Theranos former president found guilty on all fraud counts
wsj.com
wsj.com
> At Balwani’s trial, his lawyers said that Holmes was in charge of the company. But prosecutors pointed to a text message from Balwani to Holmes — which read “I am responsible for everything at Theranos” — as evidence that he also played a role. [1]
> The panel also heard from a laboratory director, regulator and patient who didn’t testify against Holmes. That testimony was aimed at underscoring his familiarity with the failed blood tests. [2]
> “Balwani ran the lab for a time and was just as involved as Holmes in management,” said Andrey Spektor, a criminal defense lawyer not involved in the case. “To some extent, the government had a stronger case against him.” [2]
The jury seemed to believe that he was more hands-on with the laboratory work.
[1] https://www.theverge.com/2022/7/7/23198848/sunny-balwani-gui...
[2] https://www.bloomberg.com/news/articles/2022-07-07/theranos-...
To be super clear, I'm not an Elizabeth Holmes fan. Not at all. But unless we have a specific reason to believe that Sunny Balwani had a less fair trial than she did, why shouldn't he also be in trouble?
Until Holmes is sentenced in a couple of months, I think it's premature to say she got away with anything.
Now, there is some credible discussion about why she was not convicted on those counts, but I don't think it could be called scapegoating.
A scapegoat would be if a junior lab director got convicted and everyone else skated free.
Imagine being in his shoes: It's the early 2000s. You're in China learning Mandarain, you're in your late 30s, you made $40 million selling your shares of your company in July 2000 shortly before it failed in the dot.com bust and you meet this 18 year old who you eventually have a romantic relationship with[3]. They did admit a romantic relationship in court documents, so this isn't making stuff up. Life's big decisions confront you, and what do you end up doing? Let's see how it worked out. All this is on the Wikipedia page for Sunny[1]:
Fails:
- Divorce wife.
- Loan $13 million, no interest to Theranos. [2]
- Become COO of biotech company even though you have no formal background in biotech.
- Waste many years of your life in fraudulent company.
- Be convicted of fraud, disgraced, and possibly spend years in prison.
- She throws you under the bus and testifies that her bad behavior at Theranos was largely the result of your abuse sexual and otherwise. Jury doesn't believe it, but her accusation is still out there.
- Have no kids, never remarry. Holmes gets married and has a kid as she was awaiting her criminal trial.
Wins:
+ Have romantic relationship with beautiful lady in her 20s.
Anyway, there's some big life decisions here that, IMHO, Sunny made very poorly.
[1] https://en.wikipedia.org/wiki/Sunny_Balwani
[2]https://stylecaster.com/sunny-balwani-net-worth/
[3]"Holmes and Balwani met for the first time in 2002. The pair initially met in Beijing, China, while on a language immersion program with Stanford University. Holmes was an 18-year-old high school senior at the time, whereas Balwani was a married, 37-year-old university student completing his MBA at the University of California, Berkeley. All in all, the pair had a 19 year age difference" https://stylecaster.com/elizabeth-holmes-sunny-balwani/
> - Have no kids
Adjusting that attitude, or at least never saying that bit out loud, may win you more friends.
Other than that, with hindsight, yes, it can all be painted as a series of bad decisions - however I'm sure at the time every decision that got him to where he is now made perfect sense, and was at least a good decision given the information available to him then.
I read Bad Blood, and have tracked stories about the key players, but we don't really know what each player's exit strategy actually was.
Hers seems to have been to eventually produce the tech she claimed her company already had. He may have bought into that dream, or planned to cut and run at some point (or both at different times).
Well that's clearly a failure then, isn't it? By definition.
And people get upset or offended by anything, it's really not useful trying to shut down discussion by claiming you shouldn't say or think something because allegedly some hypothetical people might get upset.
"They failed" does have some connotation of culpability though, doesn't it? I mean, the phrase certainly is sometimes used in situations where nobody would understand it as implying any blame; but, on the other hand, there are many other cases in which it is used in a blaming way, and those other cases contribute to its connotations.
> And people get upset or offended by anything, it's really not useful trying to shut down discussion by claiming you shouldn't say or think something because allegedly some hypothetical people might get upset.
