Elizabeth Holmes ordered to pay $452M restitution | Hacker News Reader

Elizabeth Holmes ordered to pay $452M restitution

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72 pointsortusdux96 comments

I'm curious, what actually happens when you're fined some comically large amount of money? Do you just immediately declare bankruptcy and let the courts carve up your assets? Is that usually the end of that or do you still end up having your wages garnished after bankruptcy?

If it was as easy as declaring bankruptcy I don’t think anyone would ever receive alimony or child support.

Child support generally can't be removed in bankruptcy

That is precisely the point of the comment you replied to.

I've read it numerous times after initial agreeing with you, and I don't think that is the case.

To me it sounds like they are saying if declaring bankruptcy were that easy, nobody would be receiving child support because everyone who owed it would just declare bankruptcy to get out of paying it.

Hey I appreciate the comment! I meant “if you could simply resolve debts mandated by the government by declaring bankruptcy, then people would declare bankruptcy just to absolve themselves of owed alimony or child support. Since this is not the case as far as I know, it would seem that Elizabeth Holmes would still be forced to repay this fine even after declaring bankruptcy.”

I clearly have some work to do regarding the clarity of my comments!

Even if it worked, I would expect bankruptcy to only let you escape the backlog.

you can't get blood from a stone

once all of her assets are gone, it would seem mostly symbolic...its not like she is ever going to generate that kind of income after being released

For the rest of her life she will have money garnished from her paycheck and applied towards what she owes. There's a formula they use to ensure that the person still makes money to cover themselves.

https://www.dol.gov/agencies/whd/fact-sheets/30-cppa

I think may sometimes be possible to get out from under it without paying the full sum. ie. you pay some percentage and it lapses after some time.

> I'm curious, what actually happens when you're fined some comically large amount of money? Do you just immediately declare bankruptcy and let the courts carve up your assets? Is that usually the end of that or do you still end up having your wages garnished after bankruptcy?

According to this random lawyer, bankruptcy won't discharge those debts:

https://thompsonlawoffice.net/787/discharging-criminal-debts...:

> On the other hand, the following types of court debt have usually been found to be nondischargeable in Chapter 7 bankruptcy:

> restitution ordered to be paid to compensate victims of crimes

Elizabeth will get out of paying these debts. She's a pro grifter after all.

Remember that new york times tried to sympathize her or I don’t know what you call this kind of article. https://www.nytimes.com/2023/05/07/business/elizabeth-holmes...

The author of that piece was first charmed but her editor snapped her out of it, and I feel she manages to convey to the reader that the whole Liz thing was another bedazzlement move: https://techcrunch.com/2023/05/07/elizabeth-holmes-left-to-h...

She even wrote in the NYT piece: "If you are in her presence, it is impossible not to believe her, not to be taken with her and be taken in by her.", and that is not meant to be complimentary...

But hey, if you wrote an article and many many people, even in your own business, misunderstand it as fan-girling, did you succeed at your job?

> But hey, if you wrote an article and many many people, even in your own business, misunderstand it as fan-girling, did you succeed at your job?

There are a lot of people who post dumb hot takes without reading the article to the end, that very much includes people in journalism.

Having read the article to the end - it was an extremely bad article.

> "If you are in her presence, it is impossible not to believe her, not to be taken with her and be taken in by her."

Bullshit. She's not a sorcerer. She's not Jafar. It's your choice whether you turn off your bullshit meter or not. This sounds like "you would have murdered that hobo too if you thought you could get away with it!" No, I have no desire to murder hobos, and "we'd all do it!" is the opinion of a deeply troubled person. "We'd all believe obvious stupid bullshit if a pretty lady looked into our soul with those weird alien dead eyes that she has!" I've seen her talk and she just looked like a robot pretending to be Steve Jobs, spouting nonsense that anyone with either a modest understanding of the subject or a willingness to fact-check her on absolutely anything would easily see through. Absolute bullshit excuse.

I remember back when Gary Bowser got found guilty of $14.5 million restitution for Nintendo, and would pay back 20%-30% of his income for (basically) the rest of his life for providing Switch tools that offered automatic downloading of pirated software. The general feeling was that this was "Unethical, immoral, inappropriate regardless of what he did, contrary to rehabilitation."

Now we have Elizabeth Holmes. $452 Million in restitution. Yes, what she did was much, much worse - but is anyone seriously arguing this is immoral, unethical, inappropriate regardless of what she did, contrary to rehabilitation?

I would say that it appears to me to be a double-standard regarding paying back large fines for crimes.

She raised $1.4B based on fraud/lies. Are you saying that shouldn't be paid back?

