we live in a society that values lives more than money...
She was, but she was acquitted on those charges.
Like if you order some bullets from a gun shop, and the guy delivers them by doing a drive-by on your house, surely the only legal problem for the deliveryman can't be "these bullets were a ripoff, the gunpowder is already expended!"
The bad diagnostic test in exchange for money is the essence of the fraud she was acquitted of, not some separate harm.
I mean, it's not impossible she could face state law claims about it separate from the federal ones, but any federal criminal claims from the same set of actions would be foreclosed now by double jeopardy (besides retrial on the charges that the jury hung on.)
We absolutely love throwing people in prison for ridiculous lengths of time, because we are, for the most part, violent busybodies.
If you have a problem with US sentencing culture, as a moral and a political issue you should probably not start with rich well-connected scammers.
All that said, I would hope for at least 8-12 years, possibly more. I don't take that sentence lightly and consider it very harsh (I can't stand people from the USA that consider less than 5 years and "easy sentence"). 3 years is a serious sentence, and 8-12 is extremely harsh, for good reason. It's very important to me to call this like it is. There should be heavy handed punishment, because this is among our most serious crimes.
She blatantly lied multiple times about a medical product. She had a team of enforcers harass people who tried to talk. Across the board, it was a very extreme case. More importantly, with so much at stake, these type of white collar crimes are quite frankly worth committing if the sentence is less than 5 years (I'm not sure the exact number, but it's at least 5).
For a substantial portion of the population, having that kind of wealth and influence for a short time is worth it; in some cases, even if you die. So it might not deter everyone, but I do think the possibility of spending lots of time locked up, will stop a lot of gray area people.
I also think it is necessary for fairness. I care about making these crimes "not worth it". At a certain point, you're basically letting people keep their ill gotten gains. Getting to be king for a decade, then go away for a year or two is no punishment at all.
I don't think 10-20 years is necessarily inappropriate.
I knows Theranos was headquartered in Palo Alto for part of its life, but is it really a SV company? Looking at their board I see mostly old-school business people from a construction company, Wells Fargo, and James Mattis and a former head of CDC. Only real tech person seems to be someone from NetApp. On the investor side, I don't see any of the big SV names either. Initial funding came from Rupert Murdoch.
Theranos was located in SV and Holmes referred to it as a SV style company, you might argue this is enough to make something a "Silicon Valley Company". I think OP would view such a company as one both in SV and embraced by the local ecosystem of developers and investors. I think SV "learning a lesson" from the downfall of a company only makes sense for the latter definition, and I don't think Theranos fits it.
In reading Bad Blood it becomes apparent that, Tim Draper aside, the SV investor community realized much earlier than anyone else that Theranos was shady and either pulled their money or stopped investing. As someone living here in the area at the time I felt it was common knowledge in dev circles that Theranos was shady and lying about their capabilities (though not to the level that was revealed). Certainly it did not seem to be a prestigious place to have on your resume.
Given that the SV ecosystem seemed to largely sniff out Theranos before the rest of the world it seems weird to expect them to learn a lesson from its downfall.
The answer to this depends a lot on whether you consider e.g. Arrillaga-Andreessen "SV" or not. Holmes certainly wanted Theranos, and herself, to be viewed and valuated as such.
I don't follow startups that closely. The only example I can think of is Elon Musk's "full self driving" promises, but the gap between promise and reality is a lot smaller in that case. Even then, the claims are still mostly future timelines, not "it works now, no I can't show you, trust me!!"
That's because his original 24 year sentence was reduced to 14 after a Supreme Court case vacated part of his convictions.
My bet, based on some calculators I've seen, is that Holmes serves (actually in jail) 14-18 years.
What does that mean to you? I am curious to know why you'd make that bet with the OP with those two facts alone.
Edit: Duh, four.
Non American here, why do people use this infantile term to refer to a spouse? Unless I am mistaken, the father of her child is her husband - why use another term?
Edit: Thanks everyone for pointing out that you don't need to be married to have a child, wow, everyday a school day on HN.
But her husband _is_ as far as we know, the father of her child.
Not exactly sure where the term came from, but I know I’ve heard it in songs, seen it in movies and on TV, etc. It’s just a popular phrase.
Yes. And, as the G(GG...?)P said, a stupid one.
She then married her current spouse.
"Baby daddy" is often used to imply that the woman is not really attracted or attached to the man who fathered a child.
I think OP is implying that Holmes hooked up with and married the new guy as a cynical ploy to get a war chest for the impending legal actions.
I can't speak at all to Holmes' motivations, but it certainly doesn't conflict with what I read on Wikipedia, or with her apparent ethics.
I said soon to be sentenced.
And words towards 'won't she be in jail through any appeal process.'
But in response to the original comment saying she won't get jail time at all due to appeals, do you think she will not be sentenced and the appeal with happen before then where they disregard this conviction during that process?
Anyway, confusion aside I was trying to politely point out they seem wrong in their assumption she will never see jail due to an appeal process. That's not how the process works.
I think she'll only start serving time once the very last round of appeals ends - which is going to be many years after her death. They'll just Jarndyce v Jarndyce for decades to come.
It's non-violent. Nobody died. I think 5-10 years. Maybe she can be Shkreli's pen pal.
She was peddling non functional healthcare devices and services. People could have died, and she clearly didn't care.
I think their customers just ended up stuck with the bill and had to go to a regular lab.
I don't think any of the founding fathers foresaw presidents using their power to pardon their friends. The whole system is extremely vulnerable to an insider attack - very few tools are in place to work around corrupt leaders.
The US President should have handed this power over to a similarly dusty committee resolving real injustice years ago. This would be less corrupting and more effective because a President is busy whereas the committee would be doing nothing else except investigating the circumstances of potential injustice and choosing how to resolve them (new trial, pardon, etc.)
Interestingly, this pattern repeats itself; countries which became independent from Britain later on often have a far less powerful president, with similar powers to when _they_ left. The president of Ireland, for instance, is non-executive, doesn't have a veto, and can't commute sentences... much like the British monarch when Ireland became independent.
As it stands, it's an anachronism that only survives because it's _really_ difficult to change the US constitution, I suspect.
As for Ms. Holmes, she defrauded very rich and powerful people. I would be surprised if she were shown any leniency at all, never mind a Presidential pardon.
And the optics would be _awful_; no sensible president would do it in the first place.
That's obviously no longer a constraint. The optics of pardoning Anthony Lewandowski (among many, many others) looked awful and he was still pardoned.
And I think that was a little different; in that highly polarized environment it was possibly a little easier to sell corrupt pardons if they were of people on the president's 'team'; at least some of his supporters would put up with it on that basis. Holmes wouldn't qualify; she's just a generic wealthy criminal.
This pardon abuse has been going on for awhile.
Especially because it was those same directors' reputations that likely helped the fraud go on so long. There was probably a fair number of skeptics who thought "Surely they wouldn't put their name on something like this if there was nothing there". I doubt Kissinger or the people around him want the last of his legacy to be punctuated by Theranos.
I'll be honest: I kind of thought the same thing. That a breakthrough in science of this magnitude with so much silence around its details was strange, especially in the face of some expert skepticism. But the idea that Henry Kissinger etc. would attach themselves to it without compelling evidence made me more or less shrug my shoulders and move on.
You're saying that Mattis, Cohen, etc had the ability to influence decisions within Trump's DoJ and exerted that ability in order to ensure that charges were filed against Holmes in 2018? If so, why do you think this?
But I also don't think it's unrealistic or unreasonable to speculate that people who were on the board of directors due to their connections and influence could have used that same influence when things went sour.
I was in a job once where there was a snafu with a relative of a local politician. It didn't take a call from the politician for the CEO to issue an all-hands with a mandate to find out what the heck happened.
Can I ask a question though? It seems we simply disagree here on what is reasonable speculation on the issue, and that's okay, but can I ask why you are focused on Mattis in this? He strikes me as a man of some integrity, and so I highly doubt he would have done anything inappropriate here. Though that very integrity might make him want to get to the bottom of things and therefore make inquiries about how seriously the issue was being handled by the DOJ-- again not in any inappropriate way. Out of the group of directors, I'd think him the least likely to have used his influence to pressure anyone. And there's a big difference between using influence and using pressure.
Also in my other comments I mention that it may even only have been passive influence: Having people of that high of a profile attached to a scandal can be enough to have folks at the DOJ and regional prosecutor's office take notice to see what's going on. In which case, to my original point, Holmes' high-profile board of directors worked against her when it came to criminal prosecution.
Further, I admit 1) I should have been clearer in my original comment that such passive influence may have been the factor and 2) I was speculating, not making accusations of inappropriate activity. I thought that was clear, but I suppose I'm wrong.
Maybe we should simply part ways on this thread in disagreement now, rather than continue what doesn't seem a productive conversation on this topic with each other.
The high-profile nature of the case was absolutely a factor in how the DoJ handled it -- I'm sure the media attention got it more AUSA hours, etc.
Is it not clear that I'm speculating? And is speculating that people with government connections might use them in this situation? After all, that's part of why they were on the board in the first place. Did they actually use that influence? I don't know. But I think it's a reasonable bit of speculation. Influential people using their influence when they're publicly embarrassed shouldn't require much of an imagination.
I'm not sure that Trump's presidency is relevant here. The influence these people have would be with others in the government, not Trump.
Not sure why you'd think it's "a reasonable bit of speculation" to baselessly posit that Mattis decided to obstruct justice by reaching out to a regional prosecutor in order to influence the government's decision to prosecute a criminal case.
It's also not obstruction of justice to ask the DOJ to look into an issue. If a threat was involved in that request then sure-- that's obstruction.
I try not to make nonsensical conjectures in public forums, if that is the question you're asking.
Let's part ways on this topic though: You seem to be verging close to personal attacks, and so we've passed the point of useful discussion.
Kissinger also has the fame of being the first Nobel Peace Prize recipient to bomb another Nobel Peace Prize recipient:
https://www.huffpost.com/entry/doctors-without-borders-bombi...
More on Kissinger war crimes:
I'm talking about his name recognition, and most importantly his influence & connections. I'm sure he'd rather be remembered for his work with the Soviet Union & China.
That's a rough definition of realpolitik. Pragmatism over ideals or morals is baked into the concept.
Anything else you got from my comment came from your own reading (too much) into what I wrote.
Heck, if we're choosing awful moments in Peace Prize history, one winner bombing another winner isn't even unique.
and here is why; he was / is a meta-dictator/authoritarian -- This MF was able to kill MILLIONS through his /INFLUENCE/
Just as Madeline ALbright, the Bush Cabal, the Clintons -- but this piece of shit needs to be mentally dissected so we know how to prevent such abhorrant people / actions from gaining power.
While in the cold war, such thinking was important for determining / predicting / preparing for insane scenarios... still this is a psychopath thinking of these things.
Kissenger is one of the most eveil people (along with albright)
An endorsement from Henry Kissinger is hardly an endorsement. There were far more prominent and well-regarded VCs attached to Theranos to support your point, however, which I think is well-founded.
I doubt the world's most notorious unprosecuted war criminal would have his reputation tarnished by advising a fraudster.
Reading comments by students of polsci (amateur or pro) either makes me fall asleep—oh the regergutation of supposed “ideals” and bromides and empty platitudes—or makes me shake my head in disgust. They must have ascended to a Platonic Plane where they are unperturbed by the implications of what they say.
I also should have been clearer in my original comment and provided another aspect of the influence people at that level have: It can often be passive. It may not take a phone call to for the influence to manifest itself: The mere involvement of prominent people like this in a scandal could be all it takes to spark significant interest by the DOJ and prosecutors to investigate, it doesn't necessarily have to be a back-channel request from the person to look into an issue. On a much smaller scale that has happened where I work before.
Last time I checked, a large poster with Elisabet Holmes was still present at the back of Hero City (Draper's accelerator, across the street from Draper University).
It also doesn't appear to have produced many notable alumni in its (nearly) decade of existence: Some of the Alumni they feature are profiles of people with defunct products. The QTUM crypto currency may be an exception as a somewhat moderately successful coin w/ market cap ~$1B, although that's not quite the same as a Unicorn valuation since it doesn't really all belong to QTUM as an organization.
