This greedy businessman deserves jail. Lots of it. Fraud is a crime.
6
The health and safety of patients was put at risk by this fraudulent con artist. She should face criminal charges and jail time.
19
Until these characters go to prison for at least a decade and are stripped of their personal fortunes, nothing has and will change. Just a good ol’ Boy and Girls club.
6
Lesson learned...if you are going to steal, steal big?
7
Paradigm Lost.
2
But... But... She's female! The Times told us that once that women ran Silicon Valley, everything would be peachy! What gives?
11
The standard argument: until all, or a sizeable majority of chief executives, politicians and Navy Seals are women, it is unfair to hold individual women responsible for their actions. Women work a collective magic on humankind, don't you know?
The great things are that A) this excuses egregious individual misbehavior and, B) until the gender Millenium, it cannot be disproved! Win-win for gender identity politics.
2
We are told, ad nauseam, that women should hold power and wealth because they just are fairer, more humanistic and less corruptible than men. However, when they foul up, they say that they're really no worse than men.
And the Times aids and abets this nonsense.
15
Men often commit fraud as a group, with members covering for each other. By contrast, women are on their own. Men just don't usually coalesce in a group with women. Therefore women sink on much weaker charges, and they have no one to turn to. Predictably women able to pull off-big time ideas (legitimate or otherwise) are extremely scarce. Ms. Holmes is really a very unusual individual.
7
Theranos was doomed from the start, but investors had no clue. As a retired medical technologist (ASCP) with forty years working in clinical laboratories I was dumb founded when she started her company and made claims that she could do vast amounts of testing from finger stick samples instead of the usual venipuncture specimen. I understood the possibilities of the technology to perform the testing. What she ignored or just plain did not know is that a finger stick blood sample is not a reliable sample for analysis. You only use that kind of sample as a last resort. The gold standard is a whole blood venipuncture specimen. She could not produce accurate results time after time, particularly for coagulation studies. This area of testing includes patients on blood thinners, who require adjustments to their medication based on their lab results. Failure to perform testing accurately and precisely may put patients at great risk. I am relieved to read that she is out of business because never took the course called “Clinical Laboratory 101.”
20
Even now that Elizabeth Holmes has had to accept a settlement with the SEC predicated on fraud, she still receives some accolades from those who assess her activities. What utter nonsense. She didn’t motivate people to do the impossible, she lied, and when face with doubters and dissenters within her own company, she threatened legal action to gain their silence. One hopes she is left with nothing for all years of fraudulent activity, and has to try and pick up from where she left off at age 19.
16
It surprised me that no investor seemed to due even the most basic of due diligence from a medical perspective. As a physician, I did not understand how this could possibly work at the price point that was being promised. While "paradigm shift" and "disruption" is highly prized, it would have required several exponential advances from current technology to create low cost testing from a pinprick of blood that would require a PCR-type amplification or something similar. That level of significant advancement, seemingly out of thin air, was suspect from the start. The pitch was also hilarious: "Do you hate needles?" "I hate needles." "Who needs them?" "Not us!"
10
The "Stanford dropout" bit should have been a warning. Not everyone who is a dropout will turn into Mark Zuckerberg or Bill Gates. Sometimes a dropout is just that...and not necessarily Silicon Valley star material...
12
This whole thing should have been obviou. Any new clinical lab test method *must* be validated against existing methods with publication of peer-reviewed data, and before such tests can be used to guide patient care, they must be approved by the FDA. Theranos had not shown any such data at all, so the fact that they were producing lab results for Walgreens customers could have meant only two things: either they were using their own tech without FDA approval, which is illegal, or they were simply operating a clinical lab like any other and using it as a front to hide the fact that their own tech wasn’t working.
The IT analogy would be a startup claiming it had new search tech that would blow Google out of the water, raising $9 billion on that promise, and then five years in it turns out that all the company’s searches are routed through Google’s search engine, the only new thing being the startup’s user interface.
Aaron Walton MD FRCPA
6
I think Ms. Holmes's downfall was orchestrated by her competitors. Too much was at stake, profit, infrastructure, etc. Attacks below the belt are nothing new in this society, but time will tell. People like her do not commit fraud, they may make a mistake, but not fraud, there is no intrinsic motive. If anything, I would look into the ethics and motivation of the challengers, after all valuations are based on trust, once you introduce doubt about a product, even if it works, the shares will go down and then it's a downward spiral process. It's unfortunate that jealousy is so venomous.
1
David Boies name and his firm crops up again in questionable activities - protecting Harvey Weinstein, then Elizabeth Holmes, and both in dubious ways. What a shameful descent from the high point defending Gore ifter the 2000 presidential election.
8
As pressure mounts to bring more diversity into fields like tech, we can expect more of this.
We already have massive amounts of diversity triggered fraud in higher education - where people who should not be admitted are, just to make a diversity quotient. And the result is the same as in this case; no marketable product to speak of upon graduation, with loans and investors unpaid (see the skyrocketing student loan default rate). In the case of Ms. Holmes, at least taxpayers aren't the ones being asked to bailout the investors.
But it's the same principle at work. If you want to run a scam in this crazy world, just lead with identity politics. Put an attractive blonde in a goofy Steve Jobs get-up in front, train her to talk like Obama, take pictures of her where she projects that creepily vacant and wide eyed Zuckerberg stare, and then attach some impressive sounding but tech-ignorant names to the board - and watch the money roll in. Her business plan was basically the outline of a TED talk. It was almost Hillary Clinton-esque. For people impressed by this approach, I'm sure Theranos was an attractive opportunity. Likewise for people who are blinded by identity politics.
13
These crimes have nothing to do with diversity. It It had to do with those don't it, knowing they will get off with a slap on the wrist. If we had real laws against white collar crimes, and I find it interesting they call them white collar crimes, this wouldn't be a problem. I mean, after all, commit a black color crime like being caught with a marijuana joint, go to jail and throw away the key.
4
Much more classy fraud than Trump University.
3
"Prominent venture capitalists soon signed on, including Timothy Draper, Ms. Holmes’s former neighbor, and Don Lucas, an early investor in Oracle. Ms. Holmes also assembled a star-studded board of directors, including the former secretaries of state George P. Shultz and Henry A. Kissinger as well as two former United States senators. Gen. Jim Mattis, the current secretary of defense, also served on the board: He told Fortune magazine in 2014 that he joined the board after retiring from the military because he was impressed by the strength of Theranos’s leadership."
There is nothing smart about being stupid.
9
Theranos had all these big name as part of their Board of Directors, but I'm confused.
Aren't the Board of Directors partly responsible for this fraud.
They have to answer to shareholder, but don't they have certain duties and responsibilities?
The first one I have in mind is "due diligence". Don't they have some responsibility to make sure their product can deliver the way its promoted and sold to the investors and general public?
Was their any review on the testing Theranos conducted that should prove their product could deliver as advertised???
Theranos had a valuation of almost $9 billion. It seems all these big named Board of Directors dropped the ball big time!
6
This article shows that money, power and greed corrupt both women and men. The recent NY Times article "Money and Power Women need more of Both" was just another case of not understanding the Power and Money can easily corrupt not solve issues.
7
The Steve Jobs comparison, Silicon Valley angle and famous people who were hoodwinked make the Theranos story different.