It should be paid back if she still had it.

But it's questionable whether burdening criminals with debts they can never repay is the best solution.

Since the creditors have no chance of getting that money back, it's just an additional punishment. But she already got jail time as a punishment.

I think, once you served your time, you should get a chance of a new start, without being forever burdened with debt.

Also, I think that bedazzling investors is not the worst thing she did. The worst thing is that she sold patients medical tests that didn't work.

I'm not sure I agree without knowing more details but I think that's a fair way to look at it.

Perhaps some crimes are big enough that there are multiple punishments. It is valuable for a society to show that some crimes will literally ruin your life, as an example to others. Her rehabilitation will not make society whole - her best and highest calling now is to be an example of what happens when you endanger people at that scale.

It does look like a lot of shady behavior went on behind the scenes and dropping all the blame on Holmes might be a strategy designed to limit the fallout. The military-industrial contracting angle (which Holmes apparently used as a big selling point to lure in more investors) got set up with help from Theranos board member Jim Mattis, for example:

https://taskandpurpose.com/news/mattis-theranos-questions/

> "Mattis's eagerness to deploy the technology was known and noticed at lower ranks. Near the end of the month, Shoemaker wrote another email to an undisclosed recipient: “The Theranos issue has taken on quite the life of its own within the Army. General Mattis who is the 4-star general in charge of Central Command … wants to see the Theranos device put into Afghanistan."

Of course Mattis claims to have been completely hoodwinked, and didn't intentionally act to mislead the public and investors. Being politically connected probably helped him avoid prosecution, however.

I just want her in prison where she belongs. There should be a warrant for her arrest which should drag her off to prison where she belongs.

For anybody interested on how a fraud like this came to be, Hulu's series The dropout is a really high quality depiction.

Does anyone know if her husband will be responsible for this amount? They supposedly got married in 2019, which is after the fraud but before the trial and ruling.

Yes, it's in the article.

Where does it say that?

It doesnt.

Sorry, I was thinking of a bbc article that directly said they would split the fine. [1]

> In his restitution ruling, Davila determined that Holmes and Balwani should pay Murdoch $125 million —- by far the most among the investors listed in his order. The restitution also requires the co-conspirators in the Theranos scam to pay $40 million in Walgreens, which became an investor in the startup after agreeing to provide some of the flawed blood tests in its pharmacies in 2013. Another $14.5 million is owed to Safeway, which has also agreed to be a Theranos business partner before backing out.

The BBC article:

> In a separate ruling, US District Judge Edward Davila also ordered Holmes to pay $452m (£363.8m) to victims.

She will split the multi-million dollar payment with her former romantic and business partner, ex-Theranos boss Ramesh "Sunny" Balwani.

[1]: https://www.bbc.com/news/world-us-canada-65620371

That has nothing to do with her husband, who was the person at question here.

This cannot be the case. It would only apply to jointly owned assets, not any wealth he had and kept separate or earns going forward. I.e. they can’t garnish his wages for his new wife’s past sins.

I posted this comment last time her incarceration made the front page - will she report or flee? I'll go out on limb and say she doesn't report for prison.

Elizabeth Holmes is an All-American hero for defrauding Rupert Murdoch, Walton family, Jim Mattis, Betsy DeVos et al. Rehabilitation of her reputation is inevitable, why not start here and now

Holmes probably deserves all this, but we should recognize that the reason she's being punished and no other CEO is is because she was a bit of an outsider and she managed to con top members of the ruling class. Her investors were war criminals and other American elites. You don't con them out of their money and get away with it.

Her investors were war criminals

Specifically?

He's referring to Kissinger, obviously.

Yep, also Mattis and Shultz

Who is responsible for deployment of incendiary weapons, including white phosphorus against civilians.

(Obviously, EH is a criminal and a fraud, even if she's defrauding other criminals.)

Agreed. I'm not saying she isn't merely that we should think about why is this happening to her and not others with the implication that many more elites should be in prison not that she should get off.

Agreed on Kissinger and Mattis.

I need more substantiation in regard to Shultz (beyond his delusional policy supports, here and there).

Henry Kissinger

https://news.crunchbase.com/health-wellness-biotech/theranos...

Board of directors

    Henry Kissinger (former United States Secretary of State);
    Jim Mattis (retired Marine Corps four-star general);
    George Shultz (former United States Secretary of State);
    Richard Kovacevich (former CEO of Wells Fargo);
    William Perry (former United States Secretary of Defense); and
    William Foege (former director of the Centers for Disease Control and Prevention).