It's possible I'm not being fair on the Alumni though: It does seem that fair number have gone on to modest success, and as I reflect on the above, the SV focus on multi-$billion valuations is possibly coloring my judgment. ASU-Draper doesn't necessarily have to be a Unicorn factory to be successful, so I'll temper my above judgement with that.
Her mother worked as a lobbyist and at one point was a Congressional staffer.
That's not exactly an endorsement.
Investors know that every dollar they put into a company could disappear, it's why startups get capital from investors and not bank loans.
But a patient does not expect for their blood test results to be completely wrong. Her tests weren't giving false-negatives or false-positives, they were using lab techniques that we have known to be inaccurate for decades. She knowingly sold Walgreens on 1 test, and then performed a different test.
I need to sit down and properly inform myself about how the prosecutors fucked that up so badly.
Not excusing it, but maybe it was a company vs personal thing (eg. consumer harm perhaps didn't pierce the corporate veil[1]). Whereas Fraud against investors is much more of a personal/individual thing.
[1]: https://www.law.cornell.edu/wex/piercing_the_corporate_veil
Because und test results where in general correctish, they where just not gotten in exactly the way it was claimed, which was also not noticable less reliable or anything.
And what the user bought was the test result.
As far as I understood, with my very limited understanding of US law it seems hard to sue as a consumer as you where deceived but not hurt/damaged in any way.
Guess they just answered the question of "If you can't tell the difference, does it matter?".
"we gave you treatmemt for wrong type of cancer, close enought!"
They diluted the blood. They couldn't possibly be correct.
The maybe not right information I got was:
During the trial phase they get full sized blood samples + finger prick to do cross validation.
The results they send back where "from the validation" as it was basically the only test done.
I think in the HBO documentary they say the unravelling started because of FDA complaints on the bloodwork being sub par. But I think you can't jail someone for 120 years because they did a shoddy product. Maybe the prosecutors simply went for the biggest bang for their buck?
This is what they did to Wallgreens, they sold them on the idea that they would have theranos machines in-store, but instead what they did was do IV blood draws (calling it a comparison check) .. and then would just process the samples the same way as everyone else using standard equipment.
People were getting good results because Theranos was using machines from Siemens in their hidden lab.
> People were getting good results because Theranos was using machines from Siemens in their hidden lab.
Thus the tests sometimes were good, and sometimes bad. Some patients underwent unnecessary medical treatments and procedures based on bad tests.
Those machines weren't designed to work that way though, so the test results were wildly inaccurate when they did dilutions. And they fired people who wanted to delay rollout in order to ensure that they had consistently accurate results.
Lying about it to the Investors, and possible intellectual/contract issues with Siemens are another issue.
Very few tests are 100% reliable, so I would expect that Theranos claims about how the tests where performed would play a significant role in determining the guilt. People where told they would get the perfect magic pixy dust test that worked on one drop of blood instead they got one of the early covid tests that needed at least four repeats to give a "most likely negative" result, unsurprisingly the covid tests also resulted in confused tweets by the one or other VC.
Unfortunately, it turns out that "fake it til you make it" doesn't work with some problems that are seemingly unsolvable (at least by the approach they took).
IOW, it turns out that "fake it til you make it" doesn't work if you don't actually make it.
Reverse engineering is not bad, and it is dismaying that someone posting on a site called "Hacker News" would think so.
Personal attacks aside,
I'm just saying that if I get a blood test and it says I've got AIDS and I actually don't -
and that's all because some sociopath grifter with less of an education than what's been proven with my own Bachelors of Fine Arts realized that to swindle millions of more dollars from her geriatric backers she's been manipulating (and ruining the lives of their own family members),
she needs to fake the test results from an impossible dream machine that does NOT exist and couldn't ever - because it defies the laws of physics,
and does this by running modified machines of her competitors that are now basically broken,
in secret rooms she doesn't tell journalists or inspectors about,
well: that's truly fucked.
But I don't know if the context of any of this is what some really want to discuss. It's just the slogans. You know: "hack the planet" and all.
I also don't think I'd be really OK with working for a company that told me to do this reverse engineering, but if your morality says differently, then: hey.
Of course badly done reverse engineering can be bad. But that's not because it's reverse engineering; it's because it reaches incorrect conclusions that hurt people, just like not doing any reverse engineering at all. The problem that put people at risk in this case wasn't that Theranos did reverse engineering; it's that they didn't do enough reverse engineering.
No, sure, real reverse engineering is fine.
But when "reverse engineering" is used in the sense Theranos (and/or Holmes' defense team) apparently did -- i.e. tampering with a competitor's machines so they sometimes don't work properly, and passing off the sometimes-invalid results as super-duper hot stuff created by your new and superior WonderTech™ -- then yes, it darn well should be criticized to Hell and back.
Well, better than the relevant standards. Otherwise all the "reverse engineering" -- i.e, tampering -- is fucking meaningless.
If they were taking apart and studying the hardware inside competitors' machines, then that would not have been a problem. It's something which many companies do. But they would not be using this for patient testing, they would use it as input to product development and engineering.
Theranos were modifying the machines to operate outside their design parameters. Medical diagnostic equipment is validated at great expense to operate within given parameters to give a diagnostic result which is known to be accurate with a very high probability. They are carefully calibrated and tested to guarantee the accuracy of every test. Tampering with them makes them invalidated and destroys any guarantee of diagnostic result accuracy. The FDA approval for the equipment is only valid if they are operated as intended.
For this reason there are carve-outs in copyright law where something is illegal except when done for the purpose of reverse engineering; for example, in the US, you have Sega v. Accolade.
After failing to produce their own reagents and hardware, Theranos pivoted to using off-the-shelf Siemens hardware and reagents (purchased through a shell company) and dramatically diluting the blood samples to make good on the "single drop of blood" customer promise.
This would've been an impressive feat of reverse engineering, software eating the world, IF IT WORKED. But it didn't. Results couldn't even pass internal audits and the FDA forced Theranos to invalidate ~1 million test results when they found what was going on.
You'd have to prove to the court that theranos used their bad techniques instead of their good ones.
I am not as optimistic they kept such detailed records of their crimes, and feel this would be a tough angle to successfully prosecute.
https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
I'm not even sure they could be criminally charged for a sham festival since the festival did actually happen. I'd imagine that the whole thing turning out to be a complete wreck would probably be something that could be handled in a civil case.
The above does not excuse fraud. Investors know their investments are risky, but that does not give you permission to deliberately lie or mislead, with an intent to deceive the potential investor.
For example, if you tell investors that you anticipate getting $50M in new contracts over the next year, well, assuming you mean it in good faith, that's not fraud even if it doesn't pan out or was delusional to begin with.
If you tell an investor you just signed a contract for $50M, in order to get them to invest, and that's a total lie, that's fraud. Whether or not the investor did appropriate due diligence to confirm that fact or not, it's still criminal.
On the other hand, perhaps the argument was that investors know there's a risk and know they should be skeptical. It would be unreasonable to expect patients requesting a blood test to be suspicious and question the results.
If you've ever dealt with competent VCs, they are very skeptical, which is why they pretty much ignore your forward looking statements and just look at your current data. And the reason they do that is because forward looking statements can be all kinds of BS, but current data is just facts (unless you're lying about them, in which case it's fraud).
Of course, they also want to know your vision and drive for the future, but they'll basically ignore statements like "We have 10 big deals I'm the pipeline" and just say "How many signed contracts do you have?"
my thoughts exactly. i'm woefully underread on the whole situation but something is weird and different about it.
one thing that does jump to mind is that the investor list and board composition isn't what i'm used to seeing for stem ventures. i can imagine that perhaps they're less forgiving of failure and were operating with more blind trust in company leadership on stem/technology matters.
For those stuck at the end of first day coverage the way I found is: type «from:doratki day 2» in search
I mean, if you could find someone that experience material loss from it, or death, I think they'd have a very legitimate chance to sue. It's not clear to me what promises Walgreen's is actually making though.
Who knows how long the scam would have continued without him, and how many more people would have gotten bogus test results.
If Tiger Woods can get a presidential medal of freedom for playing golf, it seems like it's the least they could do for Carreyrou.
If Theranos still existed as a company, it would doubtless be getting buried under a blizzard of charges relating to how Theranos, the company, treated their patients. One of several reasons why Theranos the company no longer exists.
Unless the word "really" is doing some heavy lifting here, this is incorrect. There were multiple counts directly and specifically related to defrauding patients. These counts came back not guilty, but they were, in fact, charged, and customers testified in court in support of these charges.
I have to think, though, that the fact that it was such an odd charge in relation to patients, had a part in why those charges didn't stick. I think wire fraud in relation to investors succeeded because it was a much more accurate description of the act involved. But you're correct, some of the counts that didn't stick were wire fraud related to patients.
Theranos tests gave some inaccurate results, but the defense will say Traditional blood tests can be wrong as well. This devolves into statistical evaluation of the methods used for testing, e.g. if the standard test is 99.9 what was the Theranos result?
This is a huge mess, and why the pragmatic charge was financial fraud.
The lies to patients and investors were quite well linked anyway, if you want to think about it like that.
The lies told to patients and fraudulent test results could be (and were) denied by saying she wasn't aware of what was happening in the labs.
It's not that investors are more important in the eyes of the law or that patients weren't lied to, it's about the quality of the evidence available. Her not guilty verdicts do not mean she's innocent, simply that there wasn't enough evidence available to convince a jury.
Being found guilty of defrauding investors in that light is easy because Holmes did specific acts, such as basically saying "we're endorsed by $BIG_PHARMA" knowing that they weren't, as part of her investor pitch--that's a pretty unambiguous traceable injury. But tracing anything she herself said to getting a random schmoe on the street to take a blood test... again, if you think fraud requires that specific act, it's not hard to see why someone would vote not guilty there.
Of course, I would still have liked to see her proclaimed guilty on fraud for the test results. But as abhorrent as her actions may have been, they may not have necessarily climbed the bar into illegality.
Imagine that, rather than the CEO making shit up, the case was about a lowly lab technician who faked results out of laziness or recklessness. Even though his fraud ultimately impacted the patients, he would probably still get convicted for defrauding his boss or the company he directly worked for, not the patients he never met or knew.
If your client was a wealthy person or large corporation and you knowingly lied to them about the performance of your product or service which caused them damages, would you get charged?
Ultimately, does this mean that the next fraudster will get away with it as long as they keep their investors in the loop about the lies?
The law really is weighted in favor of investors.
https://www.reuters.com/business/judge-tosses-deal-shielding...
But when it's the CEO who does it, doesn't she do both? I mean, those individuals who get the fake test results are also members of the general public.
https://www.cnbc.com/2021/11/17/theranos-patient-says-blood-...
Fun fact: In some places like Singapore you don't even get the chance to test again to verify the result, you just serve your time in quarantine and then get back your "safe" status.
I don't think it's for the best, it ignores any other medical conditions and offers no way to double check a result that could come from a dodgy test center.
Whereas Theranos' newfangled secret "innovation" was ... well, a secret throughout.
But even with the established PCR tests and with all the theatre around it, I doubt that this quantity of testing is being performed up to the highest standards and there are a bunch of "entrepreneurs" in this space too who may benefit from little supervision or consequences.
In this case the people claiming COVID PCR tests were bogus were right. The US CDC has now admitted it. They recently changed their testing rules to stop PCR testing people at the end of their self isolation period because PCR tests can stay positive for up to 12 weeks whilst being clinical false positives, and thus (Rochelle Walensky's words) "we would have people in isolation for a very long time if we were relying on PCRs" [1]. Nothing changed to prompt this - no new science or discovery or anything like that. They just suddenly noticed something that random bloggers knew in April 2020: that COVID PCR positives don't imply you're infectious. Also note the use of the word "would" and not "did"; apparently she's in denial about what happened here.
There are lots of other issues with them beyond the cold positive problems of course. In theory PCR tests are precise because they triangulate the presence of at least three genes. In the beginning that's what they looked for. Over time that's slipped and they're now routinely reporting PCR tests as positive if they only detect a single gene. I took a PCR last week where the certificate stated outright they only looked for one gene.