I'm not trying to shut down anything. I'm just attempting to produce an explanation of why some people, rightly or wrongly, actually are upset (which is rather apparent from other comments on this post.)
It usually does have some, yes. For example if you are infertile through some fault of your reproductive system, then that is to blame for your inability to have children.
> I'm not trying to shut down anything. I'm just attempting to produce an explanation of why some people, rightly or wrongly, actually are upset (which is rather apparent from other comments on this post.)
I think they're just vicariously upset. Either way I wasn't wondering about them. Just correcting a misconception about the use of a word.
ETA: Though I wouldn’t want them to not express it, the opposite.
Besides, how does it possibly help you (or anyone else) to get emotionally wounded by some random stranger on the Internet's insensitive comments? Most people older than their 20s have figured this out already and are living more productive lives.
> I’m not talking about not wanting to be friends, but rather, being offended
That’s not what you said, you said alienate.
People should be more open to welcoming differing opinions. No one should have to self-censor their own opinions.
Most reasonable people don't alienate friends over different beliefs, but most people also have some sense of discretion when judging the lives of their friends.
I think I would have issues with a friend who judged me as having failed, or worse, a failure for what I consider personal and subjective life choices.
like the different belief that not having kids is a fail? Or can you alienate friends over beliefs you disagree with, but not ones you do?
I mean I do not have any kids, but I know many people that believe one of goals of life is to have children, and I am intelligent enough to understand that procreation is evolution's goal
Thus I do not get offended or alienate people from my life if they say me not having kids is a failure
I don't know if it would irreconcilable, but I think I would have an issue if someone tried to openly judge me and think me a lesser person based on their personal truths.
The fact the people judge other people actions based on their worldview is just a fact of life. Seeking that external validation of ones life choices to me shows insecurities in those choices.
In order have a pluralist society we have to be a to allow people to "think less of us" while still engaging, talking, and transacting with them. If we instead simply reject everyone that does not share our worldview then that is a monoculture, and most likely and dystopian society as well
However, we are talking about friends, not strangers. Surely there is some point when the opinions of others should matter.
Would you want a friend, or worse, a spouse that considered you to be a failure, fool, or generally inferior person?
In my belief, healthy and meaningful personal relationships are based on mutual respect. This includes accepting the fact that other people may have different life goals and objectives.
This doesn't need to be absolute, but depending on the magnitude and frequency it can certainly be a irreconcilable difference.
lets change the context to something less divisive, say i was an Alcoholic and my Alcoholism was destroying my life would my "friend" be a friend if they continued to supply me with Whiskey and Beer or would they be a "friend" is they took me to task, told me as I fool, and a failure?
That said, there is productive and unproductive disagreement. Similarly, there is also transient and permanent disagreement.
There is also the matter of perspective. In the case of the alcoholic friend, there is a difference between viewing it as something that is preventing them from achieving their own goals versus your own personal code. I think the former is a much more compassionate view (and perhaps more productive).
I think this is an interesting example because most people would agree that destroying your life with Alcoholism is a bad thing, so we both share the same bias.
What if you had an alcoholic friend who judged you for not regularly drinking to excess? How does that change the logic in the example?
>> - Have no kids
> Adjusting that attitude, or at least never saying that bit out loud, may win you more friends.
Having a spine and saying what you believe is what wins you friends. Self-censoring being afraid that someone on the internet will get triggered will NOT win you friends.
Edit: For what’s worth I don’t agree with them that having no kids is a fail.
And in this case, it would be the difference between saying
"I wonder why [person] didn't remarry or get kids - but that's really none of my business."
and
"People that don't get married or have kids are losers."
So obviously it also depends on how one frames their questions and opinions.
If you don't want to "hang with that crowd" then there's nothing to worry about here w.r.t filter.
I have personally a very different opinion - smart handy balanced successful (in life, pursuit of happiness, usefulness to society) people should have more kids/kids more frequently as they do, of course if they are able to do so physically, emotionally and overall mentally. Why - this world desperately needs more of such people, and instead gets explosion of poor uneducated farmers or basic factory workers.