Investors

    Media mogul Rupert Murdoch, who led a $5.8 million Series A in February 2005;
    Venture capitalist and Draper Fisher Jurvetson partner Tim Draper, who remained an outspoken defender of Theranos at least until 2018;
    Oracle Executive Chairman and founder Larry Ellison; and
    National pharmacy and retail chain Walgreens.

damn, i kind of like her now...

How do these Secretary’s of State and Generals end up on boards like this?

Like how do they find the company in the first place? Who connects SecDef Mattis with a blood test company?

what value do they gain out of being on it measurably? Equity? Salary?

and once there what do they really do?

Does Henry Kissinger really have a connection to the modern day FDA to move things along for Theranos?

> How do these Secretary’s of State and Generals end up on boards like this?

They get jobs on these boards, because the owners of the company want them on the board, because they have friends who can grease the wheels in getting the DOD to buy services from this startup.

It's just plain-old corruption. As long as it's not formally quid-pro-quo, it's not illegal.

> Does Henry Kissinger really have a connection to the modern day FDA to move things along for Theranos?

He probably can't move the FDA, their process is too streamlined and public, and they may be under too much of a microscope, but he almost certainly has friends who can move some less-public/streamlined/visible processes - procurement.

It's just plain-old corruption

Yup - as with Dropbox's tapping of Condoleeza Rice.

Lest we forget: https://www.drop-dropbox.com/

'On April 21, 2018, Draper predicted during an Intelligence Squared debate that "In five years you are going to try to go buy coffee with fiat currency and they are going to laugh at you because you're not using crypto."'

Nice! No, Tim, I'm laughing at you. There are so many crazy VC's.

Well, yes. But I'd say that the direct harm caused by her particular brand of fraud, combined with how utterly ham-fisted it was, also plays a part.

Of course, but we see insane crimes all the time and nobody goes to jail. Poisoning water for entire cities like in Flint (which was a government/private sector collab), financial crimes that put millions in poverty, etc.

It's not always possible to prove criminal negligence or malice from incompetence.

There are a lot of well intentioned people doing things that directly or indirectly harm people. We generally grade people on intentions and not results.

Other countries have different strategies and those also come with trade offs.

In some ways she did though, she'll likely never pay that $452 million in restitution and sure, she's in jail, but if she doesn't pay it back.. she got away with it.

I don't think it counts as getting away with it if you don't get to keep the money and you are stuck in prison.

just hire the same image consultant who guided Martha Stewart from jailbird pariah to amusing D-list celebrity

She reaped the benefits from the money a for a good period of time. Not having the full sum of cash can't discredit the lifestyle and things she did during that time frame.

But then doesn't basically everyone who does anything 'get away with it'?

E.g. I kill my wife. I get executed 6 months later but I get to enjoy my wife being dead for 6 months.

This is the "time horizon" problem. There's more theory about this than you ever care to know in books about reinforcement learning.

A longer time horizon is better, but you'll need to learn that at a shorter horizon of course.

Please don't dilute what she did because of who one member of her board was. She didn't just lie. She ran a con that affected people downstream who used the service. Who knows what kind of damage she caused with her fake tests. She belongs in jail and all of her money has been made through fraud. That's on her.

That is not too different to what the food industry is doing. Soon there will be 100 million people with diabetes.

Yes. It is actually too different to what the food industry is doing.

Shouldn’t Walgreens execs be on trial for not having done proper due diligence before rolling out the tech?

Well, no. Half the US secretaries of State both invested in Theranos and helped the company. Such a thing would lead to asking the same questions about them.

The difference is Walgreens took the tech and held it out to the public, implicitly stating that they had done appropriate due diligence and the outcome was that they were backing it.

Being a Secretary of State or other politician and investing and sitting on the board only means that they thought it presented a reasonable investment opportunity and that they believed they could execute board governance requirements. I don’t think anyone believes Henry Kissinger could do due diligence on technology.

I think what people believe about Henry Kissinger and all other Secretaries of State is that they could and would hire people who would, correctly, do due diligence for them, and wouldn't be fooled as a result.

You would expect them to have both a lot of experience doing this, and being able to sniff out problems. I mean, that is what they've done their entire life, isn't it? You'd expect them to be half-decent at it.

Instead it very much looks like they backed this startup because of family and government ties, and one wonders if you'd look, would you find they backed it against advice by reasonable and knowledgeable people? You know "Trump stuff".

Worst part of this is, when it comes to testing many biomarkers simultaneously in a single small sample, there's a metric boatload of startups with credible stories (and testing 1 biomarker in a small sample is a difficult but solved problem. Any hospital can do that now). These startup aren't seeing investment ... and weren't seeing investment before Theranos either, but a lot of them aren't outright scams! They're trying to make it work, and slowly, very slowly advancing the state of the art.