This crops up in other ways. To detect Omicron, they were taking PCR tests that failed to trigger on one gene (thus technically should have been classed as negative) and then treated them as positives, being sent for sequencing to determine if they were Omicron or not. But only samples with Ct <= 30 were sent. They use this threshold when normally even 40 is accepted to be a positive (Ct is log scale so 40 is a very tiny level of detection compared to 30) because it turns out any sample that triggers over 30 is so destroyed it's unsequenceable. They can't even find enough viable virus to know what it is. That doesn't stop them classifying such samples as "infectious and must self isolate" normally, though.
And all that's before you even get to the cause/effect confusion the tests represent.
No, COVID PCR testing is a mess. The only reason Holmes is a convict and those guys aren't is that Holmes wanted to be the next Steve Jobs, so she worked entirely in the private sector. If she'd been selling COVID stuff to the government she'd have been fine, even doing the same things.
[1] https://abcnews.go.com/Health/live-updates/coronavirus/?id=8...
There was a scammy company is Sweden that wrote everyone negative covid results, without actually bothering to analyze the samples:
https://www.euractiv.com/section/politics/short_news/swedish...
Yup - https://www.businessinsider.com/theranos-gets-fda-approval-2...
Maybe it's just me, but with all the anti-consumer practices going on, it doesn't surprise me in the least. Gotta protect those profits.
In my own mind, the test result fraud is far worse ethically - however as long as she is locked up, it still works.
There is obviously a culture issue with "white collar" crime and a large hole in most countries ability to correctly police what is and isn't acceptable. There are also questions around "business secrets" and how these were used to justify a lack of scrutiny or due-diligence.
Not excusing it. But maybe the jurors think the doctors and/or insurance companies ordered/interpreted these tests have some responsibilities too?
But it's not the army, they could refuse, they all did the tests and gave the false results back to humans, which is unfathomable in healthcare. She s eventually responsible but her job was on investor relationship.
Officers are not only allowed to, but required to, refuse illegal orders in the Army. Enlisted troops are allowed the "just following orders" excuse, but not officers who should know better.
Within certain bounds; even enlisted can be convicted of crimes for following palpably unlawful orders.
I can’t find details of the specific wire fraud charges that she was found guilty of, but it is far easier to find and prove technical breeches of law (documents showing X was claimed to investors to obtain money when other documents show it wasn’t true) than proving intent or knowledge by the accused beforehand.
Could I have gotten out of it? Sure. Could I have gotten out of it without lying under oath? I don't see how.
Exactly. This is the exact opposite of the justice I'd expect.
Invest money? Expect to lose it most of the time, that's the game.
Pay for a service? There should be an expectation of honest delivery of said service.
Patients who were wronged by the company did get screwed though. Such is the nature of trials by jury sometimes the jury doesn’t come through.
If the patients were still getting correct results (I assume they were still being tested, but in traditional ways) then it makes sense that they were not being scammed
The patient's state of mind, e.g., their expectations, is not an element of wire fraud. Only Holmes' state of mind is relevant; specifically, her intent.
https://sgp.fas.org/crs/misc/R41930.pdf
"In any event, the question may be more clearly presented in the context of the defendant's intent and the materiality of the deception."
Whether a patient expected that results might be inaccurate, or even whether a "reasonably prudent" person would have expected results might be inaccurate, is not necessarily a defence to wire fraud. Even if such a defence were asserted, the focus would still be on Holmes, her conduct and her intent, not the patient.
If that’s true, it isn’t surprising she wasn’t found guilty for defrauding patients, and more cases (¿maybe one focusing on partners and one focusing on patients?) could follow. I don’t know whether something like that is in the pipeline.
Edit: reading https://en.wikipedia.org/wiki/Elizabeth_Holmes#Criminal_char..., that’s unlikely to happen:
“In February 2020, Holmes's defense requested a federal court to drop all charges against her and her co-defendant Balwani. A federal judge examined the charges and ruled that some charges should be dropped: since the Theranos blood tests were paid for by medical insurance companies, the patients were not deprived of any money or property. Prosecutors would hence not be allowed to argue that doctors and patients were fraud victims. However, the judge kept the 11 charges of wire fraud”
I think that leaves open prosecuting for something else than fraud for knowingly delivering unreliable test results, but wouldn’t know what that “something else” would be.
Theranos had a duty of care to the patients and they very blatantly breached that duty.
Fraud deals with purely financial loss, while negligence deals with harm which is much wider in scope.
So if a company deliberately and knowingly markets a "sepsis-test" that puts out completely random results and leads to people getting their limbs amputated (bear with me, I know the example is terrible), they can only be held responsible for "negligence" by those patients? Or would patients only be able to claim financial loss due to fraudulent loss of work ability and such?
There was similar reporting of those prenatal genetic tests a few days ago (they have led to unnecessary pregnancy abortions due to incorrect results), and I wonder what corrective action we can do to ensure these things don't happen?
Again assuming Wikipedia (https://en.wikipedia.org/wiki/Negligence#Procedure_in_the_Un...) has this right, negligence requires injury (“The United States generally recognizes four elements to a negligence action: duty, breach, proximate causation and injury. A plaintiff who makes a negligence claim must prove all four elements of negligence in order to win his or her case”
“Injury” may have a wider meaning in US law than elsewhere, though. Wikipedia gives me https://en.wikipedia.org/wiki/Personal_injury, which says “Personal injury is a legal term for an injury to the body, mind or emotions, as opposed to an injury to property”, so properties can be injured, too, and https://dictionary.law.com/Default.aspx?selected=1646 sort-of shows that’s a synonym for “property damage”.
I think they might have contracted out tests to real labs which could be fraud but that would be both harder to link to Holmes and potentially defensible. Imagine an alternate world with a Nega-Theranos which actually had machines which worked but were say five percentage points less accurate. Say Nega-Theranos used some patient samples with enough blood that way to check their accuracy in comparison. Technically not the machines they advertised but still done in patient interests.
We don't have a NegaTheranos and there were biophysical and statistical constraints which made the concept flawed from the start (not all blood sources are identical in the person and statistical limitations) . The smart thing to do was not try that method from the start. The ethical thing would be to tell the board and let them decide if they should dissolve the venture or try to pivot to another approach or task. It would be stupidly harder to try to identify the contents of blood non-invasively but actually possible. There are already several insulin only blood scanners in trial or development by multiple companies.
They lied about what test they were doing, and people paid them based on that lie. While the jury here may be correct that that wasn't federal wire fraud by Holmes personally, it absolutely was a fraud by Theranos.
False. Fraud deals with any time in which something of value (not just something financial) is obtained under false pretenses, and (where civil damages or criminal restitution is sought/awarded for it) can address all compensable harms resulting from the misrepresentation, not just loss that was financial in character (the restitution will be financial, of course, but that's also true of negligence.)
I don't know anything about that ruling except what you've quoted from Wikipedia, but didn't many of the patients have to make coinsurance payments for these tests? I just paid a medical bill today with a coinsurance component, and so both I and my insurance carrier have now paid for those medical services.
I also wonder about whether getting people to have a fraudulent medical test (which might cause some amount of pain or anxiety, especially for people who are afraid of needles) could have been a cognizable harm even if they didn't have to pay money to undergo it. But I realize that the law will often distinguish between suffering and losses of tangible property for many purposes.
If I remember right one of the witnesses was a woman who got a false-positive HIV test result, so they probably went for that angle.
If it's easier to prove that someone defrauded investors, then this is what prosecutors will go for.
Side note: I highly recommend subscribing to Matt Levine's newsletter.
[0] https://www.bloomberg.com/opinion/articles/2021-02-03/goldma...
> As I often write, this theory can turn anything bad that a public company does into securities fraud [...] The stock will drop (because the bad things are bad for the company); the shareholders will sue, saying “you said you were good, we believed you, we bought the stock, but you were bad and we lost money.” And so climate change and sexual harassment and lax customer data protections and mistreatment of orcas can all be transmuted into securities fraud.
There's the easy story: "Young, ambitious wunderkind founder falls from grace." And the hard story: "Here's what might be relevant for future founders."
Which would effectively siphon money away from an already hard but critical space.
The jury found Holmes guilty. But she should have been found just as guilty if she'd been running an adtech startup or a crypto company.
If you similarly put people's lives or safety in danger with an AI startup somehow (with enough of a lack of ethics, this might be possible), you too could be eligible to win an all expenses paid vacation.
This had nothing to do with patients though I am sure the patient angle helped underscore the lies to investors.
I.e. what Theranos said "We're testing you using our novel testing systems" vs what Theranos was actually doing "We're testing you using a standard test system"
So, most people who got Theranos tests were lied to, but in a way with a more positive outcome for them.
Often not and which method used wasn't disclosed so test results couldn't be sanitized.
> Who would sign up for that?
Somebody who was lied to.
> and how is that legal or ethical?
It is neither legal or ethical.
> Even if she hadn't been lying these people were gambling their lives
You are exactly correct. People were gambling their lives unwittingly.
My hope is that a precedent is set that you can boast and talk about the future, but claiming something to be true which is patently false should be fraud. I believe that is already the definition of the word fraud, but would be better for all if the legal system enforces that.
1) A reasonable person would understand the statement as fact rather than hyperbole 2) You have objectively not been transformed in your business 3) The problems are caused solely by your understanding of the Salesforce product and not just that you are a bad business owner
So that's why some things sit in the grey area.
And oftentimes, the extra juice gives them enough runway to make things work. Cheaters win, that's the way it is.
> And oftentimes, the extra juice gives them enough runway to make things work.
Above all, it gives you [1] time: To cash out that investment. Sell it to some later bigger sucker who doesn't already know or suspect what you know or suspect, maybe even at some more modest profit -- not making any loss at all! -- in stead of the super-jackpot you'd been hoping for if it were a "unicorn".
Early investors who start to smell a rat don't only lack an incentive to raise the alarm, they have a positive incentive to keep the lid on the story.
___
[1]: The editorial "you", the hypothetical early(ish) investor.
You'd have to prove that Salesforce didn't believe they could transform your business, not that they didn't do the transformation.
Something like "perform n lab tests with a single drop of blood" is a very specific claim.
"This product will revolutionize the industry", "We are going to disrupt X", etc. is usually BS, based on irrational optimism about the future. Of course, in the unlikely case that it comes true, they will say you "had vision"
"I have a working prototype, and if you give me $Xmm we'll productize it". If you don't in fact have a working prototype, this is fraud.
The former is an optimistic projection of demand. It's not a lie if it turns out not to be true, since it's a prediction. The latter is a lie: it's telling somebody something that is objectively and unambiguously false.
And she insulated herself from scrutiny by packing the board with old powerful men. So old that their critical thinking skills were on the decline (e.g. George Schultz, as described in Carreyrou's book), and whose expertise was NOT in the relevant subject areas.
Holmes was obviously corrupt from the beginning.
I imagine this may also have clouded their judgement.
I remember first hearing about Theranos in the New Yorker profile of Holmes. The presence of Schultz, Kissinger and other non-scientist powerful old men struck me as extremely odd at the time. And given her youth and appearance, it is impossible not to speculate about her effect on them, intentional or not.
Also, the book made it very clear that Schultz's judgement was clouded by personal feelings. He blew up his relationship with his grandson over his defense of Holmes; the grandson saw what was going on.
The company literally tells them the hardware is there, it's "only" missing the software.
Like, what's a robot worth without the undeveloped software.
Wow! That's interesting! While nobody has been paying attention, forward-looking patents have become acceptable (I don't agree that this is a good thing). Seriously, that's a fact; and here comes Holmes apparently claiming to have the science, am I right? There is language which apparently (IANAL) needs to be watched especially around verb tense when filing such patents.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3202493
One of the harmful externalities of the practice is that when incorrect / impossible prophetic claims are made (and they are), they negatively impact the progress of science since they are generally presumed to be true and so might be used to refute a legitimate science or technical claim.