The Theranos product, however, is just one more scam from the medical industrial complex. Read the NYT story from 2015:
https://www.nytimes.com/2015/11/24/us/politics/fda-targets-inaccurate-me...
WASHINGTON — Inaccurate and unreliable medical tests are prompting abortions, promoting unnecessary surgeries, putting tens of thousands of people on unneeded drugs and raising medical costs, the Food and Drug Administration has concluded.
Life-threatening diseases go undetected in some cases. In others, patients are treated for conditions they do not have.
"Patients have been demonstrably harmed or may have been harmed by tests that did not meet F.D.A. requirements,” federal investigators concluded in a report to Congress last week.
3
Eric Garner is arrested and strangled by police for selling individual cigarettes ($1 each?). Elizabeth Holmes defrauds investors of at least $700 mm and puts peoples' health at risk with flawed medical testing and she gets this slap on the wrist? She's still wealthy, free, and alive.
In case anyone doesn't believe that structural racism and class-ism exists, this is Exhibit A.
21
This is not exhibit A, but maybe AAAA..... Big Parma has done this many times and the FDA has been complicit in it. No one foods to jail there either. Every once in a while, they pay a fine, and it's business as usual.
4
Thank you, Larry.
4
Where's the hashtag now? Victim or culprit? No doubt, misogyny made her do it. The only thing we know, for sure, because we're told all the time, is that she's a "born" nurturer, more sensitive, and more cooperative by nature. It can't possibly be thought that "she's" responsible. Would we even be making this fuss if she were a man? Women to the ramparts! The Queen is under attack! Long live Elizabeth!
4
Why does this woman essentially get a free pass- pay a minimal fine and not do any jail time, when Martin Skirelli gets stuck with a 7 year sentence. Skirelli's investors lost 0$$ money whereas Holmes' investors plied in 700 million and received a fraud. Sounds like gender discrimination.
9
Such Hubris!
700 Million down the drain!
Where is the 'due diligence' by the investors and the Board?
Makes you wonder about investing with VC's more than anything!
3
Both investors and health care providers were massively duped. Investors have only themselves to blame but where were the health care watchdogs? It seems that only a minimum of due diligence would have been needed to expose the obvious fraud, testing the equipment independently. Cooperation would not even have been needed with Theranos to submit identical samples to them and to an independent lab. Was there no one to look after the public interest here?
1
Business leaders tend to be amoral sociopaths.
and quite obviously, anything involving Henry Kissinger is, by definition, a criminal enterprise.
12
Voiveofamerica, this is SO true!
3
Theranos was a phony scheme from the start. Now I would like to see 23andMe get back under the legal microscope. They use invalid info and extrapolations from skimpy DNA data to come up with their estimates of where people`s ancestors where born. It`s a less serious crime but still a crime to take money for a sham.
2
Hi Duncan: Re: 23andMe -- are you sure? One of the investigators at NBC tested 3 major DNA analyzers (23andme; myancestry, and one more) and all three delivered exactly the same results. I believe he used identical triplets, incognito, and all the info was identical.
I don't know. I'm skeptical of the entire thing.
1
My husband, an academic MD/PhD, owns a small biotech startup that does small volume blood testing for blood clotting disorders. He spent two years begging VC to invest in his company, to no avail. His tests were validated, his tech peer reviewed, but the tests weren’t sexy, and were initially focused on treatments for sickle cell, a neglected disease of neglected people. Eventually he gave up on VC investment and bootstrapped his company into being a player in a niche market. Meanwhile, Theranos and its novice founder, with no meaningful scientific background, raised millions for a sketchy technology with no backing evidence. It is dispiriting to see how little ideas or experience matter to those with money, and how much more influential it is to have the right “profile” — white, young, with powerful rich benefactors. At least the Theranos ruse was finally exposed, but how much additional money is wasted everyday on poorly conceived ideas from people whose credentials are never challenged because of their privilege?
24
So, should we expect a tidal wave of civil lawsuits from other investors - as well as customers? How many people received results from a Theranos test that is now in doubt and pursued a certain treatment because of that? How much physical and emotional trauma might have been caused by this?
I certainly have no idea about the answers to these questions. It would be great for these reporters (or the one at the WSJ who broke this story) to shed some light on these types of question.
4
Harvard dropout, blond, nice looking woman and investors got taken in. Is it fraud or investors got blinded by Harvard dropout phenomena or should I say mirage?
For little I have read on her she appears to be hard charging, driven ambitious woman and I believe she believed in what she was doing.
3
She must have known at some point that this house of cards was going to come down hard. And that is where she failed -- not admitting the truth in time.
2
Just a simple basic fraud - securities fraud. Whether it be mineral oils sold as medicinal elixirs or high tech machines that can not do what they are touted as doing.... it is always for one thing ---- MONEY. Good for the feds for holding her feet to the fire.
3
Don't these people ever go to jail? They buy their way out with fines, no fair.
12
Prison time is justified and necessary.
7
She should lose everything. Every penny made, and everything purchased (including primary residence) for this fraud. Those in the industry pointed out the lies early on, but were silenced and pleas and proof to the government were ignored.
She should be in jail with a billion dollar fine. What is wrong with our justice system and government agencies when they do not punish these crimes?!! No wonder there are so many white collar criminals - it pays!
14
John Carreyrou deserves an award for pursuing this story. If only the investors had possessed the same common-sense based skepticism upon reading this absurd line in The New Yorker profile of Holmes: “A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel,” .
Holmes deserves to serve time, not simply for fraud but for enforcing a dictatorial work culture that resulted in the suicide of one person.
SILI-CON-JOB VALLEY BEGONE! BEGONE!
9
Why is her "legal criminality" being treated differently than Martin Shkreli's?
Did she receive a more favorable outcome because of the political connections of Mattis and Kissinger being on her board??? She should be in jail!!!
13
FINALLY!!!! Those in the industry knew this for ever.
7
"Jennifer Lawrence will play Ms.Holmes in a forthcoming movie". Why enshrine this figure in a Hollywood flick? Has Hollywood already run out of inspiring and interesting female figures?
Everything I want to know about Theranos and Holmes I get from the remarkable investigative work of John Carreyrou- but then I have to endure watching this deplorable woman's rise-and-fall as set to some eye-catching or not eye-catching set design, mediocre or not mediocre soundtrack, but definitively dime-store psychoanalysis based narrative arc?
If Hollywood had brains and soul it would turn its focus not on Holmes but the one person who committed suicide when working for her, and the work-culture that is tolerated by those who are selling their skill to charlatans that peddle illusions of "breakthrough technology that is going to save the world".
Oh, and someone should ask Bill Clinton what he thinks of Theranos. He once did a fawning interview with her. Uhgh!
11
This case illustrates how corruption and greed are not gendered. They are human failings that can beset any gender identity, as well as any ethnicity or race. As more women gain corporate leadership roles, which definitely needs to happen, we will also see more women demonstrate avarice and fraud and bullying behavior. It's not gender, per se, that prevented women from such behavior in the past, but the fact that they were kept out of the positions that enables such behavior. Here we have some of that behavior well documented.
6
Somehow, I don't see Ms. Holmes living in a cardboard box on a street in Palo Alto, holding a handwritten sign: "will test blood for loose change".
3
Jina L. Choi, director of the S.E.C.’s San Francisco regional office, said: “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth..."