These startups have to scrape together funds that come from testing crime scenes (if you can test very small samples, you can test blood found at a crime scene because only the top layer coagulates, there's a "liquid core" of a few cl inside ...)

She sold a product that directly caused people to miss their diagnosis that probably resulted in many deaths. She showed absolutely no remorse for this. I think she got off lightly.

I think the unaccountability of the high criminality of US elites is so entrenched that people read my comment and think I'm arguing that because no one else goes to prison Holmes should get off. On the contrary, we should be calling for more prison for more elites but also not be naïve as to why Holmes is going down in this instance.

Holmes' father was a VP at Enron and her mother was a congressional staffer[1]. She is the absolute definition of an American elite. To try to characterize her as an outsider is absurd.

[1] https://web.archive.org/web/20200211105506/https://www.busin...

>Holmes' father was a VP at Enron

lol the family does have an interesting track record. What were they trying to do, produce the Kwisatz Haderach of fraud?

They need to cross her bloodline with someone from the Madoff dynasty and some offspring of Sam Bankman-Fried.

"Call me, Elon!"

[said grudgingly] objectively, she still is of outsider gender

The reason she is being punished is because she committed very flagrant fraud. Fraud that likely lead to deaths as people trusted theranos’s fake blood test results.

Also, her cofounder got a little more prison time than she did.

Not everything has to be part of some grand conspiracy.

If restitution was the most important goal here, they'd allow her to work a (monitored) job on house-arrest with massively garnished wages.

Seems like silly posturing to order massive restitution while also sending her to prison — you can't have your cake and eat it too. Make up your mind which is more important — punishment, or compensation for victims.

Aren't you somewhat leaving out the fact that she may still have assets (she may not, I don't know) ?

To paraphrase Bo Burnham, and she still will but it’s not as fun now.

If she has $50 million squirreled away somewhere she won’t be able to spend it openly. She can be sneaky and keep a slightly comfortable life but she’ll never again have an opportunity to be openly decadent.

Debts handled, excellent health care, a little bribery perhaps, and an occasionally get away to somewhere remote, but no conspicuous consumption, which for these people seems to be more than half of the fun.

How do you get excellent health care when you pay under the table? Surely no one reputable is going to take cash?

Medical tourism was the angle I was thinking.

> How do you get excellent health care when you pay under the table?

As is very common, you're thinking within the confines of your borders.

Typically when rich people outside of the US/EU need specialist healthcare they fly to the US/EU. Is your claim that 'excellent' health care can be found outside of these areas, or that paying cash for healthcare is a reasonable proposition in the US/Europe?

When people of intermediate means need major surgery, India is now emerging as a place where you can get better than 80% of the healthcare for 20% of the cost.

What job is she going to get that will get anywhere near $452M?

> posturing to order massive restitution while also sending her to prison

Under what legal theory can someone only be punished once in one way?

> What job is she going to get that will get anywhere near $452M?

Politician, perhaps.

Take my upvote. That was clever.

> What job is she going to get that will get anywhere near $452M?

She should launch a new startup

> they'd allow her to work a (monitored) job on house-arrest with massively garnished wages.

What is she qualified for?

ted talks?

Voice coaching

Or Courses on how to become a fraudster in 21 days

Try not paying alimony and see what happens. Go to jail AND continue having to pay them. No difference here.

I think it’s totally justified to add bankruptcy to a prison sentence in this case. She wasn’t even jailed for the bodily harm she did.

Restitution can be paid out of many types of income. Book deals, inheritance, future earnings after she gets out of prison (she probably won't serve the entire 11 years), etc. In some states, the restitution could also be taken from her spouse's income.

It seems unlikely that she will ever pay the full restitution amount, regardless of how much jail time she serves.

This is federal prison so it's extremely unlikely she will serve less than 85% of the 11 years. It would take a presidential pardon to change this.

Who says restitution is the most important goal?

The actual goals of the US DOJ are set out here https://www.justice.gov/doj/doj-strategic-plan-2022-2026

1: Uphold the Rule of Law

2: Keep Our Country Safe

3: Protect Civil Rights

4: Ensure Economic Opportunity and Fairness for All

5: Administer Just Court and Correctional Systems

Like I said, it's fine for the goal to be punishment.

But then don't order these silly un-payable restitutions. It's clearly just posturing that doesn't help the victims.

This order all but guarantees that, even if she games the system and gets time served, she will never have the opportunity to reoffend.

I don't follow how this affects her ability to run a company post-release. It just affects her ability to get (somewhat) rich from it.

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