I really don't see the line being repositioned at all because typical founder bs and Holme's fraud have a clear difference:
- bs is often overinflated promises of the _future_ that don't come true ; E.g. Musk overpromises fully-self-driving cars next year blah blah blah
- fraud is often lying about the _past_ with falsified documents etc. E.g. Holmes deliberately fabricated "military contracts" that didn't exist and forged papers with supposed Pfizer endorsements to trick investors to wire money. Likewise, Madoff faked the so-called fund's audited statements showing profitable trades. Therefore, convictions of wire fraud charges are easier to prosecute.
Holme's guilty convictions really have no relevance to the pie-in-the-sky overconfidence of founders. Therefore, unrealistic projections will continue to be made.
Is there any credible evidence showing Elon Musk falsified documents and fabricated income to trick investors into SpaceX/Tesla?
I think some of the grey area with Musk is the marketing of the product, like terming it "autopilot" which has a very specific connotation in the public perception. I'm granting that's not fraud in the same sense as the Theranos case, but I think it (probably deliberately) walks into a grey area of ethics. I think the damage claim is readily apparent but the intentional claim may be more difficult, in part because I don’t think there is a standardized definition of “autopilot”, even if it knowingly means something specific to the general public.
If I create an EV model named the "ThousandMiler" but put an asterisk in the manual that says it's only capable of 500 miles, maybe that's not fraud but it's skirting the line.
I always wonder do they really are overconfident, or are they so because somehow they think they would miss opportunities if they are less overconfident than their competitors ?
It sounds much like advertising always selling you things using very ambiguous wording in order to make you dream. For me that's just lying.
An optimism bias leads naive project managers to gauge cost and schedule on best case scenarios. Less naive managers then have to give equally optimistic projections, just to have a hope of getting funded even if they know the projections are wrong.
I don't think thats quite correct.
Holmes committed fraud, the part that seemed to sink her was attaching other company's names to literature.
However most of us would have assumed the bit that _should_ have nailed her and a lot of the executive committee is the industrial fraud of individual, vulnerable patients.
THeranos was only able to commit this fraud because of the breathless, non critical PR pumped out by tech "journalism"
Honestly, these founders are crap. I met a lot of different types of founders, there are a lot of snake oil sellers out there, and then there are the good ones. I'm willing to bet that nothing good came out of the snake oil sellers.
I think the FSD research Tesla is doing is interesting, but man I would rather all of that money gone into a carbon fiber roof or something on my model 3 instead!
Theranos would be if JWST took taxpayer dollars and launched a non working telescope and sent back fake images.
Tesla with FSD is a lot more like the JWST being delayed, or perhaps if they launched a stripped down version to space and then delayed the real thing.
It would be fraud if internally they knew FSD was not possible on their hardware but they continued advertising that it was (I'm not suggesting this is the case, just saying there is a world where Tesla's FSD claims are fraud)
I agree that Elon's timeline's are absolute BS. My perspective on his timelines are that they are almost meant more for his employees (throughout all his companies) to try and shorten the time it takes to 'achieve the impossible'. For example, something that most industry folks would think will take 20-30 years (or is feasibly impossible ie. reusable rockets), Elon gives a 5 year timeline and his team actually gets it done in 10 -- still less time than anyone thought possible.
I'm excited to see what kind of progress is made on FSD once the DOJO supercomputer is built out and put to work (another item with an unrealistic timeline, I've no doubt).
Just my two cents. Enjoy your Model 3!
No one realistically thought reusable rockets were impossible or even infeasible. Reusable rockets trade lift capacity for reusability. A single-use Falcon 9 lifts more than a reusable one because it can use all the fuel in the first stage for lift saving nothing for landing. Keep in mind the Space Shuttle (a reusable rocket) had been flying for thirty years before Space X landed a Falcon 9.
Space X has done cool things but they are iterative developments. Tesla didn't invent electric cars or do something impossible, they iterated on existing technologies. They, like Space X, have happily and readily accepted every government subsidy dollar they're remotely qualified to receive. All while Musk is bitching about paying taxes.
Not addressing the point of my comment here ^, but why didn't anyone else do it if it was feasible and possible? And how long would it have taken an agency like NASA to actually start and complete the project?
> Keep in mind the Space Shuttle (a reusable rocket) had been flying for thirty years before Space X landed a Falcon 9.
Wasn't the space shuttle a glider with rockets strapped to the bottom? It was not a reusable rocket, it was a reusable shuttle.
> Space X has done cool things but they are iterative developments. Well, everything in the human existence is an iterative development, so I don't understand what you're trying to say other than to downplay other peoples' accomplishments.
https://youtu.be/mY-fSnKTLqw?t=111 <-- anyone could do it if they felt like it, right?
The fuel is quite cheap compared to the rocket that burns it.
Because their customers didn't need it. The medium lift space only has a few players because there's not a huge number of customers. In heavy lift there's even fewer customers.
The established players had legacy expendable stacks with a proven flight history. There was no incentive to redesign their systems to be reusable and then start fresh with a flight record.
> And how long would it have taken an agency like NASA to actually start and complete the project?
SpaceX has gotten considerable amounts of money from NASA to develop the Falcon 9. Even the video you shared is SpaceX landing their rockets at a NASA facility. SpaceX is essentially a NASA subcontractor developing a reusable rocket. So the answer to your question is whatever amount of time it's taken SpaceX to develop the reusable Falcon 9.
Like I said, SpaceX has done some cool things. I'm not trying to take away from their real accomplishments. But there's some ridiculous fanboy shit around Musk and his companies. He's done a good job of publicizing his companies' accomplishments and people seem to jump to a conclusion that they just invented concepts whole cloth that could have never existed without some magic.
With this, we can imagine scenarios that would be comparable for a Tesla, or any othet tech startup. It seems relatively safe to say that Tesla's FSD doesn't just pipe out the computation to a competitor or something, so by this thought experiment, it at least has that going for it.
There's moonshot, and then there is farce. Theranos was farcical, but someone might do it some day. Tesla, at the very least, still has chances to deliver.
Meanwhile Theranos bloodtests suffer from scientific impossibility: you can't get information from where there is none. And when the information is sparse, you'll have to spend greater entropy to get it (versus the tiny machine that theranos built).
Wish I had gone big on this one earlier, because I have a feeling this verdict is going to spice things up in the short term.
All that to be said, if you've got any authentic Theranos gear hiding in storage please do let me know, I'm a motivated buyer.
For those curious as one example: Nothing raises a few eyebrows more than a note written on Lehman Brothers letterhead with a Purdue Pharma OxyContin pen with the dosage pullout.
At first I read 'worth in the hundreds of thousands' and I was really curious what garnered such value. Language ambiguity is fun.
Like you, I collect fucked/defunct company merch, tho my collection isn’t just fraud related, I’ve got Quibi merch — most of it is. I’ve got MoviePass, Fyre Festival legit merch with tags, Ozy Media was a recent one, Enron business cards, Arthur Andersen tote bags, Worldcom mugs, etc. I’ve even got some old Internet Explorer merch, because it’s kitsch!
What is your favorite piece?
Also, have you seen The Booksellers?
It took me a while to realize I was collecting books. Before, the way I thought of it was "I would never walk past an out-of-print book about computing history! I might never come across it again!" But now I am a bit more focused on the collection aspect, for example, there are now specific titles and authors that I seek out.
I've seen a lot of Pawn Stars in the past six months. They never say this, but you can put it together. Most things that people collect trade in low volumes, so pricing is hard, and the bid/ask spread kills you. If you decide to sell, you'll either get 70% of the value if you sell it fast, or maybe 100% if you're ready to wait two years. If you want to liquidate everything, it might depress the market. There's also a discount when you have it as a collection because someone could part it out, but that's even more time. That, and the drive to collect is building the collection, so there's less utility in getting an instant collection.
As a collector of memorabilia for a band that's been around a while: The items I was drawn to, either because I just loved the look or because they were from a show/tour/album I particularly found special, have often turned out to be the ones that have appreciated much more in value than the average thing of that level of rarity for the band.
But it sure does make me nostalgic!
https://www.ebay.com/b/CueCat-POS-Barcode-Scanners/46706/bn_...
Even some cases of 100 for $500.
Hey OP, I got a Theranos-branded mug I can drop-ship you from Alibaba. $800 OBO
I’d think the only way is to be the original owner (ie proof of employment at the company), but even then, given such a hot marketplace it would be super easy to just purchase and resell knockoffs.
The same way they do it with art ... research.
With say a sweatshirt produced by a third party based on some digital stencil art, do you know for sure the one you're receiving was printed by the company and given to an employee/customer? Literally hundreds, possibly thousands would be in circulation. How would you be able to distinguish that from say something a former employee w/ access to the original art data having it reprinted?
I think that's part of the fun, hunting for the original stuff.
Would you be interested in an unreleased "Cosby Show" lego set that was supposed to come out right before he got cancelled?
0: https://www.cnn.com/2015/07/07/us/bill-cosby-quaaludes-sexua...
But I actually meant "literally" cancelled. The Lego set was planned to come out with an actual REBOOT of the Cosby Show, which was cancelled in the traditional meaning of the word, like the TV did not go to air.
https://tvseriesfinale.com/tv-show/nbc-kills-new-bill-cosby-....
If that was the intent, it was a pretty big mistake to use “before he got cancelled” instead of “before the show got cancelled”. The former construct in modern usage is pretty exclusively used for pejorative references to actions attributed to “cancel culture”.
That was the meaning before “cancel culture” and was the intent of the parent.
I didn’t at all read it the way you did, maybe I’m older than you and I’ve seen more shows cancelled. (Firefly, for a famous enough example)
The discussion about disgraced-public-figure memorabilia was certainly offtopic, but it was offtopic in a whimsical and unpredictable way. That's ok on HN because it's interesting. What's not interesting, and is the bad kind of offtopicness, is turning the thread into a generic argument about some inflammatory thing that has already had countless flamewars. If you review https://news.ycombinator.com/newsguidelines.html, you'll see that we have several rules that are intended to act as flame retardant against this kind of thing:
"Eschew flamebait. Avoid unrelated controversies and generic tangents."
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
"Please don't pick the most provocative thing in an article or post to complain about in the thread. Find something interesting to respond to instead."
The high-indignation, high-repetition flamewar topics are like black holes that suck in threads that swerve too close to them. Since they're so repetitive (and generally so nasty), they're definitely not what HN is for, so we should all try to steer clear of them.
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
Can't tell if serious. If serious, was this out of Lego Ideas (Cuusoo)? [I worked on the Back to the Future DeLorean set with the designers in Denmark]
Worth anything?
Very very very curious of the text contained within.
I would not be interested in authentic Theranos swag, but I would pay a lot for a new knockoff mock turtleneck with the old MPlayer logo on it. Now I can't even find the old MPlayer logo anymore.
I worked for a "hot" a16z startup just out of college, with a trendy office and the :rocket: :moon: vibe. They went under a few years after I bailed, but I still wear the t-shirt because it makes me chuckle.
In a strange twist of fate, I decided to exercise my few options, and I had to mail my stock exercise notice to some place with a check for ~$2500 to purchase them. USPS lost the letter and saved me $2500.
For the longest time the historical Vancouver stock exchange, vsx, was known as something like the fraud capital of North America.
All of that is before we even get into the ugly history of some Canadian mining companies that have got into bed with non-democratic regimes in places in the developing world, where they did actually have a real mineral resource to extract, and damn the consequences.
" ...one of the five women who considered themselves his wife... "
This is some serious drama. Have you got any reading you can recommend on the topic? I recently bought "The Prize" to catch up on my oil & gas history, perhaps there is a sibling book for minerals?
It would be trivial to prove you worked at a company if that's how you were given it, you might even have photos of an event where stuff was given out, emails detailing a "welcome pack", I'm guessing it's these sort of things that are used as proof.
[*from What We Do In The Shadows]
https://www.apmex.com/product/50847/enron-corp-stock-certifi...
Also I love that website. As a recent casual collector of paper currency. I never thought to buy some old stocks/bonds.
Edit: it’d be hilarious I’d the Enron stock was fake
That's a really cool collection! I always find it interesting to learn what obscure things folks collect.
> any authentic Theranos gear
How do you tell if it's authentic? If I was a collector in this area, my big concern would be that especially given that the market is hot, someone could just look on ebay for images of branded products, and then make replicas of them by passing the same logo onto promotional printers.
