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  1. #1
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    Elizabeth Holmes: guilty

    Couldn't find the previous thread on this, but I have to say I'm very happy that Elizabeth Holmes was found guilty on a number of serious charges.
    If you haven't read Duke grad John Carreyrou's book Bad Blood, you ought to...fabulous book, amazing story about how someone, hooked into the venture capital high rollers of Silicon Valley, could carry on such an amazing fraud for so long.

  2. #2
    Had an interesting exchange of messages with my non-lawyer sister-in-law about the sentence Holmes will receive. She thinks she won’t get much jail time, because she’s white, educated, and has a young kid. I think she’s going down hard, because the counts on which she was found guilty involved hundreds of millions of dollars, and she’s going to get no credit under the guidelines for acceptance of responsibility, cuz she hasn’t. There’s also the small matter of forfeiture, which will likely send her into poverty unless she has funds stashed where the marshals can’t find them (IIRC, forfeiture amounts aren’t dischargeable in bankruptcy).

    Anybody else have thoughts on the subject?

    Agree that “Bad Blood” is a fabulous read, right up there with “The Smartest Guys in the Room” as best-of-genre.

  3. #3
    Quote Originally Posted by burnspbesq View Post
    Had an interesting exchange of messages with my non-lawyer sister-in-law about the sentence Holmes will receive. She thinks she won’t get much jail time, because she’s white, educated, and has a young kid. I think she’s going down hard, because the counts on which she was found guilty involved hundreds of millions of dollars, and she’s going to get no credit under the guidelines for acceptance of responsibility, cuz she hasn’t. There’s also the small matter of forfeiture, which will likely send her into poverty unless she has funds stashed where the marshals can’t find them (IIRC, forfeiture amounts aren’t dischargeable in bankruptcy).

    Anybody else have thoughts on the subject?

    Agree that “Bad Blood” is a fabulous read, right up there with “The Smartest Guys in the Room” as best-of-genre.
    I think it's more that typically "white collar crime" doesn't get huge sentences, with also no prior criminal records. I think each of the four counts she was found guilty of has a maximum of 20 years, but they typically aren't "stacked." In cases like Bernie Madoff which are incredibly egregious, they come down hard and he got them stacked for a 150-year sentence. No idea what will happen with Holmes.

  4. #4
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    Truly sucks that she was not found guilty on defrauding patients, since they were the ones who could have potentially suffered the most from all this.

    The previous discussion on this was in the What are you reading? thread.

    Yes, highly recommend Bad Blood. I can't believe all those people that were suckered.

  5. #5
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    Quote Originally Posted by aimo View Post
    Truly sucks that she was not found guilty on defrauding patients, since they were the ones who could have potentially suffered the most from all this.

    The previous discussion on this was in the What are you reading? thread.

    Yes, highly recommend Bad Blood. I can't believe all those people that were suckered.
    Sort of like how they got Al Capone? Not for murder but tax evasion?

    -jk

  6. #6
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    I didn't watch the testimony, so I have no idea what the judge heard, but if it approximated what Bad Blood revealed (and I have to think it did) I suspect the sentence will be pretty harsh. It wasn't really just a matter of hiding fraudulent activity, Holmes was malicious and vindictive, as was her co-executive Sonny Balwani (who she tried to insist had manipulated her). At least I give Holmes credit for having duped an absolute all star cast of board members, including George Shultz, Henry Kissinger, Jim Mattis and William Perry...not to mention prominent mega investors such as Rupert Murdoch and Larry Ellison. Oh, and the good folks at Walgreens.

    Terrific movie role for Jennifer Lawrence, I think she's the perfect choice to play Holmes.

  7. #7
    Quote Originally Posted by aimo View Post
    Truly sucks that she was not found guilty on defrauding patients, since they were the ones who could have potentially suffered the most from all this.

    The previous discussion on this was in the What are you reading? thread.

    Yes, highly recommend Bad Blood. I can't believe all those people that were suckered.
    Quote Originally Posted by -jk View Post
    Sort of like how they got Al Capone? Not for murder but tax evasion?

    -jk
    Jury also deadlocked on a few counts of defrauding investors, so was found guilty on about half of those counts RE: investors. And acquitted on conspiracy (and defrauding patients as you say). Seems like her attorneys did a pretty amazing job injecting plausibility deniability (although I don't know the details of the case)...I think they basically argued she was tricked by her co-conspirator...When's his case or has it already happened?

  8. #8
    Quote Originally Posted by budwom View Post
    I didn't watch the testimony, so I have no idea what the judge heard, but if it approximated what Bad Blood revealed (and I have to think it did) I suspect the sentence will be pretty harsh. It wasn't really just a matter of hiding fraudulent activity, Holmes was malicious and vindictive, as was her co-executive Sonny Balwani (who she tried to insist had manipulated her). At least I give Holmes credit for having duped an absolute all star cast of board members, including George Shultz, Henry Kissinger, Jim Mattis and William Perry...not to mention prominent mega investors such as Rupert Murdoch and Larry Ellison. Oh, and the good folks at Walgreens.