Quiet average (or under-average) majority never changes much, they listen to what they should think, what is right, cool etc. Decision processes based mostly on emotions, which is always flawed long-term (and mass media abuse this to no end). We as mankind are clearly heading to self-destruction if we continue this trajectory long enough (longer than doomsayers preach but not absurdly long).
Also majority of childless older folks I've met are in one of these categories: 1) physically impossible, didn't want to go through adoption bureaucratic hell; 2) would be OK with kids but didn't meet the right partner during say age 20-45; 3) didn't want them earlier and when decision changed they realized it was too late (I know quite a few guys in this bracket too). Those that made this decision consciously at early age and stand by it till death without regrets are really small minority.
Even those fearing overpopulation are helping shrink it a bit if they have 2 kids max (equilibrium is somewhere around 2.1 IIRC). There are other points but I don't want to end up with article on this topic. Suffice to say, in my view, life is a (short) game that shouldn't be played on easy difficulty (=no kids) to get most out of it.
If that makes me some arrogant a-hole for stating that, because I ruffled some underlying feathers of somebody online is of no concern to me. Being people-pleaser is a shitty life from all possible angles.
Let's not forget that at a certain moment of time Theranos was valued at $9 billion (according to my web searches), and that was just before almost anyone and his brother was at the helm of a unicorn. At that exact moment I'm pretty sure he had felt he had taken almost all the correct decisions.
Just kidding, but wouldnt it be a hilarious plot twist if I were?
Some people noted the key thing here - Sunny's decisions earned him more wealth (if ephemerally) and fame (ditto) than most of us will ever obtain. The balance of good to poor decisions leans heavily to the poor end of the spectrum to my eyes, but it's unlikely he would have agreed during most of the period.
Several people seemed more upset that my response to someone describing a man whose actions may have lead to the deaths of others, certainly amplifying poor health outcomes for many [0] that relied in good faith on the fraudulent & false results coming out of the company, his lack of children was a failure worth noting. Especially in contrast to his ex-partner who, between arrest and trial, had hurried to spawn -- more cynical observers may conclude that fits a well-described sociopathic profile. In any case, comparing highly questionable characters like these two reminds me of the old adage about arguing over the tallest dwarf.
Without irony I was told that:
o having a spine and saying what you believe is preferable - but given I said what I believe ...
o I should adjust my attitude - because telling people to adjust their attitude is wrong.
Several people observed that they themselves weren't personally offended -- good for you chaps! -- but sadly extrapolated that to conclude that anyone who disagreed on the no-kids == failure assessment was therefore wrong, via some breathtaking inductive logic.
Unsurprisingly, someone who thinks PHP is 'the best' struggled to cogently describe their position, but did allude to being too smart to be offended by any claims of being a failure (I guess php guys develop a thick skin) and then proceeded to react to increasingly bad-faith interpretrations of my initial en passant suggestion.
[0] https://www.nbcnews.com/think/opinion/elizabeth-holmes-trial...
> Have no kids, never remarry
You know how the saying goes:
The rich get richer, while the poor have kids.
I would like to see that curve though, if it really exists.
It could come down to "having kids is expensive" (definitely in the US), so either (1) you start out rich enough that it doesn't matter, (2) you only have a few kids a middle class wealth, or (3) you have many kids and accept having less money.
The tragic correlation is probably that on both ends of the U, parenting is probably not great on average due to the sheer time demand of being poor/very wealthy.
It's an interesting lens through which to look at society. After all, how many of the current issues could be considered a result of a parenting crisis?
I'll never understand why he's still working there. The work environment (both physical and mental) at Amazon makes Microsoft look like a luxury resort in comparison.
Puttering around in the garden, on the other hand, is a living hell.
I was briefly the owner of a really nice Ferrari. Never ever saw it myself. Sold some land to a guy, he was rich but no liquidity, sold me the car way under value, I sold it relatively easily with a little more time and effort than guy was willing to put in.
Nobody has Scrooge McDuck cash vaults.
2 were founders or co-founders and 1 is a college friend who was smart and worked hard, but also was right place, right time in the private equity world.