Here's an idea: instead of trying to "revolutionize and disrupt," why not try making a good product or service and selling it at a good price? Or do business-folk consider that to be "un-American?"
12
So the "pharma bro" gets 7 years , and Holmes only gets $500K fine?
8
The SEC cannot bring criminal charges. The Justice Department led by Jefferson Beauregard Sessions is doing that (a fact the article alluded to in passing). So we are left waiting for the other shoe to drop. It may never happen. Also, her deal with the SEC doesn't require her to admit to wrongdoing, probably because of the criminal consequences - although civil fraud is legally different from criminal fraud.
5
The DOJ can still bring criminal charges.
2
What woud have been Holmes penalty had she been a non telegenic minority mid-level accounting manager who cleverly embezzeled $700 mil through her position? Barred from accounting/auditing for 10 years? If Holmes escapes the wearing of an orange jumpsuit, we have to bring the pitchforks to Silicon Valley.
7
"The well-known lawyer David Boies not only defended Theranos, but also joined the board at the height of the company’s turmoil."
Does he still have a license to practice law?
11
Some of the commenters here are complaining that she is walking away with a lenient punishment. It seems that people forget, or are in denial, that sexism works both ways. I can't help but wonder if her being a woman, especially a very white woman with blond hair & blue eyes, is helping her get away with just a slap on the hand. If she were male and nonwhite, the outcome may be very different.
7
Part of what made her (and, by extension, her company) so convincing was that she seemed so fresh-faced, clear-headed, youthful, and driven (the perfect Silicon Valley Dreamgirl)... and, by many accounts, she lived modestly, even frugally, focused almost exclusively on working extremely long hours. You might say: hardly the criminal type (or stereotype).
Well, so much for stereotypes!
3
Jail time for no other reason than her attire .. Yuck
7
I know. Her attire is a Steve Jobs rip off. Isn't it too bad that both looked incredibly foolish in that attire? My sarcasm is meant to say, would you have made that statement about Job's attire? Or is it because Holmes is a woman and she is supposed to dress a certain way? Your attempt at humor was just not funny.
I am not a fan of Martin Shkreli, just the opposite, but how is it that he is going to jail for 7 years and this cute blond is getting away with a slap on the wrist????
21
I think you answered your own question with "cute blond". It's amazing what moderately good-looking folks can get away with. Shkreli was moderately good-looking (read: young), but also creepy and cocky. Holmes is blandly good-looking, and probably as smart, if not smarter than Shkreli, but men (and an unfortunate number of women) forgive way too much if the person is "cute". Men fantasize about being with her; woman fantasize about being her. So she gets a pass. I see this go on all the time in my industry (advertising), and it's almost too easy. If we put up our cutest, friendliest and most youthful employee (male or female) to sell an idea, it has an almost 10-fold increase in chance of survival than if we let our 55 year old COO or our 50 year old CMO present instead. People are swayed by "cute" more than almost anything. Like all animals, we are evolutionarily geared to protect and defend "cute". Our instinctual urge to do anything at all to ensure that something "cute" lives, clouds our judgement on a daily basis. We can't help the fact that we are drawn to big eyes, large teeth, wide, welcoming smiles and, in the case of caucasians, blond hair. Our genes tell us that these are vulnerable creatures that need our protection and support. Sadly, some adult humans have learned how to take advantage of this immutable force within us all. Just look at the fashion industry.
2
In addition to her looks and gender, she’s got powerful political connections (including her family)
3
The SEC can't hand out jail time. It's not how it works. The DOJ would be responsible for criminal charges.
3
Is there any surprise this kind of ruthless capatialism is so prevalent in America? Its almost looked at as a virtue. So long as you can convince people to pay for something whether it works or not, its considered okay so long as you can say you made money. Why is it that CEOs and other white collar criminals are getting off light for the same mentality that drug dealers have?
10
The difference is with Amazon, Facebook, Twitter and even to some extent even Uber, the basic functionality of the initial product can be developed and proven valid from a dorm room at close to zero cost. But then making a business of that functionality is a whole separate issue. With Theranos, if in fact she had developed the functionality, the business would have been easy. That and if she were a man she'd be in jail now.
5
Silly Valley needs to get over itself.
6
As no-one appears to have been hurt physically by her phantom product, I actually find this entire episode to be quite funny.
A bunch of ignorant greedy old men and the lazy media seduced and fleeced by a college drop-out using little more than a Steve Jobs impression.
I'm gonna get me some of them black turtlenecks and head west!
13
How do you know no one was hurt? Investors were hurt. Walgreens was undoubtedly hurt. People whose tests were faked may have been hurt if they didn't get the right treatment.
9
Actually, having dealt with many Stanford-bound students over the last 20 years, they basically break down into the very talented and the very mercenary. The latter category are intellectually pretty good, but more than that are totally convinced of their own merits and willing to do anything to get what they want, and any good things that come their way are their just desserts--according to their thinking. Holmes, for me, represents the true spirit of the contemporary Stanford scene: in it for whatever is in it for them. It's not that she ran her company like a tech company--it's that she thinks it's perfectly okay to swindle people. Sociopathy courtesy of our almost best and brightest.
27
I'm wondering why, after all of this, she gets to keep her job as CEO and Chairman of the Board.
6
Maybe you didn't read the entire article; she is banned for holding either position for ANY public company for ten years.
1
... yes, I saw that, but Theranos is not a public company, unless I missed its IPO ...
1
sad thing is that some of, expert in the field, knew her ideas were technically impossible. how it got anywhere is surprising to many. Once again, it's the tale of lipstick on a pig...
7
A little jail time would have a remarkable deterrent effect on those contemplating similar malefactions!
She could share a cell with Martin Shkreli, Heather Bresch (Mylan), and they could all clean the toilets together and commiserate. (As context, Michael Milken DID clean toilets as part of his incarceration duties -- back in the day when financial crooks went to jail -- cf, James Stewart, 'Den of Thieves')
Speaking of both punishment for crimes and deterrence for future crimes, perhaps these three could be in a special wing (SuperMax?) for gross malefactors, along with thelikes of Lloyd Blankfein, John Fuld, Ken Lewis, "Ace" Greenberg, Angelo R. Mozilo, and all the others who've looted the system, made $billions for THEMSELVES, and skated free...at least so far...
the l
11
A fine of only $500,000? It might be good to check her bank accounts in foreign countries.
12
So much for the "striking stage presence" and the "glowing articles". They may have gone to a fancy university and work in Silicon Valley, but the spirit of the American con artist continues within our national soul, and the investor must always beware.
11
Many readers have commented that Ms. Holmes is getting off too easy and that she along with other wily aggregators of ill-gotten investment funds should be separated from every dime she ever collected.
Unfortunately, neither the SEC nor anyone else currently has the authority to do that. The SEC did pursue such actions, technically known as "disgorgements," for several decades. But a decision in a Supreme Court case last term limited the scope of such actions to a five year period (see Kokesh v. SEC; the court unanimously decided that "disgorgement" was a "penalty" under the clear meaning of the statute and therefore subject to the statute of limitations).
So unless Congress acts---and good luck with that---the way things stand with large-scale business fraud is that perpetrators are essentially free to keep whatever they can get away with keeping.