    Terrific movie role for Jennifer Lawrence, I think she's the perfect choice to play Holmes.
    You forgot the family office of former Education secretary (under President Trump) Betsy Devos. They invested $100 million into Theranos. They apparently DID do some due diligence before investing the money in Theranos but, obviously, not enough.

  9. #9
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    Quote Originally Posted by Bluedog View Post
    Jury also deadlocked on a few counts of defrauding investors, so was found guilty on about half of those counts RE: investors. And acquitted on conspiracy (and defrauding patients as you say). Seems like her attorneys did a pretty amazing job injecting plausibility deniability (although I don't know the details of the case)...I think they basically argued she was tricked by her co-conspirator...When's his case or has it already happened?
    Believe it is upcoming.

  10. #10
    Quote Originally Posted by budwom View Post
    I didn't watch the testimony, so I have no idea what the judge heard, but if it approximated what Bad Blood revealed (and I have to think it did) I suspect the sentence will be pretty harsh. It wasn't really just a matter of hiding fraudulent activity, Holmes was malicious and vindictive, as was her co-executive Sonny Balwani (who she tried to insist had manipulated her). . . .
    The imposition of any sentence that falls within the maximum prescribed by law will, IMO, be less than she deserves. Holmes is nothing more than an unapologetic con artist with no conscience, no compassion, and no integrity. She does not acknowledge that she did anything wrong; and if she is ever released from prison, there is little doubt that she will try to resume her predatory practice of exploiting others for her own profit and personal aggrandizement. I believe a harsh sentence of long-term imprisonment is warranted in this case both as a punishment and as a deterrent to others.

  11. #11
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    Quote Originally Posted by duke79 View Post
    You forgot the family office of former Education secretary (under President Trump) Betsy Devos. They invested $100 million into Theranos. They apparently DID do some due diligence before investing the money in Theranos but, obviously, not enough.
    Indeed, too many dupes to mention! Also the Waltons, the WalMart ones not the TV goobers...from what I recall from the book, the key endorsement of Holmes and Theranos came from one of the venture capital titans of Silicaon Valley.(can't recall his name)..once she had his endorsement, the celebs and their money poured in.

    There's also a creepy element in all this, the manner in which Holmes lowered the pitch of her voice and imitated Steve Jobs...maybe a mental health defense would have been more fruitful.

  12. #12
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    Count me as one who believes she should get the stiffest possible sentence. However, my guess is that the judge will allow the sentences to run concurrently and also give her something less than the maximum. I am quite disappointed that she was not convicted of defrauding patients, as I agree that was the most egregious crime she committed.

    The woman dropped out of Stanford after one year with the intention of creating a company that utilized a “technology” that she knew did not exist, and she also knew that she did not possess the knowledge to develop such a technology. The voice change and the “Steve Jobs” clothing only reinforces the evidence that her goal was to trick people. She wanted to be a strong woman, and sold herself to investors as such, but when she got caught she blamed others and used (IMO) a phony “abuse” claim.

  13. #13
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    Quote Originally Posted by Tooold View Post
    ...The woman dropped out of Stanford after one year with the intention of creating a company that utilized a “technology” that she knew did not exist, and she also knew that she did not possess the knowledge to develop such a technology. The voice change and the “Steve Jobs” clothing only reinforces the evidence that her goal was to trick people. She wanted to be a strong woman, and sold herself to investors as such, but when she got caught she blamed others and used (IMO) a phony “abuse” claim.
    The bolded here is a very salient point in my opinion.

  14. #14
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  15. #15
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    I have not read the book so this may have been addressed but one of the most interesting discussions in all of this is where exactly the line is between start up vision setting and entrepreneurial bluster and outright deceit. Holmes undoubtedly crossed the line but I’d wager a lot of VC-backed start ups get closer than we might think or are houses of cards in their own right. I’ve done just a bit of work with SV firms in the VC stages and the market projections for unproven lab scale or demonstration technologies were absurd at times.

    There’s definitely a culture of claim absurdism in that world in pursuit of unicorns.

  16. #16
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    Quote Originally Posted by bundabergdevil View Post
    I have not read the book so this may have been addressed but one of the most interesting discussions in all of this is where exactly the line is between start up vision setting and entrepreneurial bluster and outright deceit. Holmes undoubtedly crossed the line but I’d wager a lot of VC-backed start ups get closer than we might think or are houses of cards in their own right. I’ve done just a bit of work with SV firms in the VC stages and the market projections for unproven lab scale or demonstration technologies were absurd at times.

    There’s definitely a culture of claim absurdism in that world in pursuit of unicorns.
    There were employees questioning the issues and they were promptly fired and threatened with lawsuits if they talked to anyone about it. And some were physically intimidated/followed. She is a nutjob and her practices were carefully planned until the info DID get out and she could no longer keep people quiet. Several of the bigwigs had the true info thrown in their faces and she managed to continue to con them. You should read the book - it is mind-blowing. As someone who has worked in research-related fields all of my adult life, I was floored at what she got away with.