And rip offs will often have subpar artwork obviously not using original AI/EPS files.
A buddy of mine has a similar fascination with picking things up from defunct companies, specializing in film/video post production companies. One of the items he picked up was a standard banker's box. Inside were a pile of CD-Rs which turned out to be the entire digital back up of an unfinished 3D animated feature. The entire recordings of the actor's lines. The 3D objects, scenes, etc to an unknown level of completeness. Even though the work product was purchased from the bankruptcy auction, the copyright was still owned by the creators and could not be rendered/released just because they bought a box in auction for $20.
Does the first-sale doctrine not apply here?
I was curious. My ebay search for "theranos" turned up 50 items. There were fleece jackets with high asking prices, so that certainly was something. But everything else I saw for mugs and hats and t-shirts was in the $20-50 range.
Seems like plenty of new things not collectors items.
In my totally arbitrary set of rules the item must have been available or given to employees only.
Here’s one I’d love to get my hands on if not for the price: https://www.ebay.com/itm/255014966170?hash=item3b6013939a:g:...
The Lehman Brothers risk management/principles cube was a hot seller for a while, but I'm curious as to long term valuations. Thought the art collection didn't actually do that well on resale.
(Hmm... might as well fabricate the collectibles themselves, as some other commenters have suggested...)
That sounds hilarious, can you post a picture?
Had free reign throughout the facility for two days, scavenging through 200k sqft+ of warehouse, marveling at the cringey pseudo-motivational blather posted everywhere and grabbing whatever could fit into my apartment at the time. At one point, we spotted Holmes (and her "special needs" Siberian Husky puppy who left dribbles of urine on the warehouse floor) arguing with some operators from afar.
We weren't allowed to touch specific computers, chemicals or any hardware locked in the cages (incl Edison devices), but everything else was up for grabs, from high-end Mitutoyo measuring tools to Aeron chairs to U-Line desks, Theranos bumper stickers, water bottles, etc etc etc.
So yeah, I've got a few bits of Theranos branded gear... Still waiting on the right time to sell.
I like hubris branding for the same (mythical) reason Canadian engineers do iron rings [0]: so that maybe when I'm waivering on an important decision, I'll look down at the logo on my coffee cup and remember that some things are more important than immediate professional gratification.
I have a friend who is cousins with Elizabeth Holmes. His mom was her first investor and she has the original stock certificates... They're planning on turning them into NFT's and selling them.
Pretty amazing.
It is not pure SaaS companies either, in the EV/self-driving space we have outright frauds like Nikola rolled a truck downhill to make the video and were public at $8 Billion. Others like Rivian/ tuSimple are definitely are not going to meet the projections in sales and plans they have published. Tesla constantly says a lot of things they never delivery or deliver much later than promised.
All the time? No.
They may have nothing / not much yet… but you know that investing and generally their products are very “doable”. Online focused cleaning service for example… it’s a crud app, maybe they don’t get users and fail, but the service was doable.
Theranos claimed to already do the magic thing with blood (many tests with very little blood) that they simply could not do and never did.
Big difference is Theranos lied about what the could do. Rando start up who is honest that they don’t yet do the thing, no big deal.
You can take money and have nothing… fail, but if you’re honest it’s not fraud.
Sales people lie all the time and make claims about features that don't exist, often because the company has other priorities not because they are 'impossible' - but again, that doesn't really matter either.
It's a tactic used by salespeople to get the company to rally around a feature or set of features.
It's very common.
You have to ask yourself how that is not prosecuted as being illegal.
https://www.nytimes.com/live/2022/01/03/technology/elizabeth...
This might be because Saturday in Hindi and other Indian languages is “sunny-var”, and the day of the week you are born on is a common nickname, in conjunction with “sunny” being an easy to pronounce and common English word.
I feel cheated. I got my nickname because my baby sister couldn't pronounce my name correctly.
From what I understand, the reasons for picking nicknames are quite random. As another commenter mentioned, people named Sunil or Sanjeev go by Sunny sometimes, although other times it is just picked out of the blue, like with Bollywood actor Sunny Deol, whose real name is Ajay. His brother Vijay uses the screen name Bobby, by the way. Random.
Sometime people named Sunil, such as the cricketer Sunil Gavaskar, use Sunny as a nickname.
https://variety.com/2021/film/news/jennifer-lawrence-elizabe...
[1] In this context to take meaning as knowledge, not meaning "not guilty" here.
If Reddit included those sock-puppet users in their metrics to investors, then that would be roughly equivalent fraud.
This was about the wealthy investors. They will come after you whether you fake medical devices or bombs.
All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of.
I don't think so. I think there were very powerful investors and others associated with the company (like board members) who were stung and embarrassed.
> SaaS and consumer tech startup founders lie and cheat and blow up investor money every day and no one really cares.
Do you have any roughly equivalent examples on the scale of the fraud and the people associated?
> All the wealthy investors gain nothing from Holmes going to jail. In fact the lengthy trial only drags them into the spotlight, which they'd rather stay clear of.
I disagree with this too. It's a good way to clear their names as it were ("we aren't greedy gullible idiots, she tricked us"), and a great way to send a message not to cross the ruling class.
In any case I'm not sure how the comment addresses what I wrote.
It didn't mean literally lying about your capabilities or accomplishments in order to garner more investment money.
That's not "fake it till you make it". That's just fraud. It's not really hard to distinguish between the two, despite the way some people are trying to merge the two definitions.
A coworker was using a mobile app from a startup offering to do "receipt OCR using AI/ML" when in fact they were sending most of the scanned pictures to a call-center in India to be manually entered. They hadn't yet figured out the fancy image recognition algorithm, so they were just throwing AWS Mechanical Turk at it while building up a user base. Realistically, they might never get to that level of AI while staying solvent.
That's not so different ethically to what Theranos was doing. The only difference with Theranos is the scale of it all.
The second, and more important, question is, are they harming customers. Theranus gave people unreliable blood test results and lied about their reliability. That does actual harm to customers. Whereas for scanning receipts the only thing a customer really cares about is accuracy.
No. One is we know we can do OCR, we know we can do AI, it's just an engineering effort to put those pieces together. The risk is schedule risk.
Theranos was hard science. They did not know if they could do what they fraudulently claimed they had already done. They needed scientific discoveries to deliver. The risk was can the necessary technology be invented.
The line around fraud is really not that gray. If you're lying about current facts for personal gain, that's fraud. You can hype all you want about the future, and most VCs are actually fine with you selling them the "yeah, it's hamster wheels in the backend now, but just wait until we build out our tech and scale!" line (just see all the well funded "AI" startups that just have legions of people "training" the AI), but if you say that it's the whizbang tech right now, but it's really just hamster wheels, that's fraud.
Fraud is not just an extension of "aggressive selling".
I'm not sure this is true. She told a lot of egregious lies to investors while trying to get money from them. She repeated those lies in the press and to anyone who questioned it. And I don't mean a lie like lying that your product is more effective than it is. I mean she told prospective investors about huge contracts with the defense department that did not exist. She told investors that her machines were being use in the battle field. These were lies that were never going to be true.
She said it was being trialed by the military, in reality what had happened was Mattis said he would be able to introduce the technology to the military. This type of "abstraction" is in very many pitches I've read over the years.
[1]https://www.youtube.com/c/LawyerYouKnow [2]https://www.youtube.com/channel/UCOShJ_GPEegXscrlKWfpwCA [3]https://www.youtube.com/channel/UCiWXvA_5bzvOFdbS353Ll-Q [4]https://www.youtube.com/channel/UCwCqasesYi60fSrOjlUSNzg
That's not an "abstraction". It's a lie, and therefore fraudulent.
If you're seeing these sort of lies all over the place, you might be in a weird bubble. Startups are known for creative wordplay, but if you're straight up lying about something happening when it's not happening at all or even started, that's fraud.
Surely there would be a contract with the military if that was the claim and surely these investors did due diligence and audited the contracts, nobody would ever get wrapped up in the hysteria and hype and burn a billion dollars…
tbqh, I came away from the trial really feeling like the investors who testified against her deserved what they got because of how they approached the situation. IMO Elizabeth Holms isn't some mastermind manipulator, she's more akin to a child who was enabled by moronic parents.
I think the crucial distinction between a slight stretch like you describe and what Holmes did is the tense: the military is going to test our product vs. the military is testing our product (which did not, uh, exactly exist then). One is a rosy forecast and the other is just a lie.
But as I understood it, that's not what she said. Your phrasing is about the future, i.e. something nobody can know at the time it is being said whether it will come true or not. Therefore, something anyone with the least bit of common sense would think "Yeah, let's hope that will happen" about.
Completely different than saying "the military is running / has run a test with our equipment". That's a statement of actual ongoing or concluded fact. If it actually is happening or has happened when you say it is happening or has happened, then you're telling the truth; if it isn't / hasn't, then it's a lie.
From what I gather, what she said was the latter -- but it never actually happened: So, a lie. Said with intent to induce people to give her money: So, fraud.
That's pretty far from a fair summary. Mattis made the introduction, Holmes could not get past the initial military diligence, and killed the project, and yet years later continued to represent that it was an important part of Theranos' business, to add an imprimatur of success and reliability of the testing.
Nice of you to use quote marks... Because that's not at all what "abstraction" means.
Citation needed. The whole concept has a critical flaw, as pointed out by her engineering staff and medical advisors: blood tests require a certain minimum volume of blood to work, and that's inescapable because blood components are discrete, not continuous.
For example, a drop of blood is about .05mL, or about 1/20th of a milliliter. A common testing sample size in a normal lab is 3mL, or about 60x larger what Theranos claimed they could work with. Now, suppose you're testing for some cell that's may be present in concentrations of 10 per mL, or 1 per .1mL blood volume on average. In a conventional lab, then, you'd probably have about 30 of those in the 3mL sample. In a Theranos lab, even if it worked perfectly, you're equally likely to have either 0 or 1 present in the .05mL sample. In other words, you're 50% likely to get a false negative, even if the equipment is working perfectly, based purely on the tiny sample volume.
By analogy, if you poll 100,000,000 Americans, you might get a pretty good idea of an election's result. If you poll 3, you have no idea, even if the poll is perfectly designed. Well, that's what Theranos was up against.
NB: I'm not a lab tech, and the above is my understanding of it. That's my distillation of a lot of articles I read about Theranos, such as https://theconversation.com/the-rise-and-fall-of-theranos-so... .
Of course, like everything it could be biased by the used methodology.
Maybe not quite as extravagant a claim as hers, hers was def a 100 year vision, but many people are working on and having progress in a very similar area. Heck even Tyler Shultz the kid who is on the road doing a press tour about how "he took down Theranos", is working on a Theranos-esq startup.
EDIT: And my favorite part is the first step the Siemens machines they used for testing is to "dilute" the part of the sample it is going to use (addition of DI water, to get the blood to the desired concentration). That is hard-coded into the protocol, with a specific dilution amount, and it is done for all the official Siemens tests, as well, hah.
> Holmes described the miniLab as “the most important thing humanity has ever built”. But at best, the lab could do immunoassays using microfluidics. The tiny blood sample had to be diluted extensively (for which there are no reference standards or precedents), leading to artefacts and spurious results.
That (and other reports) sound like they diluted way more than usual.
1. The premise assumes there are not significant wastage in the current processes and those are near optimal. Any non optimal paths could potentially benefit from improvements
2. While there are some tests at that low concentrations not all tests have components at that low concentrations. Those could certainly be improved ?
3. Reuse and cross testing the same samples, or testing for multiple things at the same time etc, are all areas that could yield better outcomes than current standard.
4. Perhaps it is also possible that while primary marker for a test is not present in the sample, its presence in the blood could have left other markers that are detectable
I don't know anything about lab testing, if I can think of few approaches to solution for the low sample problem. Experts may have many other approaches so it shouldn't be surprising if there are improvements claimed ?
If I falsely claim to have invented a warp drive, I don't get credit for whatever work people do in that area in the future.
Holmes was an agent to energize the industry in the sense that she was instrument to attracting a lot of new VC investors willing to throw money and experiment with new tech like this . I doubt she personally claimed to have invented anything new, even had Theranos succeeded her claim to fame would be only building the organization that enabled such innovation and not the innovation itself.