(Me - I’m just a regular schmo but I probably trend old for HN)
The surprising thing to me on there was that despite the bad loans to Theranos (money that is worth $0 now), they still estimate his net worth to be $85 million as of 2022, so way up from even the $40 million he started with in the early 2000s. I guess that despite the Theranos shenanigans, most of it was parked safely.
Shocked. I am shocked.
And when we say several, do we mean three or thirty?
Who cares if he divorced and never remarried?
Did CEO of Enron fail in life because he divorced his first wife?
The biological impulse to reproduce is too strong for most to resist
Holmes:
You are the breeze in the desert for me
My water
And ocean
Meant to be only together tiger
Balwani:
ok
Also, how long are texts saved for?
> ...
> Balwani:
> ok
Are Balwani and Chad[1] related?
[1] https://en.wikipedia.org/wiki/Chad_(Saturday_Night_Live)
https://www.aljazeera.com/economy/2021/11/30/read-elizabeth-...
> For her part, Holmes’s responses are often short.
> Balwani: Missing u in every breath and in every cell.
> Holmes: Ditto
> She uses “ditto” nine times in the texts that are part of the exhibit.
> Balwani: My family sends love and prayers and u have prayers of thousands and thousands of people u have served
> Holmes: Ditto
Balwani didn't. He wanted success, and he wanted Elizabeth.
He's featured prominently in all the most public Theranos material including the book Bad Blood and the series The Dropout. If he doesn't get as much play as Holmes it's not by much — they are both very much front and center. If you hadn't heard much about him (or the fact that he'd very much be on trial the same as Holmes), I'd very much recommend going to the source material — Carreyrou's book, which an easy 300-pager that reads like a thriller
In terms of media, try a custom Google search with a time range that excludes today's sentencing date [1] and you will find thousands of articles written about his trial before now. And beyond that, most of the articles about Holmes' trial end up talking about Balwani in the body because shifting the blame to him was her most central defensive strategy (and vice versa on Balwani's side).
---
[1] https://www.google.com/search?q=sunny+balwani&sxsrf=ALiCzsYc...
I didn't see any obvious implication.
She's also a very strange "character" who attempted to cultivate a cult of personality around herself.
He told them to pound sand and said he had every faith in the Journal's internal processes to not publish anything they couldn't prove.
Really increases the WSJ's credibility in my mind.
Isn't act of integrity, just common sense.
He likely knew by this point (or even way before) that it was inevitably going to come out at some point.
She's also a recent mother.
She played her cards perfectly.
From what the trial has uncovered, it does seem like he had a powerful hold on her, when she was young and impressionable. Does that absolve her of guilt? Absolutely not. But its hard to see how any of this would be possible without Balwani.
Whilst bodily autonomy is of course a thing, one has to wonder at the mindset - she was already at trial, and knew she was facing a 20 year sentence, doesn't seem like the right time to try for a family.
Given her other behavior, more than one person has thought that it wasn't the most coincidental that she got pregnant with a due date within two months of the trial calendar date for sentencing. (Though I will say, even there, that'd be pretty good planning -and- luck to time it that well).
That said, it’s my understanding (and apparently the jury’s, too), that Balwani oversaw the day-to-day operation of the labs. It’s plausible that Holmes was insulated from some of the worst screwups and lies. In any case, while both of them were convicted of defrauding investors, Balwani was also convicted of defrauding patients, where Holmes was found not guilty on similar charges).
Given that the CEO and COO were both found guilty of some crimes, and the COO was also found guilty of additional crimes, I wouldn’t be completely shocked if the COO got a heavier sentence. If that says anything about our society, it’s that it’s bad to commit more than one crime at a time.
Edit: these aren't my claims. They're from various news stories published today. See my comment at https://news.ycombinator.com/item?id=32017919 for more info.
Most big companies I’ve worked in the entire C-suite has their own fiefdoms.
The CEO has direct reports in their C-levels, but the C-levels “own” their own orgs that the CEO isn’t as close to.
The relationship between a CEO and a COO is much closer to a equal relationship than a boss and subordinate.