As far as non-SEC civil suits go she has already settled several major suits out of court, on top of which the half-a-million penalty by the SEC is likely a drop in the bucket.
We live in the age of the charlatan, where charisma and social equity rather than the law define the line between legitimate business and fraud. This caveat-emptor-writ-large principle is consistent with the drift toward market fundamentalism that we have seen in other aspects of contemporary American society. Congress, under control of both parties, has seemed to think that this is as it should be. I wonder how many other americans do.
10
TWO references to her wardrobe? Really, NYTimes??
The problem with Theranos is that Holmes wanted to act like it was a tech company, not a life sciences company. She filled the board with tech and political figures - not people who understand science. She wanted to keep the technology fully secret, as tech companies do. That isn't how science works. Scientific discoveries are shared so that they can be replicated, criticized, peer reviewed. There's a reason for that - lives can be at stake. Shame on her and shame on all of the people who helped her perpetuate this fraud.
22
As all those board members either chose to be ignorant or knew this was a scam, at the least the SEC should bar any of them from being on any board of directors of publicly traded companies for a significant period of time.
8
What is wrong with this picture:
1. Holmes steels billions of dollars.
2. SEC pays their lawyers 5 million dollars after 4 years of investigations in order to fine Holmes $500,000.
3. Holmes pays $500,000 and gets to keep 700 million which she keeps in offshore accounts tax free.
4. Holmes and all her family are "set" for generations and get to join the new "American House of Lords" along with the "House of Trump-Kushner".
5. Holmes "penalty" follows exactly the story of the Wall Street financial crisis and the rank support of the pathetic and corrupt SEC.
15
I still remember the day the New York Times published its hagiography on St Elizabeth, which was the same day the WSJ started its in-depth coverage of Theranos possibly being a fraudulent company with Holmes being nothing more than a scammer. The day I realized the the New York Times is not always the paper of record.
17
You rob a bank with a gun, you get maybe a thousand bucks...and twenty years. You get a job on Wall St., or become a CEO...you rake in millions, get the best lawyers on the planet and never see the inside of a jail cell. Why do we even have a SEC?
17
American-style capitalism is downright exploitative, crazy.
3
Fraudsters come and go - buyer beware.
My biggest concern is how "fast money" allows science and tech to be treated. Bad treatment does not get jobs done - it just extends the breadth and depth of failure by terrible management.
Despite what knowledgeable researchers indicated - little chance with current tech to get what Theranos' claimed, people still jumped aboard.
Recall Ian Gibbons' suicide? Too much pressure on their key scientist?
Too many promises made that were impossible to deliver?
4
Frankly, this sounds a bit like #MeToo in reverse. A pretty and charismatic young woman dupes a bunch of middle aged and older prominent men to sit on her board, enabling her to raise preposterous amounts of money. How many women sat on her board? None. Hmmmm.
23
Astute observation and especially timely
6
She is a successful woman who made a few mistakes .. she gave a lot of money to California's ever growing population of undocumented immigrant workers - and who can blame her since they do all the jobs no one else wants to do and without their efforts we can't survive as a species. Also gender has a part to play .. so even though she is a criminal, she is still a woman trying to survive in a Man's world.. not for long
#MeToo #SavetheWhlaes #Farm2table4Homeless #TransgenderActors
Drug lords too routinely give a lot of money to politicians and people in their home region. Its not a virtue, its part of the scheme.
13
It's sort of like a medical Bre X other than the felons sort of get away with it.
It's a good thing for her that she's white and connected in silicon valley. She gets off with a $500K fine (that is how much of what she raised?)—else she would be sharing showers
4
Well I am tired. Too many frauds but we always have excuses and escapes. Even here while Elizabeth has “settled” her number 2 man is on the hook. As with the financial crisis and others; justice is one eyed and determination of criminal is racist & chauvinist!
4
Pay no attention to the woman behind the curtain.
4
This is why my Little Black Book has a note: “ Never make an important decision in the presence of an attractive woman.” Unfair to honest attractive women but my biology is unfair to my brain.
3
Of course they conspired, Ramesh Balwani and Elizabeth Holmes were involved in an affair - it's the worst kept secret in Silicon Valley. Their deceptive practices started in the bedroom and ended in the boardroom.
7
The best line in the article was slipping in that “Jennifer Lawrence will play Ms. Holmes in forthcoming movie.”
8
No admission of guilt and $500,000 fine, what a joke! This woman needs to go to jail! She not only deceived investors, but threatened employees and their families, and is responsible for the death of some of them as well as possibly the death of customers who entrusted her company with their test results! She's a sociopath, hiding behind a pretty face! Please someone send her to jail!
11
Can't due process wipe the smile off her face?
8
...stripped of control, fined and sent to prison. What, not sent to prison? Not stripped of the millions she made by fraudulent means? Just loses control of a fraudulent company. That's not much is it? I guess that's why stupid people rob banks and convenience stores.
6
Perhaps Ms. Holmes should contact Paul Manafort.
He works for free and is good at doing laundry.
5
I have a suggestion for a better headline for this story:
Pretty Flim-Flam Artist
Cons Doting S.E.C. Lawyers,
Gets Off Real Easy
4
She's being accused mainly because of her identity as a womyn, some radical feminists would say, and not bother to analyze the facts. Just because of her gender she doesn't wear a halo, walk on water or hover above the rest of us. She can be venal and corrupt as the next person, given the perceived opportunity to enrich herself by any and all means and get away with it. Had she stayed in college long enough to study the notorious Victoria Woodhull of the 19th century, perhaps she would have taken another higher road toward personal fortune.
2
This was no innocent mistake. She deliberately lied about Theranos's secret, proprietary technology and how it worked (it didn't). There's not the slightest doubt as to her guilt -- which, by the way, is often the case with white-collar crime. Let's rid society of these vermin by shaming them out of existence. Confiscate all their personal and family assets. Lock them up for lengthy prison terms, mixed in with violent criminals. Stand them up before a firing squad, for all I care. Then populate the SEC with moral people who will act responsibly.
9
Why isn't she in prison?
4
Because this punishment is from the SEC, and they can't hand out jail time.
1
I really wanted this thing to work. Guess it never lived up to the hype.
A con artist wrapped prettily in a black turtleneck.
What’s next for her I wonder. The Oval Office maybe?
3
Is Theranos the biotec version of Enron?
3
Somewhere in America a plain Jane is going to jail for passing a bad check for under $50 to feed her kids, while this blond princess, whose worth is claimed to be 4.5 billion get a slap on the wrist.
13
As long as we don't have to bail these people out.............
Warms my heart to see all the gender equality going on here. Women can be just as deceptive, devious and greedy as men! Who woulda thunk it?!
4
$500,000 in penalties is nothing. Holmes got away with murder.
This is not right that a con artist gets a slap in the wrist while lying and cheating.
It pays to have one of the best lawyers in the business.
2
This is an interesting article. So interesting that The Times seems to run a slightly new version of it over and over. I know the wheels of justice turn slowly but this article makes it feel like they are turning backwards.
1
A snake oil salesman with great hair and black turtleneck. There were thousands of them at the turn of the century “where are they now”
2
Wow, maybe she should run for president in 2020!