Even though Theranos failed as firm, a lot of smart people got funding to work on interesting projects while there and potentially either developed or started developing products because of holmes being able keep them and Theranos funded. A lot of new people are getting funding, because Theranos and Holmes opened this industry to VC funding when it was not traditionally so.
To your example, if you falsely claim to invent a warp drive, raise a lot of money, hire a lot of smart people who do interesting work while working for you, eventually fail as company and those people go on to build parts of the drive partly with experience they gained in your research. This kind of research was not well funded before you, Likely without you this would have never been a VC funded industry don't you have some hand in that ?
Also, Holmes's lies sucked up a ton of funding at the time. Not just the money given to her, but the investors who said "theranos already dominates blood testing, so we'll invest in another space"
This was a disaster all around for everyone but her.
I don't know how you can say that, some of the trial evidence was heart breaking. Some of the emails, the texts back and forth between her and Sunny, what a mess, it sounded like she was totally losing her mind and stressed out to no end while being pushed and cajole by an unreasonably intense person behind the scenes. She was clearly devastated when the company collapsed, she very clearly believed in what she was doing, and now she is going to jail. That sound like beyond a disaster, it sounds like hell.
She's a human being and it is a sad situation. But this is justice.
A mL of water has ~10^22 water molecules in it. Dilute substances are usually measured in ppm (parts per million). Even 1 ppm would have 10^16 molecules. I think your orders of magnitude are way off here.
Hard disagree on that one.
It's certainly not common nor acceptable to knowingly lie to investors like Holmes did.
There is nothing normal or common about the type of fraud that Holmes perpetuated, despite attempts to downplay or normalize it.
> I'm sure it's going to be an unpopular opinion but personally if this is the new standard, the SEC should have a pretty long list of founders to try at this standard.
Can you name a single one? Or is this just cynical speculation?
I've seen a lot of attempts to downplay Theranos' blatant fraud as an "everybody does it", but I haven't seen anyone calling out other companies who were caught committing fraud and everyone, including their investors, just shrugged it off. It's not normal.
But I agree with the other responder, I've also been in many startups and have certainly seen tons of exaggerations about the future but never outright lies about the present that Holmes was guilty of. Even worse, if you're going to lie about the present, you should at least have strong confidence your lie is physically possible - Theranos tech was always a sham from day 1.
I just don't buy at all the "everyone in Silicon Valley does it" spiel, because if they did, investors of failed startups (i.e. the majority) would have tons of reasons to sue and put people in jail.
> "The saddest thing of it all to me is that she was onto something, people are having success with her ideas today."
This is a very poorly informed statement. Who bought the valuable IP that Theranos spent hundreds of millions of dollars developing? No one is "having success with her ideas" because the ideas didn't exist. That's why she's going to prison
As a participant in the startup investment world you are willing Participant of SUSPENSION OF DISBELIEF. This is roughly equivalent speak for REALITY DISTORTION FIELD. The point is you as an investor are a willing participant in believing that something more is possible than what has already been achieved.
If you're a founder: you should be worried about being held to a legal standard of the representations and warranties. That section is in every share purchase agreement and it's the stuff that gets you sued. And sometimes, like in this case, it's WIRE FRAUD and it's criminal. Crazy. We need another section to replace REPS AND WARRANTIES.
Ain't that the truth. Hand on heart: the number of decks I saw last year that have an INSANE 2 page legal disclaimer at the start AND finish of the deck is up ~90%, ninety percent. I knew people who used this as a signal of an inexperienced founder, over night it's the signal of an experienced founder.
You might be able to consider that a pivot, since she had been saying "drop of blood" the whole time.
It was Holmes' unwavering attitude to imitate Steve Jobs that got in the way of her decisions, and I think more than a pivot of product, that a pivot away from this ideology could have saved Theranos. Willingness to give up on perfect design in order to acquire a working engineered product could have made a world of a difference.
https://www.wired.com/2016/08/theranos-chance-clear-name-ins...
I don't really blame folks for not calling it out as a fraud at that point, given how little information we had. There were, for what it's worth, a number of people who complained about the ambiguity of the website. But many were convinced that the illustrious board must mean good results.
Well done to medman77 who had the most direct rebuke: "The company is all hot air. They have a board full of retired military figure heads that have no experience in medical devices or retail services. Additionally, they do not have any products to show. Look at their patents. They are all very general and broad. There has been NO FDA CLEARANCE for anything they are doing, which raises legal questions. Speaking of legal, search for lawsuits they are involved in. Their core technology is not even theirs. They stole it from someone else."
medman77 did crush it with actual technical analysis, among others. now I want to go back and see what hn said about other famous companies
Basically, barring any miraculous discovery, it was all bullshit and Theranos did not seem to have anyone on their roster capable of delivering a miraculous discovery.
But the board being extra stacked with political power was also seen as a blatant attempt to deflect from not having anything real to show in their product.
> So, it's a health testing company that will keep all my blood-related health information and make it "actionable", with the backing of James Mattis, William Perry and none other than Henry Kissinger. There are more soldiers in that board there than doctors.
> The only way I'd give them my blood would be to infect them with a disease.
Which I think is really telling. I guess in my old age I certainly have taken on the "If it sounds like bullshit, it almost certainly is." If you're really confident and proud of what you're doing, you explain it in the simplest terms possible.
[1] https://hn.algolia.com/?dateRange=all&page=30&prefix=false&q...
https://www.youtube.com/watch?v=YecjzEScXqU&t=105
In this video she is being interviewed on Mad Money, using her (assumed) actual voice.
https://www.youtube.com/watch?v=rGfaJZAdfNE&t=403
What a strange person.
Also some throat infections can temporarily make the voice lower.
Holmes was convicted of fraud, which is a crime.
If hubris was a crime, the meek would inherit the earth, and Silicone Valley real estate would be affordable.
Would the jury get this document with the blue and yellow highlighting??
> Language proposed by Ms. Holmes, and objected to by the government, is highlighted in blue. Language proposed by the government, and objected to by Ms. Holmes, is highlighted in yellow.
(but no, what you linked are a conference hearing preliminary proposed instructions for parties objections)
I've written about this a bit, but Elizabeth Holmes comes from 2 dynastic families. On one side, the Holmes family, whose name is directly tied to medicine / hospitals / clinics across Ohio. On the same side, a little bit farther up, is the Fleischmann family. Those yeast packets and jars that are in your cupboard...yes, that Fleischmann.
I don't think it's any sort of prejudice (sexism, high flyer, etc), her behaviour seems to speak for itself.
She said it works and that was a lie. A lie that affect lives and economics of rich and poor alike. Bad combination.
Fucking around with people's health just to get rich and famous is evil.
[1] https://www.goodreads.com/book/show/37976541-bad-blood
[2] https://www.gatesnotes.com/about-bill-gates/holiday-books-20...
Far, far too many of these charlatans out there. I used to admire many, thinking I wasn't working hard enough, trying enough, so I busted my rear for decades, career-wise and activity-wise.
They're all bluffing. Lying. Stealing. Cheating. Eff them all.
That's why her "lesson" from SV entrepeneurs about "fake it til you make it" did not apply. They weren't doing medicine.
Revolutionizing an industry where there are already standards, laws, people's health at stake, and government bureaucracies is WAY harder than what most of her heroes did.
[1]: https://www.bloomberg.com/news/articles/2021-12-14/balwani-s...
The wire fraud charges were by far the much better target.
That aged well. https://web.archive.org/web/20160320011355/https://www.thera...
I think it shows that generally speaking our regulatory bodies need to evolve. They need a quality control program that periodically audits the information provided to them and conduct their own independent review/replication of the experiments. If reproducibility isn't possible then severely punish companies that are found to be misrepresenting their data.
Are there any actual articles with the message the op is suggesting?
But is it realistic to assume founders will self-police given the pressures? Or should we expect investors to look at these BIG WARNING SIGNS and do more due diligence??? Seriously, having no subject matter experts on the board etc is ridiculous and all the valley insiders knew it. One call to her thesis advisor is all the due diligence they needed to do.
Put another way, is the next Elizabeth Holmes going to be deterred by her prison sentence? Was she deterred by Bernie Madoff or 100s of others?
Again obviously they just wanted to nail her on something and didn't have enough evidence for the reason crime, which was lying to end users about their healthcare.
And obviously it's illegal and bad and wrong to lie to investors duh.
I'm just saying that perhaps we shouldn't use self-policing or the courts to solve the startup-investor-fraud problem because they're (a) ineffective, (b) we have other & better ways to solve this, (c) solution b leads to the more efficient market and therefore the greater innovation and therefore wins.
At the same time I feel genuinely curious about her thoughts and emotions as she unarguably is a formidable lady - scamming so many supposedly smart and competent people obviously requires outstanding logical and emotional intelligence (note emotional intelligence doesn't necessarily imply being good, it means being good at observing, understanding and managing emotions of yourself and others, whatever a purpose, good or evil), understanding of the market, society and people.
This makes me sad she herself never wrote a book and if and when she will (perhaps she'll have time for that in the prison) she is hardly going to write anything but "I'm so sorry" bullshit.
https://i.imgur.com/ukWZMDn.png
If only it was reality and we might never have that pricing
Compare to labtestingapi.com which is the cheapest quest reseller, $20 vitamin D test vs $52
https://www.labtestingapi.com/product/questassured-25-hydrox...
$10 B12 vs $39, etc.
The biggest crime she committed was ending any chance at a startup with affordable pricing in the future, no-one would believe/invest so now we are back to a duopoly in the USA (quest vs labcorp)
Maybe in a decade, or two, we'll have our own mini-lab in a box in our homes for outselves and pets, maybe it will be on a subscription pay-per-month software model, maybe 100 years we'll have it on our phones like a tricorder.
My point is what stopped Elizabeth Holmes from doing something like this? She surely knew what was coming her way and she is kinda unscrupulous too, so why didn't she run?
Second, she is supposed to get up to 20 years for EACH of the counts (they will be served concurrently so she won't get 80 years). And I am curious as to how much time she will actually serve.
Third, what kind of sociopath has a baby in the middle of a trial where she could go to jail and not see the kid for years???
Fourth, what kind of person meets her, googles her, thinks "it's all bullshit", then proceeds to get in a relationship with her AND have a kid with her. Man this woman is a con artist.
She should get 20 years for the lies she spread and damage potentially did. Messing with people's blood tests for CANCER. So wrong.
The same sort who would lie to cancer patients about their blood test results, and very probably lead a few to their deaths along the way? Sounds exactly like the Holmes we've all come to know.
[1] https://www.bloomberg.com/opinion/articles/2022-01-04/slayin...
Someone who gets rather handsomely paid for it?
As a young and attractive woman she carefully manicured her appearance to resemble Steve Jobs and consistently altered her tone of voice (!) to sound deeper. To investors she was the disarmingly beautiful genius. These old grey men should be so lucky as to get her attention and be part of her myth!
To a much older, rich, well connected, megalomaniac controlling man she was the young disciple. Ready to inflate his sense of self by “needing” direction and castigation. Not to mention the sexual dynamic.
To the jury she’s pregnant mother, victim of a culture that only rewards winning and the fragile, abused partner of an abusive man. She never meant any of it, it’s all a big misunderstanding!
Neumann has nothing on Holmes!
("U.S. District Court Judge Edward Davila will sentence Holmes at a later date.", according to CNBC.)
> On Monday, U.S. Department of Justice attorneys responded. “Thousands of patients received unreliable blood tests, depriving them of money or property, placing their health at risk and, in many cases, causing actual harm,” prosecutors alleged in a filing in U.S. district court in San Jose.
Considering the vast weight of the harms she caused, in a "fair" retributive justice system, she would get far worse the sentences routinely doled out to typical criminals.
But the US "justice system" is hardly "fair".
Personally, I don't really believe in retributive justice. The light sentences afforded to privileged criminals bother me, but what bothers me more are the draconian sentences received by those of less privilege.
That is good, and it is absolutely magnificent.
So who is next?
[0] https://www.tagesschau.de/wirtschaft/unternehmen/wirecard-ch...