Maybe something, maybe nothing. There are many differences between the two defendants and their court proceedings. CEO vs. COO is just one of them.
Yes, one of them is a blonde woman. The other a brown man. To quote the great philosopher Patrice O'neal: How long do you think the coast guard will look for you if you went missing? https://youtu.be/kYKJ2z7mecQ?t=77
He was abusive and threatening to the employee(s) who raised genuine concerns about the technology and the medical claims being made.
edit:just saw this great comment about this. Apparently the technology exists to do what they were claiming, just not in the minuscule amounts that they claimed they could use.
Startups are built on trust & dreams. It is important that predatory or fraud-like behavior with investors be dealt with so it does not harm the ones who are actually trying to accomplish something.
But then I researched them and saw war criminal (Kissinger) on their board and total lack of people with domain/business expertise in the area. I decided not to join.
Always do your research on potential startups before jumping on board.
Example: for a decade now it's been possible to take a standard blood draw from a stage 4 cancer patient, sequence all DNA circulating in the plasma, distinguish the cancer DNA from non-cancer, and use the cancer sequences to inform treatment. In 2022, this is readily available to most stage 4 American cancer patients.
The obvious logical future extension of this, is draw blood from any person, and see if they have any stage of cancer. This is something that is being actively worked on, and is currently in the experimental/cutting edge state; expect to see it become somewhat common/affordable in perhaps another 4 years.
Theranos claimed to be able to do the above, a decade ago, and with an order of magnitude less biological input material than current technology requires. One reason they garnered so much attention, is that people generally familiar with the field knew that much of what they claimed, were things that were possible but were 15-30 years out based on the trajectory of technology at the time. So it was plausible that a genuine breakthrough had occurred that massively accelerated that timeline.
Sadly, as we all now know, that was not the case.
COVID has de-sensitized us to the idea of over-testing for the hell of it (in the case of COVID, this is because society is okay with a few false positives being told to quarantine and the test had the sensitivity turned way up so that false negatives were nearly impossible), but it is still a really good way to get really bad information. It is the real-life version of "p-hacking" that occurs in some academic settings. For a test to be useful, you need a hypothesis before you administer a test.
>For a test to be useful, you need a hypothesis before you administer a test.
Hypothesis: some people get cancer
If you want to flood hospitals with false positives that sounds like a good hypothesis. Then the people who actually do have cancer will not be taken seriously.
Here's an example: Suppose you test for a cancer that is very common, and 1 in 10000 people have it. Also, suppose you have a very accurate test with a 5% false positive rate and a 5% false negative rate, and those false positives are sticky. If you 10000 people the test every week, 501 of them will reliably report positive. Every one of them will then report to the hospital with the cancer. Now the hospital has to deal with finding the one true positive before injecting people with literal poison to get rid of that cancer (chemotherapy).
Since the hypothesis is "some people get cancer," you will find all of them! And you will find a shit load more of them who do not.
Compare that to today, when your doctor says "you have a small lump in your body, let's test you for cancer" - that 5% false positive rate will mean very few false positives, so a positive cancer test means that you are ready for invasive treatment.
Data is not information. You need information to make decisions. "Serial testing" only gets you data. That's why we only do it with "informational" tests like the Chem 20 and the CBC.
This depends. There are two ways a test might deliver the wrong result:
(A) It should have delivered the right result, but somewhere along the line something happened the wrong way.
(B) The test correctly assessed the instrumental variable, but -- in this subject -- the instrumental variable did not reflect the variable of interest in the manner that it usually does.
That is, many medical tests are not actually testing for the outcome we care about. They're testing for something that is usually related to the outcome we care about, because we don't know how to test for the real thing, or we do know how but the reliable test is far more invasive, or some such. There is a very accessible example of this kind of thing right now - you can take a sample from someone and test for the presence of covid. Or you can test for the presence of covid antibodies. Those variables are related, but different, and we care about the presence of the virus a lot more than we care about the presence of antibodies.
If the test is failing in way (B), retests will not reduce the false positive rate, because it's actually a true positive that is being misinterpreted. Retesting will only solve failures of type (A). For type (B), you'd have to apply a different kind of test, and that might not be worth it if the first test is unreliable enough. Imagine an unreliable test where the reliable followup requires a bone marrow sample.