2
She belongs in jail, and these fraud charges may not be the end of her troubles. At worst, a federal prosecutor may go after her for the clinical fraud and billing fraud. At the least, the SEC fraud should grease the skids for her investors to go after her. I don’t think a $500K fine will be the last of her financial woes - when it’s all over but the shoutin’, a turtleneck sweater from Target may be all she can afford.
2
Ms. Holmes should be in jail. She's a con artist. I love the line," Jennifer Lawrence will play Ms. Holmes in a forthcoming movie." Well Holmes may have conned Silicon Valley and now it looks like she's going to con Hollywood as well. I think I'll skip the movie.
3
The BOD receives a Hall Pass? James Mattis, Bill Frisk, William Perry, George Banuelos Schultz and a cast of others simply evade responsibility and culpability for asleep at the switch oversight?
Will the SEC move the ball into the hall of Stanford’s Hoover Institute? Could this deflect charitable contributions from Silicon Valley, Sand Hill Road illuminati?
3
Lotta fraud among Silicon Valley stars. Just sayin’.
1
People go to jail for stealing $500.00.
8
How could a female CEO fail? This is against the narrative.
9
I guess this is why it's so important to have women leaders in business -- female corruption is so much better than male corruption!
4
Wow! Can't we somehow give the SEC jurisdiction over the President?
1
Another fraud promulgated by a pretty face with absolutely no backup. Can anybody say Yahoo?
6
Theranos always kept its practices hidden and didn't allow scrutiny of its testing methods. Still, the media has to acknowledge its role in putting Holmes on a pedestal - so smart she dropped out of Stanford (like Bill Gates dropped out of Harvard)! Wears a black turtleneck (like Steve Jobs)! Young! Blonde! Star quality! America loves to build people up and then break them down.
8
College dropouts should not even try biotech. The board had no biotech or medical experts. Ridiculous.
9
Amazing how so much of the popular culture, with the notable exception of the Wall Street Journal, fawned so unquestioningly over this woman. At a minimum, Forbes, Fortune and The New York Times's own T Magazine, if memory serves correctly, even had her on the cover.
With the insatiable appetite for a flavor of the month, hype invariably shoves aside skepticism time and again, although, in retrospect, the weird secrecy, the black turtleneck shtick and the fact that her eyes never blink might have been considered red flags.
So much for this particular media darling. Rest assured, there will be more like her.
10
"Eyes never blink" - that has always been my way to detect con artists, liars and sociopaths. That little trick has never failed me.
Please get it straight- she is a FRAUD. Nothing else. She is not a victim. She is not an entrepreneur. She is not a visionary. She is a fraud. Period. Why is she not in jail?
12
So you can blow through $700 milion of investors $$ and lie about your product.For that you pay a penalty of $500,000 and a few other restrictions.What happened to jail.
8
Let's try to be honest instead of skirting around the truth: she is a thief, nothing more than a petty crook, albeit on a larger scale. It doesn't say much for the people who lent her money.
7
The fact that this women is not going to prison shows the total inequity in America's judicial system. White women privilege anyone.
8
Does Tim Draper, Liz’s former neighbor, confidant and Silicon Valley VC man about town have egg on his face?
Does his claim that the WSJ’s Carreyrou has a “vendetta” against Theranos bear the test of time?
When he told Emily Chang of Bloomberg “nothing’s gone wrong with Theranos”, was that willful blindness? Did that willful blindness continue when Axios’s Dan Primack interviewed Draper and he called the bad press “a witch hunt”?
Nowehere in the press is Tim Draper given his just deserts. Shout out to Tim, I’ve got the next best change the world product since sliced bread, hit me up.
2
If it sounds too good to be true, it probably is........
2
What? No jail time for fraud and a fine that is a tiny percentage of what she stole? The judicial system is saying that it’s ok to cheat, lie, steal and rape, as long as you’re white and you went to Stanford, UPenn, or other elite institution.
1
Business plans are easier to understand than the underlying science. VC's are full of "business types" who care only about business plans because the technology is too hard to understand. These masters-of-the-universe types who think they deserve the big money and control because they are business savvy are simply lazy parasites who aren't capable of doing the hard work of actually inventing something or understanding difficult technical concepts.
3
Greed! The prime tool of all con men.
Just look at the makeup over time of the Board of Directors of this fraudulent company--Trump's current Secretary of Defense, James Mattis; Former Secretary of State George Schultz; war criminal Henry Kissinger; former Senator Sam Nunn; former Senator Bill Frist, a heart surgeon who used to make medical diagnoses of Terri Schiavo after glancing at videotapes. Getting a good feel for the tentacles of corruption that snake all through American society? Money buys the American government, past and present.
7
Normally I am of the opinion that the sentence was not harsh enough, that she should have done jail time for such a massive and audacious fraud.
However, when the investors are so lazy, and so foolish with their money that they didn't even check with almost any lab technician (who would have told them it is too good to be true), I have to say they all got what they deserved. I think it was in the movie Wall Street where they said something like, "it's not that a fool and their money are soon parted, but you have to wonder how they got together in the first place."
1
why is Martin Shkreli in jail and she's not? What she did appears far worse then a guy who raised drug prices on his product.
6
Thanks to the handy link in this article, a Times reader is reminded that not only was Ms. Holmes on a flashy T Magazine cover in 2015, but was lavished with praise as one of "THE GREATS." Self-promotion sure can work wonders in this society ... until the time comes for an abrupt descent into ignominy. In this case, all by the age of 34, the same age as Martin Shkreli. Quite a coincidence.
9
I’ve seen many suggestions in the comments that Trump should hire her. I think he’d be more likely to marry her! That’s once Melania kicks him to the curb, or even before, if history repeats itself.
Check out some of the cases Alex Tse and Brian Stretch, the current and former US Attorney's for N. California, respectively, have prosecuted and you are left wondering why investigative reporters and the FBI's Public Integrity Section are not actively investigating them for irregularities related to their refusal to file criminal charges related to the massive and sustained fraud in the Theranos case.
https://www.justice.gov/usao-ndca/pr?page=1
2
A $500,000 fine for the fraud that made her a billionaire? Clearly not enough.
3
So this woman defrauded investors and her fine was a mere half million dollars and ban from serving as an officer or director for ten years? This is the woman who a couple years ago was purportedly worth $4.5 billion (with a B) dollars. That's hardly a disincentive to defraud your investors. She'll be in the prime of her life ten years from now and she can pick back up and start a bigger and better fraud all over again. She'll have had plenty of time for planning.
4
Why the settlement? If SEC had evidence, she should be tried and sent to prison. It seems prison is just for the little people.
2
nothing as frustrating as a financial advisor and asking people to sit down for a second opinion to which 99% say no and this woman has lived a life I can only dream of. It goes to show that a woman can pull of fraud as well as any white male and for that I congratulate her and to the people who lost money, don't complain. You had that arrogance of saying you invested money with your advisor and his private equity fund and "you're all set"
1
Why do we (I mean, we, as a society) keep falling for jesters, clowns, and con artists. True, small-time grifters abound, but they are small potatoes compared to the Enrons, Theranos, Madoffs, and Trumps of this world . . . shall we ever learn?
5
Ms Holmes may have lost $500,000, but let us not forget that one of her senior scientists committed suicide whilst working for Theranos. Dr Gibbons’ wife has attributed his death to the stress of working for Theranos.
Additionally, some blame should be laid at the feet of the fawning and uncritical tech journalists who reported Ms Holmes’ claims as facts. The willing suspension of disbelief was astonishing.