- 2013/09/08 - Theranos (theranos.com): https://news.ycombinator.com/item?id=6349349 (113 comments)
- 2014/06/26 - This CEO is out for blood (fortune.com): https://news.ycombinator.com/item?id=7951019 (97 comments)
- 2015/04/26 - Scientists skeptical about Theranos blood test (businessinsider.com): https://news.ycombinator.com/item?id=9440595 (94 comments)
- 2015/07/03 - FDA approves Theranos test for HSV-1 (fortune.com): https://news.ycombinator.com/item?id=9823638 (24 comments)
- 2015/09/21 - How Playing the Long Game Made Elizabeth Holmes a Billionaire (inc.com) https://news.ycombinator.com/item?id=10252183 (82 comments)
- 2015/10/15 - Theranos Has Struggled with Blood Tests (wsj.com): https://news.ycombinator.com/item?id=10391313 (87 comments)
- 2015/10/16 - Theranos Dials Back Lab Tests at FDA's Behest (wsj.com): https://news.ycombinator.com/item?id=10397149 (86 comments)
- 2015/10/18 - Theranos Trouble: A First Person Account (mondaynote.com): https://news.ycombinator.com/item?id=10408811 (45 comments)
- 2015/10/27 - Theranos didn't work with the huge drug company it supposedly made money from (theverge.com): https://news.ycombinator.com/item?id=10459905 (113 comments)
- 2015/10/28 - The FDA's notes from its visit to Theranos' labs don't look good (businessinsider.com): https://news.ycombinator.com/item?id=10462678 (97 comments)
- 2015/10/29 - Theranos, Facing Criticism, Says It Has Changed Board Structure (nytimes.com): https://news.ycombinator.com/item?id=10471152 (65 comments)
- 2015/12/20 - "Theranos Founder Faces a Test of Technology, and Reputation" (nytimes.com) https://news.ycombinator.com/item?id=10765562 (102 comments)
- 2015/12/28 - "At Theranos, Many Strategies and Snags" (wsj.com) https://news.ycombinator.com/item?id=10799261 (126 comments)
- 2016/01/25 - "Problems Found at Theranos Lab" (wsj.com) https://news.ycombinator.com/item?id=10965167 (76 comments)
- 2016/01/27 - "The letter the Feds sent to Theranos" (vox-cdn.com) https://news.ycombinator.com/item?id=10983747 (192 comments)
People from the fields have laughed about her and Theranos for a long time.
Considering she was found guilty on 4, it's not obvious that they will bother.
Let's start seeing some other countries around the world start doing this, like India, Russia, and China. My 80 year old mother was recently tricked into wiring money by Indian scammers threatening her. I'm really sick of this shit.
I'm really not sure fraud is the biggest issue plaguing these countries... corruption is definitely an issue (though the US has in some cases legalized it into lobbying and PACs and the like). It's great that people doing scummy things are held accountable, but are the Sa cklers of Purdue P harma in prison? They've (unarguably) hurt and killed way more than Holmes did, but where's justice for that?
I lived in a developing country for a while and the corruption can be maddening. You might agree to partner with someone to buy property, they take your money and cut you out. In corrupt countries, you might be entirely screwed - that person has too many connections and influence, nobody will touch them.
At least in countries with rule of law you could sue them. You might not win or be made whole, but at least there is a system that is somewhat dependable.
Really?! Interesting...
I agree, a functioning society needs good law and order, and some way to prosecute and bring criminals to justice.
But I am personally not convinced that sending someone "to jail for a long, long time" is the solution. How is that productive? I think we need to come up with better ways to serve justice than physically restricting otherwise smart or productive individuals to a room for decades on end. As soon as we are done with abolishing the death penalty, I would want us to start looking at abolishing this "decades long locking up" of folks. I don't have a good solution as I said, but I am convinced that this is not it.
Or, do we really think it was down to just this one person's actions?
Some people are or became irredeemably antisocial and need to be kept away from society at large. Watch any liveleak video around the mexican cartel if you need a reminder of what evils people are truly capable of.
That being said, sure want to properly reintegrate everyone possible. But society understandably does not exactly welcome past offenders back with welcome arms. It is kind of hard to be productive again when few places will even consider hiring you. That isn't a stigma you can just wish away.
At least for murder, one of the strongest predictors of whether a person will kill is if they've killed before. So prison is productive because it makes it more difficult (though not impossible) for a person to keep killing.
See - 90s: Enron; 00s: Madoff; 10s: Holmes
I more often than not had a hard time understanding what some well funded start-ups I had contact with are actually up to. From personal accounts of the people involved, the common modus operandi seemed to be "let the money stream not ebb and we will figure something out in the meanwhile" as supposed to "you finally do not have to be preoccupied about the finances and can start focusing on solving the problems at hand".
I wonder how efficient the system really is, purely in enabling indivduals to develop their ideas into some form of actualization and even if the "start-up" fails completely on its promise. And also how much room to appreciate the efforts made so one can at least activley learn from mistakes/misconceptions made.
Elon Musk is an interesting example as it illustrates that there seems to be a goldilock zone of over the top "predictions", a hypnotic dance with investors and the public: "How long for X taking place?" Aside from his PR, at least he delivers on some actualized forms of engineering feats.
As the pendulum swings from government funding to private funding, the high concentration of wealth ("resources to enable") on either side make it prone to that scale of fraud.
That being said, I would hope the Theranos brand is sold and it assets liquidated to repay every person who had a fraudulent test result.
If you can do something that previously was strictly in the realm of magic, name your company after a famous magician.
is there some technicality at play here?
Whether a wire left the state means dick to whether the federal government has constitutional authority over it, per supreme court.
Interesting case, thanks. Here's a link if someone else is interested: https://en.wikipedia.org/wiki/Wickard_v._Filburn
Nope. They just got bailed out by the Fed, and given bonuses. This is how you know which profession runs the American empire. It sure as hell isn't tech CEOs.
Not guilty of endangering thousands of lives by running fraudulent and inaccurate tests under sub-par lab conditions.
Our justice system is such a farce.
*(Fixed grammar error specified below)
If not here where would you rather draw the line? Incarcerate 1 more innocents s that 1 more guilty makes it into jail?
We could have a more likely than not standard of 51% chance like civil law, and 49% of inmates are innocent.
Would you personally really want to send someone to prison if you had reasonable doubts of their guilt?
Our prison population reflects our crime rate demographics. Certain demographics commit far more crime, especially violent crime, than other demographics. They are represented accordingly in our prisons.
Justice is pretty fair and blind across the board. Do the crime then do the time.
"When Theranos' machines were rolled out to Walgreens stores in California and Arizona, they gave patients false or flawed results. One patient testified that she was led to believe she was having a miscarriage after taking a Theranos test, when indeed her pregnancy was viable. Another patient thought her cancer had returned when it had not, following a test. But in the end, jurors did not believe that Holmes intentionally deceived patients."
These examples by themselves are clear instances of harm. However, it's not unlikely that more patients were affected and perhaps even some of them took actions that were harmful to their health based on this false data.
It is crucial to understand what is the cost of doing business vs what will sink the ship.
It was hard to pin down the mob boss to particular murder. They could get the lower level hitmen, sure, but tying it to the main boss was difficult. Recordings were not really a thing back then. Those that did talk were killed.
Rudy Giuliani (yes that Rudy Giuliani) had the first successful prosecution under RICO in the 1980's.
And just throwing the word “nuance” into a comment doesn’t a counter-argument make.
Ignoring for a moment that this was in a very different era, to me, there are only two possible conclusions from this:
(a) The conviction was legitimate. This means that if only he had been a bit more thorough about laundering his money, he’d have gotten away with organized murder.
(b) The conviction was ultimately politically motivated, because it became a public embarrassment that he couldn’t be convicted of anything. But if the state really wants to get rid of someone, a prosecutor will find a way, so they did.
And I seriously don’t know which possibility is more frightening.
Yeah. Gangster?
Police doesn't care or is on the payroll.
The IRS however will get you -- it will only let the very rich off.
Calling that "pragmatic prosecutors made pragmatic decisions"... Well. You do you.
1. you have incredible insight into the inner workings of the company. 2. you're joining an online pitchforking mob.
As much as I rejoice seeing a Silicon Valley poster child be exposed as a phony and a fraud, I would be very careful before jumping to conclusions and asserting with high confidence that the court verdict is flawed.
Nope. I take from the text that prosecutors-and-or-law-itself defend the interests of super rich better than the interests/well-being of commoners.
> I would be very careful before jumping to conclusions and asserting with high confidence that the court verdict is flawed.
Good for you. I'm not saying it is flawed, neither am I passing judgement on who's guilty... I'm saying it seems the whole system is favoring the some over others.
I really just can't find myself caring about some millionaires scamming some billionaires. VCs get robbed like this all the time. Especially the ones with more money than brains. And I'm also not going to lose any sleep if she gets 5 years instead of 100. This has been kind of a fun news story to follow the last few years but really I think most of the outrage here is because the particular demographic of this website doesn't really like women like this.
I don’t know about everyone but it’s reallllly hard to find sympathy for somebody who plays fast and loose with peoples health like this. She wasn’t an arms manufacturer but I don’t really see the sympathy angle here (especially considering how much institutional support she had throughout the controversy)
But you seem to want to still be duped now, as if Theranos still represents some noble promise...
Course if government wants to keep their crusty paws in it and decides it actually isn't just a business, they should take some cues from countries with much lower GDP overhead. The half-assed system we have is the worst of both worlds.
Count one of conspiring to commit wire fraud against investors in Theranos between 2010 and 2015: Guilty.
Count two of conspiring to commit wire fraud against patients who paid for Theranos’s blood testing services between 2013 and 2016: Not guilty.
Count three of wire fraud in connection with a wire transfer of $99,990 on or about Dec. 30, 2013: No verdict.
Count four of wire fraud in connection with a wire transfer of $5,349,900 on or about Dec. 31, 2013: No verdict.
Count five of wire fraud in connection with a wire transfer of $4,875,000 on or about Dec. 31, 2013: No verdict.
Count six of wire fraud in connection with a wire transfer of $38,336,632 on or about Feb. 6, 2014: Guilty.
Count seven of wire fraud in connection with a wire transfer of $99,999,984 on or about Oct. 31, 2014:Guilty.
Count eight of wire fraud in connection with a wire transfer of $5,999,997 on or about Oct. 31, 2014: Guilty.
Count nine was dropped.
Count 10 of wire fraud in connection with a patient’s laboratory blood test results on or about May 11, 2015: Not guilty.
Count 11 of wire fraud in connection with a patient’s laboratory blood test results on or about May 16, 2015: Not guilty.
Count 12 of wire fraud in connection with a wire transfer of $1,126,661 on or about Aug. 3, 2015: Not guilty.https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc...
Yes, there are minimum security prison camps for first time, non violent offenders, which seems entirely appropriate, but a day spa it aint.
https://www.washingtonpost.com/news/reliable-source/wp/2015/...
[If you're not familiar with sentencing, the basic procedure is this:
1. Compute an 'offense level' for each count. For counts that are strongly related (which all of these likely are), combine by taking the maximum offense level. If they're not related, it's more complicated (not simply adding them up).
2. Compute a 'criminal history level'. For Holmes, that's basically "no criminal history."
3. Adjust for things like the convicted person's remorse or cooperation with investigators.
4. Look up a table that maps offense and criminal history to an actual sentencing range.
5. Adjust that (primarily, but not exclusively, in the previously output range) based on the judge's feelings.]
For those unaware John Carreyrou played a major role in exposing Holmes. His book is a good read: Bad Blood and host of Bad Blood: The Final Chapter
https://twitter.com/JohnCarreyrou/status/1478158063379042304
> And the judge will probably declare a mistrial as to the 3 counts they couldn’t reach consensus on.
> The 4 guilty counts are all investor counts. The investor conspiracy count and the counts relating to the hedge fund PFM, the ex Cravath attorney Mosley and the DeVos family.
EDIT: Mistrial only on those 3 counts which got no verdict, not the full trial. Also this is only if the Feds want to do it or now which will also depend upon how many years Holmes gets as well as if she just decides to plead guilty on those 3 charges.