Currently, for many people with some sort of mild long-term condition, their doctors will order bloodwork every year or every other year, building up a history for that patient so that when there's suddenly a deviation, it can be noticed.
This will be similar. Once the tests are cheap and ubiquitous enough, checking for mutations at sites associated with cancer to see if someone may be developing cancer, will be equivalent to how currently we check for bilirubin levels to see if someone may be suffering from liver disease.
And it will be dealt with similarly- with follow-ups, additional tests that are more sensitive/specific, and examination of possible problem sites. We haven't flooded hospitals with false diagnoses of liver or kidney diseases that are detected by traditional bloodwork.
/jk
Eh, I would tend to believe that the slam against Henry Kissinger is mostly hindsight. The foresight part was the rest of the sentence:
>>> and total lack of people with domain/business expertise in the area
Co-conspirator (everyone else organizing it): Nothing
Front person who talks directly with the higher-ups (Holmes): You'll get dragged through the media, but the high-ups won't let you get ruined lest everyone else see it and refuse to work with them next time they're looking for someone.
Axe-man who does the front person's dirty work (Balwani): You'll get thrown under the bus, because after working as the axe man for a few years, you've absorbed all the direct personal anger and discarding you means getting rid of part of the anger.
Peon (Theranos employees): You'll be hounded on the basis of your boss's guilty paranoia even if you want to comply and take home a paycheck, and when it all comes down you'll be out a few years of your life with nothing to show for it. Of course, this is no worse an end than what awaits employees at cultlike startups with bad management, except for the fact that you might unwittingly become a directly culpable axe-man bit by bit without noticing what you're becoming inseparable from.
[1] If the high-ups aren't enmeshed within the governing body you're beholden to, they can't protect you even if you're an equal co-conspirator or a front person they might need another one of in the future, and this ranking doesn't apply.
It’s quite a stretch to say that Holmes isn’t “ruined” at this point .
Lots of people get incarcerated for 30+ years for way, way, way less significant crimes.
The DoJ guidelines for calculating the offense level: https://guidelines.ussc.gov/gl/%C2%A72B1.1
Federal sentencing matrix: https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...
Just looking at the first charge of 4. She was convicted of conspiracy to commit wire fraud: Base offense: 7, but the enhancements get huge in a hurry. I don't know how much they're going to pin on her, but call it $150M? That's a 26 point enhancement.
So can go down the chart to row 33 and see what a first time offender should be sentenced to: 135–168 months in Federal prison. In her best case, she's sentenced to 11 years and can get out with good behavior after 9.5. Worst case she's sentenced to 14 years and can get out in 12.
Safe to say she'll be in Federal prison for a decade. I don't have a strong opinion on what's "appropriate" for financial fraud, she'll be paying a ton of restitution as well, but 10 years behind bars is no joke.
I predict very little jail time.
https://fivethirtyeight.com/features/women-arent-always-sent....
What do you mean? I haven't been following that case, but it looks like she got a 20 year prison sentence, which I would consider "going down hard."
Her sentencing is 25.6% longer than the U.S. mean for sexual abuse in 2018. I'm not familiar with the standard deviation for this stat (it could be a 3 sigma event for all I know).
I still don't have an opinion, but it's a good stat to know.
[1] https://www.ussc.gov/sites/default/files/pdf/research-and-pu...
Unfortunately, without having the standard deviation of the distribution, it's difficult to draw strong conclusions from these data points. All we can really say is that she received a 25.6%-higher-than-average sentence.
25.6% above the mean could be an "industrial scale" number of standard deviations above the mean, we have no idea.
Knowing HN, I hope it's only a matter of time before someone computes it for us!
The woman who was sentenced to 20 years in federal prison?
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future. They're here: https://news.ycombinator.com/newsguidelines.html.
he fucked up big time
Will be some jail time but no where close to life. Just doesn’t happen that often that there is a precedent for that.
If you are correct about the punishment, how does a single trial outcome support your claim? What about the endless fraud on Wall Street, for example? Around 2008, for example?