6
So let me get this right...
She perpetuated a massive fraud. She lied to investors. She lied to business partners (Walgreens). She lied to the public. She has agreed not to fight the charges (she's guilty) and for all of that she gets....a $500,000 fine?
Did I miss the part where she is GOING TO JAIL?
I've seen people do more time of stealing a donut.
5
Lost in the Holmes Theranos story is that the company was a medical laboratory/device maker. However It was treated by owners, investors, board, media, customers, patients, and the marketplace as a “world-changer” tech startup. It was then lifted by the hype hurricane typical to such enterprises. The lure of the next mega-gusher investment blinded the startup ecosystem. But in the case of Theranos, patients’ welfare and lives were ultimately in the balance. Where was the FDA or other medical regulatory body in due diligence and approvals? Why does the US allow the invisible hand of the marketplace and the legal system to determine the success or failure of large-scale medical interventions and devices? It’s one thing to feed on investors as guinea pigs; something else to use patients as Holmes’ fodder.
3
She dropped out of university. She never took a single course in physiology that would have taught her that the blood in the finger tip may not have the same proportion of plasma to red blood cells (because of red cell skimming), thereby undermining her simple assumption that the concentrations of ingredients were the same in the fingertip blood as in the main blood stream. They are not always the same. Viruses would be detected equally in both types of blood, because viruses are exceedingly small.
Lesson: go to school first, then make money.
8
the penalty seems mild for this big fraud.
1
If it sounds too good to be true, it probably is.
1
"Some will rob you with a gun and some with a fountain pen" ... Woody Guthrie
Capitalists are one of the leading criminal classes in the U.S. At least once a week some wizard of wall street is hauled off to court. Of course the American public, obsessed by petty drug dealers, and besotted with its romantic vision of 'Bizness' is oblivious. Ironic that this story appears on the day after congress in its wisdom voted to remove significant public protections against the predations of big banks.
5
The glaring absence of expertise in clinical diagnostics on their BODs was telling from the start. Everyone knew despite their denials. The only thing shocking here is that the SEC took so long to act definitively. Furthermore, those in the laboratory executing the fraudulent testing were fully aware of what they were doing. Scams such as this require the buy-in of large numbers of people. These individuals should not be allowed to walk away unscathed and most certainly should not be allowed to corrupt future laboratories.
3
Sounds like she was just another grifter, albeit younger, than the Grifter-in-Chief. If her fine is $500,000, what should Trump have to pay?
2
Those of us in the diagnostic industry were highly skeptical of Holmes' claims from the beginning. Early on,many requests were made for information to substantiate Theranos methods and results, and nothing was ever given. Holmes' stacked her BOD with high profile celebrities who had no understanding of clinical diagnostics, and apparently, they never asked any questions. This was a fool's investment from the beginning.
3
Elon Musk and Tesla: same scheme. They are next. Watch.
1
That is just plain WRONG. Guess you haven't seen nor driven a Tesla. Try it. You actually buy one, unlike anything that Holmes claimed. Please.
1
There were many co-conspirators in the reality distortion field that Theranos used to raise money. Luminaries from heavyweight organizations -- but with little expertise in diagnostics or biotech start-ups -- dominated a Potemkin village of a board.
That they lent their names to Theranos calls their judgement and integrity into question. So blatant was the lunacy of Holmes and Theranos to anyone who cared to do diligence that heir seats on other boards should red-flag companies for critical re-evaluation.
In 2015, the board included former Secretary of State Henry Kissinger, former Secretary of Defense Bill Perry, former Secretary of State George Shultz, former Senators Sam Nunn and Bill Frist (surgeon), former Navy Admiral Gary Roughead, former Marine Corps General James Mattis, and former CEOs Dick Kovacevich of Wells Fargo and Riley Bechtel of Bechtel.
Of that group, one name stands out as particularly troublesome. Currently, James 'Mad Dog' Mattis directs military infrastructure as Secretary of Defense.
3
Surely, there have to be criminal charges brought.
I am asonished at many of the comments. In all likihood many thousands of inocent people were harmed perhaps died due to false test results. While there are financial crimes here, there is also criminal behavior. Oddly, no mention of this.
1
Although the article says that Holmes appeared on the cover of the Inc magazine, it fails to mention that she also appeared on the cover of the NYT's Style magazine. This was not too long before the WSJ articles began.
3
"On Wednesday, the Securities and Exchange Commission charged Ms. Holmes, now 34, with widespread fraud, accusing her of exaggerating — even lying — about her technology while raising $700 million from investors."
Hope Elizabeth joins another greedy 34 year old, Martin Shkerli. I'm sure they have a bed open in federal prison.
First, why is she off the hook so easy? More than just defrauding investors, she jeopardized the health and safety of tens of thousands of patients. Doctors have been jailed for far less. Second, what about the Board of Directors (Mattis, Kissinger, Schultz et al.) -- don't they have any responsibility? Shouldn't they also be barred by SEC from serving in any public office or corporation?
2
Oh, a movie staring Jennifer Lawrence will be coming out. Great. I suppose one about Martin Shkreli will follow soon after. We admire, even envy, con artists like these two. Many, many Americans would love to be able to pull off what they did. Even after they're exposed, there remains a little admiration for the nerve it took them to go as far as they did. Holmes still has many supporters, as does Shkreli. We just can't get enough of the snake charmers among us.
2
Funny how a female CEO in tech is the one to be accused of and convicted of fraud, because how exactly are her company practices different than any type of investment/ venture capitalism? This reminds me of the Martha Stewart debacle, as if she were the one and only person to get caught insider trading. Didn't Trump's advisor drop steel stocks 4 days before the tariff announcements? Seems like these are isolated targets when it's surely a broad spectrum problem.
1
Greed founded upon paranoid fear of blood draws...bad business model.
This should be the subject of the next John Adams opera.
I hope her next expensive outfit is a very bright orange jumpsuit for the next ten years!
2
The good news is that as regards opportunities for financial hype, hucksterism and outright fraud, women have registered the same achievements previously restricted solely to men.
1
The initiating events in this massive fraud need to be explored further. While Elizabeth Holmes may be inept and delusional, she was aided and abetted in developing her story by a 'distinguished' professor of engineering at Stanford, one Channing Robertson. This person was her mentor at Stanford and provided the early myth making and the professional cover. He should have known better and exposed the fraud early on. What he did was join the advisory board of Theranos!
1
Folks, the Board of Directors, and any other internal "oversight" people were not there to verify the technology or that fraud was being committed, more than any Trump advisors are tasked to watch for any unethical behavior, they were simply there to pump up the value of the company and dupe public investors before cashing out, period.
1
She pays $500K for $700MM in fraud? What am I missing? The ROI for potential fraudsters is clearly worth the risk. That's the unambiguous message.
Ms. Holmes talents would seem be more at home in the Trump administration. A person who duped seasons investors with a "vision" that lacked any real technology to make it a reality could do wonders what she could do with the wall, space force and wellfare blue apron during the next election cycle
1
With a $700,000,000 theft and a $500,000 fine, Ms. Holmes sounds eminently qualified to be Trump's Chief of Staff.