The presumption of innocence in this case, is that she did not mislead Investors.
(IIRC, Holmes' lawyers also made the argument that it was not legally possible for her to have committed wire fraud against the patients, because any money that Theranos received would have come from their insurance companies.)
Part of the difficulty is that the empirical data that would have proven how well (or poorly) the technology worked was allegedly stored in a proprietary, bespoke database. When Theranos was ordered to turn over the data to the feds for discovery, they delivered an encrypted copy, and then claimed that the encryption key was lost and the original disk arrays were unrecoverable. Both sides of the case then blamed each other for destroying the last remaining copy of the data, which made for some fun reading.
Here's one report on an invalid pregnancy test:
https://www.theverge.com/2021/9/21/22687026/theranos-patient...
This doesn't hold with what was found in the trial. She was found not guilty on those counts. Just because a dude wrote it down in a book doesn't mean it's true. And the legal process found it to be, in fact, not true.
The jury didn't find that the results given to the patients were accurate. They found that Holmes was not personally, criminally culpable for wire fraud in those cases. Wire fraud is a crime that has very specific elements, well beyond the question of how accurate the test results were.
They decided that she had.
FWIW, every single firm that had medical expertise declined to invest in Theranos. They could see it had extremely minimal chance of success.
Longer answer: Theranos never really got their own custom machines working. Until those machines were working, they did use other machines and processes which did work. However, their entire shtick was trying to do a lot of tests on less blood than usual, so... they simply diluted the blood samples to get enough volume for those machines to function in the first place, and correspondingly, the results were absolute garbage. Effectively, they were using working machines incorrectly to cover up for their non-working machines.
Carreyrou originally got tipped off by pathologists saying that this was impossible, then they got sued into oblivion (see thepathologyblawg).
(IANAP but this is my understanding)
Some real tests rely on having a huge blood sample (e.g. 100ml), being filtered (e.g. by centrifuge) and then a test of a known sensitivity applied.
Theranos claimed that their tests were more sensitive so could work with smaller samples. Statistically this doesn't work because with a finger-prick test (e.g. 1ml) the sample is 100x less likely to contain the target cells - cells are integers.
Additionally finger-prick tests contain only capillary blood - they're filtered by the finger blood vessels only allowing tiny cells - some of the Theranos tests claimed they could detect markers that only exist in arterial and venous blood.
(I do realize that keeping track of how precisely Theranos was lying can be frustrating, since they were doing multiple levels of lying here.)
Count seven of wire fraud in connection with a wire transfer of $99,999,984 on or about Oct. 31, 2014:Guilty.
Count eight of wire fraud in connection with a wire transfer of $5,999,997 on or about Oct. 31, 2014: Guilty.Often shares will be split %-wise between two or more funds. I.e. 22.5% goes to XYZ Fund 1, 85.5% goes to XYZ Fund 2. These % can be super specific and make it so wires go down to the cent.
If, like you said, the patients still got their results, the results were correct, and it was only how those results were obtained that lead to the patient fraud charges, then I think you maybe correct.
Again, I'm not a lawyer, so people should feel free to correct me if what I said was wrong.
Patients just saw a blood testing service promising the same accuracy as a blood draw and went for it
I think you are: https://www.theverge.com/2021/9/21/22687026/theranos-patient...
> To use traditional machines, Theranos had to dilute some of the smaller samples it collected. It appears that Theranos carried out another 60 tests using this method in December 2014.
> Some of the potassium results at Theranos were so high that patients would have to be dead for the results to be correct, according to one former employee. This is because, lab experts told The Journal, "finger-pricked blood samples can be less pure than those drawn from a vein because finger-pricked blood often mixes with fluids from tissue and cells that can interfere with tests."
Holmes clearly lied to investors, and even if she may have "believed" in the long term prospects of her company, she also clearly intentionally lied to investors to get their money. The investors were also obviously harmed (they lost their money). Also, the fact that VCs expect a lot of their companies to fail is totally irrelevant. VCs (and more importantly, the law) also expect founders to tell the truth on simple statements of fact, e.g. "We recieved this much revenue" or "This machine can perform X, Y, Z tests now". Again, Holmes didn't just exaggerate or say "This machine can perform X, Y, Z tests in the future". She flat out lied about the current capabilities of her company.
With patients, most of the tests were done on standard equipment. I don't believe patients were ever told "we will test your blood on Edison", and more importantly, they probably wouldn't have cared that much - they just wanted their test results. So with the tests done on standard equipment, hard to argue there was much harm done there.
Now, some tests were done on Edison, and I know Walgreens invalidated a whole bunch of Theranos tests. But even then, it's harder to say Holmes intended to deceive in that case (a prerequisite for the fraud charge) - presumably they chose to run them on Edison and not the other equipment because they thought Edison could handle those tests. The fact that the lab was sloppy, the fact that Edison had issues, that in my mind wouldn't be enough to assert wire fraud on the part of Holmes. All in all it's just kind of hard to say that patients were really defrauded at all. If Theranos had instead just completely made up some of their test results, and Holmes directed that behavior, then yes, that would have been fraud against patients, but that's not what happened.
"I feel very confident predicting 1 million autonomous robo-taxis for Tesla next year" - E. Musk 2019
Did he ever atone for this, or is he still kicking the can down the road?
Edit: I know, I know... It's not a crime until it is. Let a jury decide if Musk lied, or if he genuinely believed that his company was capable of producing 1 million robotaxis in a year. I would love to know what his staff where telling him that would lead him to this "very confident" prediction.
By 2019 pretty much everyone knows that Musk is a person who makes extremely ambitious predictions, projections, timelines, etc, and tries to meet them. Almost anyone in that situation will have a low hit rate. There's no sin to pay for, this is how he chooses to work and structure his businesses. Investors tend to be very happy with the results. To them, making a large number of ambitious goals and meeting some of them is still very worthwhile.
If you want to invest in companies where they make no such predictions, and the CEOs are never wrong, you are welcome to buy GE and follow their CEO on twitter. He has never, ever made a wrong prediction: https://twitter.com/larryculpjr
Is that not lying? When does it become lying, when you're 100% sure you're not saying the truth?
There's a difference between saying I weigh less than 90kg and I will weigh less than 90kg by next year.
She didn't say we hope to work with the US Army or that we plan to. She said that units were in use by them.
She didn't say the devices are on the verge of being used to analyze blood samples. She said that they were indeed being used to analyze a high percentage of the samples.
Many, many other examples.
That's the plain definition of fraud.
When the speaker implies uncertainty it is difficult for the investor to claim fraud because uncertainty was expressed to them. That the speaker "knows" the 95% figure is BS is very difficult to prove and generally everyone treats it as BS/puffing anyways.
If you could easily show that the CEO saying hitting the next milestone is 95% in the bag but in fact it is impossible AND they said so to others in private then that would also be prosecutable fraud.
I don't know anybody who hears Musk talk and thinks "that's a true statement." He's a circus barker. We might call him a bullshitter -- he's making a big noise, but nobody really thinks he means most of what he says.
Musk has spent years building this persona, and so people generally treat him with the level of credibility he has established he deserves.
I still think he's being dishonest at best, but the rational world's response to "gee I bet my life savings on his robot taxi prediction" would be ridicule.
Holmes presented herself at all times as deadly fucking serious, and got incensed and rage-angry when questioned. She's in a different category here, I think.
The real difference between the two that I see is that Musk's borderline-fraudulent statements are intermingled with true statements about the actual companies he operates and the actual things they do. That's what buys you some slack to make outlandish statements: Accomplishing outlandish things. If Holmes had normalized electric cars or launched some reusable rockets, and had then staked (some of) the reputation of one of those companies on claims about a non-existent blood test, there may not have been a trial.
I figured someone would suggest there's a gender issue at play in my distinction, and I think that's inevitable and unfortunate because I'd be making the same point if they were both men or both women.
Another factor I somehow managed to omit is that Musk's predictions are far enough off to be seen as aspirational, not statements of actual forecast. He said we'd have Tesla Johnnycabs by X date, but then no real movement on them happened, and self-driving proved harder than expected, and so far nothing has come of it. That's barker behavior. That's making noise to get headlines. I think it's still stupid and unserious and fundamentally not honest, but it's not fraud.
Holmes outright lied about what Theranos could do, and behaved (we now know) in ways that showed she KNEW she was lying and that the repercussions would be significant if Theranos was exposed, all while enriching herself from it. That's fraud.
Stop and rethink your plan seems reasonable in this circumstances.
https://www.pbs.org/newshour/economy/making-sense/why-elon-m...
https://www.theguardian.com/technology/2018/oct/28/elon-musk...
that just seems so reckless on so many levels
This is the reason why you can catch a federal charge for growing your own pot or making your own machine gun, despite it never leaving your property nor any desire or act to enter commerce/trade. Even merely _where_ you store your goods for personal non-commercial use in your own state is considered interstate commerce, a la Gun-Free School Zone Act.
I've read there is good evidence that black people get harsher sentences than white people and men get harsher sentences than women, other factors being equal. I suspect there is also evidence attractive people get lighter sentences than ugly people.
The current system seems like a clear-cut violation of the US constitution's Equal Protection clause. So why doesn't an organisation like the ACLU take legal action to force all sentencing to be done by a judge who is unaware of the race, sex and attractiveness of the defendant?
Second, It is extremely hard to prove that discrimination happens while all other things are equal . Rarely all other things are also equal as there are many strongly correlated factors with race[2] that can adversely impact conviction, for example being black on average would be poorer and would more have a court appointed attorney who is looking to close a case(given his load) rather than win for each defendant and push a defendant to plea out than go to trial etc. Is this directly because he is black ?
Race, age and gender are objectively measurable [3], "attractiveness" is lot more subjective to eyes of the beholder. How do you even come up with a scale for legal purpose of measuring bias like this ?
U.S. follows trial by jury, by definition that means the jury of peers are to take the law and your entire specific example and act with full freedom as they see fit ( even nullify laws if they wish to do so). In a such a system there will be biases, because people are inherently biased. While there are some efforts to reduce this, like no all white juries against black defendants etc, unless there is fundamentally different system biases can not be eliminated.
The biggest determining factor is Money. Richer you are, less likely to have trouble with law, and get away with a lot. White, young, female and attractive correlates to being rich. Sadly that is how the world works.
[1] There are similar protections in the 5th Amendment Due Process Clauses that can be applied at a federal level.
[2] Similar examples to other factors as well
[3] Race and Gender can have some ambiguity but in most cases it is clear
I agree that attractiveness is ridiculously subjective.
What I like about OP's argument is, I can think of few legit reasons for a sentencing judge (as opposed to fact-finding jury) to need to see a defendant rather than just hearing the arguments being made, and I can think of many drawbacks to allowing a judge to do so, such as conscious or unconscious biases.
The Holmes case was merely the catalyst for my thinking. The point remains: Why isn't there a legal push to have blind sentencing, at least for state crimes?
> Second, It is extremely hard to prove that discrimination happens while all other things are equal.
It's not that hard. You take a sentencing case - say, guilty plea to armed robbery with no prior convictions - and pair it with a similar case where the defendant is a different race (ideally without know the actual races involved). You do that for 1000 cases and then show that the sentencing is generally harsher for one race than the other.
> U.S. follows trial by jury...In a such a system there will be biases, because people are inherently biased
I'm talking about making sentencing less biased. I don't have any suggestions for making the trial less biased.
> The biggest determining factor is Money. Richer you are, less likely to have trouble with law, and get away with a lot.
OK but when it comes to sentencing money should not be a factor - rich and poor should receive a similar sentence for a similar crime.
> Race, age and gender are objectively measurable [3], "attractiveness" is lot more subjective to eyes of the beholder.
Sure, but it's not completely random. If you and I both choose the most attractive person in a group of 10 people, the chance that we both choose the same person is far greater than 10%.
Let's say we ask 100 people to rate defendants by attractiveness and use the average score for each defendant. It's quite possible we would find the gap in sentencing severity between the top-10% and bottom-10% people in terms of attractiveness is greater than the gap between black and white defendants.
But it's really a moot point - if we prevent the sentencing judge from knowing the race and sex of the defendant then the judge will also not know how attractive he or she is.