  17. #17
    Quote Originally Posted by wilson View Post
    The bolded here is a very salient point in my opinion.
    Quote Originally Posted by bundabergdevil View Post
    I have not read the book so this may have been addressed but one of the most interesting discussions in all of this is where exactly the line is between start up vision setting and entrepreneurial bluster and outright deceit. Holmes undoubtedly crossed the line but I’d wager a lot of VC-backed start ups get closer than we might think or are houses of cards in their own right. I’ve done just a bit of work with SV firms in the VC stages and the market projections for unproven lab scale or demonstration technologies were absurd at times.

    There’s definitely a culture of claim absurdism in that world in pursuit of unicorns.
    I haven't read the book either but, like many fraudsters, she may have started out with legitimate intentions but, then, when she couldn't make the technology that the company was working on successful, she then embarked on the fraud, rather than admitting failure and shutting the business down. I mean, Bernie Madoff was a legitimate money manager at one point in his career until he realized that he couldn't beat the market on a regular basis and he became afraid that he would start to lose his legitimate clients. He then started out on a small scale sending out false account statements to some clients and then it got bigger and bigger and he couldn't turn back. If you read the stories behind many of these fraudsters and con artists, this is a common occurrence.

  18. #18
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    Quote Originally Posted by bundabergdevil View Post
    where exactly the line is between start up vision setting and entrepreneurial bluster and outright deceit. Holmes undoubtedly crossed the line but I’d wager a lot of VC-backed start ups get closer than we might think or are houses of cards in their own right. I’ve done just a bit of work with SV firms in the VC stages and the market projections for unproven lab scale or demonstration technologies were absurd at times.
    There is a difference between having a technology or product that has some promise but needs development and having no technology at all. There is also a difference between overly optimistic market projections for a product that works (or seems like it actually could work), and the same aggressive projections for a product that doesn’t exist (or doesn’t work). IMO, Theranos was the latter in both of these scenarios. And Elizabeth Holmes knew it. And she also had to know that she personally lacked the scientific knowledge and education to have even a clue as to whether such a product could be created (and I believe the head of the chemistry (?) department at Stanford even told her that.)

    The book is excellent, btw.

    Edit: if it isn’t clear, this whole situation makes me very angry.

  19. #19
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    Quote Originally Posted by duke79 View Post
    I haven't read the book either but, like many fraudsters, she may have started out with legitimate intentions but, then, when she couldn't make the technology that the company was working on successful, she then embarked on the fraud, rather than admitting failure and shutting the business down. I mean, Bernie Madoff was a legitimate money manager at one point in his career until he realized that he couldn't beat the market on a regular basis and he became afraid that he would start to lose his legitimate clients. He then started out on a small scale sending out false account statements to some clients and then it got bigger and bigger and he couldn't turn back. If you read the stories behind many of these fraudsters and con artists, this is a common occurrence.
    Quote Originally Posted by Tooold View Post
    There is a difference between having a technology or product that has some promise but needs development and having no technology at all. There is also a difference between overly optimistic market projections for a product that works (or seems like it actually could work), and the same aggressive projections for a product that doesn’t exist (or doesn’t work). IMO, Theranos was the latter in both of these scenarios. And Elizabeth Holmes knew it. And she also had to know that she personally lacked the scientific knowledge and education to have even a clue as to whether such a product could be created (and I believe the head of the chemistry (?) department at Stanford even told her that.)

    The book is excellent, btw.

    Edit: if it isn’t clear, this whole situation makes me very angry.
    Yeah, and to be clear, my post wasn't defending her. I haven't read the book and mostly been keeping tabs through light touch news stories. I just have noticed that some of the talking head chatter content has centered on "the line" in claims and I think that's a reasonable and interesting discussion to have. I suspect duke79 is generally correct, she started off with something legitimate, it failed, and she committed fraud to hide it.

    I do think the line is fuzzier than we might think --- and is crossed more often. The VW emissions scandal comes to mind a recent example. I did some light consulting for a venture-backed renewable company many years ago. I recall many of their market sizing claims - for what was then a demonstration level technology with no actual revenues - suggesting their eventual product's market could replace 1/3 of the world's fossil energy, which was and is preposterous. Their tech also had many, many MANY technological, scalability, regulatory and economic issues --- but sure, if they solve all those, they had a hell of a product!

    Note: they failed, ran out of money and are no more...

  20. #20
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    Quote Originally Posted by bundabergdevil View Post
    . I suspect duke79 is generally correct, she started off with something legitimate, it failed, and she committed fraud to hide it.
    .
    You and Duke79 are far nicer (or more generous and less jaded) than I am. I don’t think she ever had a legitimate concept (let alone a legitimate product or technology). While she may have hoped it could be created, she was smart enough to know the technology did not exist and that she was not capable of developing it. I don’t think it was a question of a failure….it was a fantasy from the start.

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