1
The fact that Theranos is not admitting or denying guilt is quite frankly outrageous. Through its fraudulent behavior, the company might have sent incorrect test results to physicians that may have resulted in patients getting treatment regiments that were either unnecessary or worse potentially dangerous.
Sorry, but I think Ms. Holmes may need to trade her black turtleneck for an orange jumpsuit.
I feel that Ms. Theranos was singled out for what reason I can only guess, “don’t mess with big Pharma or someone else wants to capitalize on the idea. Silicon Valley is all about hype, getting investor money, maybe having a product, or not, and hoping the Sand Hilll Road boys can spin it enough to make everyone at least temporarily rich. Once in awhile they hit a home run but most of the time things tank for those of you not around for the last few bubbles. B.T.W. to refer to her as a “pretty blonde in a black turtleneck “ sounds sexist even to an old duffer such as myself. I believe Ms. Theranos is a brilliant young lady with a prescient idea that needs work and any attempt reform of excesses in our health care system should be welcome, Madame Curie didn’t strike gold on her first attempt but at least she was working on something potentially beneficial to society rather than making billions putting book stores or their equivalent out of business as is the current model of success.
1
Well, the firm is likely to be looking for investors right now. Surely a good time to put your money where yor mouth is, so to speak.
2
Actually, Marie Curie DID "strike gold" on her first attempt, discovering polonium and radium and correctly theorizing about radioactivity. One might do well to review the sacrifices she made just to get to the University of Paris and to get her master's and doctorate. She shared the Nobel Prize in Physics in 1903, when she was 36 and received the Nobel Prize in Chemistry in 1911. She is one of only two people to receive Two Nobels in different fields. To compare her to the fraudster Holmes in any way is laughable.
4
Sure, if your definition of "brilliance" includes not having any degree, knowledge, or experience with biology or medicine and hawking a product which never existed. Look, I know plenty of truly brilliant people -- people who skipped grades, are Rhodes scholars, retired by 40, etc. -- but even none of them got to where they are with absolutely zero knowledge of their field.
1
New Yorker magazine did an expose on this last year. Amazing how she gets away with paying a paltry $500k fine, she and all others like her should be in jail.
1
What boggles my mind is how Holmes imagined her end game : the insoluble problem would be exposed sooner or later - and the longer it took, the greater the fall
It was one thing to fool others, (as noted by other commenters), but she must have really believed in her own hype as well.
I hope the Justice Dept will get involved and jail her; aside from millions of dollars, her faulty devices could have cost actual lives, all in sacrifice to what appears to be a delusional and ambitious ego
Her 'story' protected her for too long. Young smart female taking on Silicon Valley. The cool Ted talk, the billionaire investors. She checked the right boxes; knew the right people so she got away with fraud for too long and will get off with barely a slap on the wrist.
1
But hey, Jennifer Lawrence (!) is going to play Ms. Holmes in a "hot button topic bio-pic," according to the link provided in the article!
Isn't this the greatest compliment that can be paid to any type of disaster, fraud, or other tragedy, for it to result in a Major Motion Picture with Real Stars who look even better than the original people? More millions to be made! "Legendary Pictures picked up the package, but only after outlasting plenty of other bidders—and ponying up a reported $3 million" says the Vanity Fair link.
Wow, this is so truly America at its Finest: A slap on the wrist from a supposed regulatory agency - cue the Pink Floyd parody, "We don't need no regulation..." - and a Major Motion Picture! And poor Jennifer Lawrence's struggling career gets a boost to boot! Who could be more deserving?
Never mind the cloud - just look at the gold and silver lining that will be painted and then harvested from around it! Hopefully there will be side spinoffs with a major fast-food corporation - action figures of Ms. Holmes and major Silicon Valley venture capitalists and a Free Toy 'nanotainer' for the kids to pretend drawing blood from each other!
Wow, is this a Great Country or what? You can put money on that, for sure.
2
Seems General Mattis is at least consistent in his inability to detect frauds and con artists and his willingness to work with them. Elizabeth Holmes, Donald Trump. Two doozies he has associated with.
1
The criminal case needs to move forward so she can be jailed.
1
Here is another example of gross white collar crime that bilked millions of investors of millions of dollars. And what is the penalty? A monetary penalty that, relative to the amount of fraud, is a slap on the hand. Why won't Ms. Holmes serve jail time?
Left out was the suicide of the award-winning and Cambridge educated Theranos Chief Scientist Ian Gibbons in 2016. He knew it wasn't working. Also, even the Theranos tests performed on traditional machines were seriously flawed and put the lives of the patients in jeopardy. Ms. Holmes should suffer the 'perp walk' of shame like Martin Shekrelli
I feel like I'm taking crazy pills. This 19 year-old Harvard drop-out built a company around a fabricated product and lied about every measurable investors use to determine the risk/promise of the venture and not just a little. She stole billions from investors, but will walk away with a slap on the wrist - a mere $500,000 fine for her troubles.
Meanwhile, poor kids rot in jail for years, just waiting for their arraignment after being accused of stealing a backpack. Others are locked away for selling pot, watching their life drain away with the bang of the gavel.
217
You're right on the money. What kind of backroom deal led to this absurd settlement agreement where she walks away with a slap on the wrist and doesn't even have to admit guilt? This stinks to high heaven.
5
No, more like ignorance pills. She never went to Harvard. She went to Stanford.
1
Exactly. So unjust to all. She lied, stole and potentially hurt others who believed in her and her fabrication.
1
Caveat emptor.
I am in this business, and Theranos never made sense to me. While it is not impossible to think that multiple tests could be done on a small amount of blood, it would require very significant advances in methods and instrumentation. The crazy part is that the tech investors who invested didn't delve even superficially into patents, know-how and the science behind the company.
That is part of every deal. The process is called "due diligence." I have been on both sides of diligence efforts, and even a cursory look would have shown that there was no substance to it.
So forget the conspiracy theories. The vast majority of the problem is that no investors, including Walgreens, Silicon Valley masters of the universe and the political star-power board ever asked the right (basic) questions. A ten minute phone call by someone with more than passing familiarity with biology would have made this a non-issue.
4
This was a case where the technology could plausibly exist and chances are it will within a decade at the most. This was also a case where hope triumphed (temporarily) over reality.
1
As a new outpatient with a rare T-Cell lymphoma I am on track to have monthly blood drawings to monitor the status of the disease. For in-depth research and investigation during the diagnostic phase I had up to a half dozen vacutainers of blood drawn at each visit. I cannot imagine that immunologists and hematologists could perform their work with patients by drawing a few drops of blood. I would suppose that Flow Cytometry alone would require more than a few drops.
Theranos was a bright idea which dimmed - deservedly. Better now than leaving patients and medical oncologists without the needed coverage of reliable test results.
Theranos Becomes Thanatos.
2
Nice closing statement. This is one of the reasons I subscribe to the Times...an erudite readership.
1
She wants to be like Jobs, well, this is her chance to do a 2nd coming
The article mentions some of the prominent venture capitalists and the star-studded board of directors. Why didn’t they demand to see how the technology worked before investing their money and reputation?
17
William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senate majority leader), Gary Roughead (retired Admiral), Gen. James Mattis (current Secretary of Defense), Richard Kovacevich (former Wells Fargo Chairman and CEO) and Riley Bechtel (chairman and former CEO at Bechtel Group).
She recruited her board of directors purely for political protection and their deep connections. Industry knowledge or product expertise wasn’t required (and for a good reason, since it was a fraud all along).
That’s is how she was able to con people 15 years.
1
Because ‘the story’ was just too appealing and fit the echo chamber
I marvel at how she was able to get away with so much, for so long, just based on confidence, demeanor, looks, and a very deep voice. Given this light fine, it seems no one is impervious to her charms, except a WSJ journalist and his sources. Thank goodness for a free press.
46
Let the buyer beware.
Star Trek tech is still a bit off in the future it seems.
Genetic drugs for every person is the goal but getting there is going to be bumpy and people wanting to steal your capital along the way doesn't help.
Big names on the board doesn't a good company make.
10
So, someone with no scientific credentials bilked a whole bunch of investors with no scientific background or understanding, and blew through hundreds of millions of dollars. This was inevitable, and highlights the problems of having poor scientific education in this country. You get what you pay for.
63
the public wants to believe. that's what cons count on. there's a reason it's called "confidence." Just another "neither confirm nor deny" crook walking out the door with the keys to the lambo.
16
I work in the diagnostics industry, where people were rolling their eyes when Theranos was high flying. Alarm bells were going of everywhere. It did not make sense that the company had the technology that it claimed it had. It was highly suspicious that Theranos would not share any scientific data on their technology. It was ludicrous to fill the Board of a tech start up with big name people who had zero understanding of the industry and the technology. If something sounds too good to be true, it's usually not true, or even more likely it's a fraud. Theranos is a good case in point.
101
#Metoo!
Is Ms. Theranos being "harassed" because she is a "woman"?
This article can't possibly be true; as we all know: "Women" are more sensitive and caring of human life; "women" are more cooperative and focused on the good; women are about more than "power" and "money"; "women" are not predatory: love and cuddling are important them.
22
As a woman I find your comment snarky to say the least. There has been fraud perpetrated on investors for that she should pay the price and by pay the price it should have been much more than a measly $500k she should have had t pay more, much more and with a little jail time thrown in for good measure, right after Blankfein and Dimon go. Martha Stewart did far less and she paid the price. She lost her company and spent time up the river.
3
You don’t understand women or the #MeToo movement at even the most fundamental level.
2
Let's see if we can explain it to Anthony Adverse: No one ever said the things you quote with your many many scare quote marks. No one.
Women have not traditionally been in power positions. Some will be super great, some will be bad, and the majority will just work their careers, just like men.
You are one of those people who think a black man's crime reflects on all "blacks"; that a woman's fraud crimes reflect on all "women". But I'll bet you think that each white man's crime is an individual offense that does not at all reflect on your tribe.
4
The fact that Ms. Holmes and her company were revered and exalted, let alone entrusted with individual medical information for decision making without ever having published their data and enabled its evaluation through peer review demonstrates the ultimate silicon valley hubris and worst of VC investing. All those who heralded Theranos as the future and endorsed their ridiculous valuation in the absence of data should be ashamed. Peer review and publications in science exist for a reason. She should be imprisoned for her behavior and betrayal of all patients Theranos touched with their sham technology.
36
Perfect instance of a corporate world dominated by style over substance. American-style salesmanship gone out of control. It's all about image, how you present it, not what you are presenting.
30
Without an admission of guilt we continue to live in a semi-fictive world where reality can be plausibly denied "I wasn't convicted of anything" "I admitted no wrongdoing", etc. We need to get away from this world. Theranos was a fraud. Is a fraud. Holmes ran it as a fraud from day one and knew it, whatever hopes she may have had for the future. Also the Silicon Valley media hype machine of Inc, Forbes and the like should not be unscathed. They are part and parcel of the entire facade that has lead tech companies to very nearly drive civil society over a cliff.
33
The CEO class live in a consequence-free world. Their behavior confirms that.
2
Ironic - that is the exact same word (Fraud) someone used to describe her to me nearly a decade ago. I never forgot that even when the hype machine around her was running on overdrive.
24
Was lying always a part the way Holmes did business or did she get seduced by the desire to be the next Steve Jobs and so not want to fail or disappoint those around her that she started to lie and the lies just cascaded into fraud?
8
It’s a cautionary tale all right—one that should be applied to any number of tech solutions that go unstudied and unproven before letting loose on the public, on the public’s dime. Tech in classrooms is one of these panaceas. Remember around, oh, five or so years ago when everyone thought MOOCs were going to be the next great college fix? We dodged a bullet there, because turns out it doesn’t work. One can also extend this logic to the great experiment of getting rid of all non-STEM departments in colleges. Because of course we will have great scientists if they do nothing but work in labs for four years: never mind they will have no idea about the world, no imagination, no critical skills. But the great thing about living in America is that history is easily erased and we won’t even remember this later. Come to think of it: do we still have history departments? Why?
17
And the wonderful Electronic Medical Records!
The real shame of this is her and the rest of the Theranos' crew's scam has cast doubt on other startups and their ability to raise venture capital that are really developing the technology that she faked. Real companies publish the underlying applied science and protect with patents. Theranos never did that, it was always hype and hyperbole.
9
It would be interesting to know what Elizabeth Holmes' current financial situation is. Is she a pauper or a millionaire?
20
Her family is loaded... Don’t worry about her.
No, this is not Silly Valley hubris, Sir.
It is Silly Valley fraud.
Let's call it what it was from the beginning.
I am dismayed that SEC did not pursue her criminally and rather than settling for a piddly sum - she deserves a jail. May be not along the lines of Bernie Madoff - but long enough to let Silly Valley know they need to play by same rule - as applied in rest of the country.
And I say this because I read all those WSJ exposes and some more.
What they did to Mr. Schultz's grandson where he had to go in hiding because he feared for his life. That also should have been a factor in her sentence.
And her ex president, according to WSJ - actually threatened that young man. He definitely deserves a prison sentence.
Now, while I greatly admire Mr Schultz as a great public servant - the WSJ articles show that he was not an innocent bystander. As a matter of fact, according to WSJ, he threatened his grandson to turn him over.
So, if nothing else, Mr Schultz at least deserves a wrap on his wrist.
As good as the NYT is about dogged investigations - I wish, it would on its Technology pages - periodically highlight these shenanigans of the Silly Valley folks.
I enjoy that section but most of the times it appears like it is an adjunct of a great marketing company of the Silly Valley.
I have been in the oil industry for 45 years, hold a couple of patents - so I see usefulness of technology when I see it.
But this technology was too good to be true - a fraud.
27
Were/ are you in on the fracking technology that has revolutionized resource extraction? Could the seismic disturbances in Oklahoma be an adverse effect of the process? Is there a way to extract without the subsequent bedding instability?
1
Theranos was a creature of Silicone Valley hubris and media hype. Of note, those who invested were tech investors, rather than biotech investors who would be more likely to unravel the fraud. While each industry has its issues, it is well to remember that "tech," free-wheeling and largely unencumbered by the need for data, is a universe away from "biotech," which is highly regulated and reliant on data for proof of efficacy.
123
Her family connection to Kissinger, Schultz, and others she was able to recruit for the board lent her enterprise a great deal of credibility. This isn’t *all* on Silicon Valley & the media.
1
Certainly, there is a lot of hype in Silicon Valley, where I live, but it should be noted -- as I read in other articles -- that the major biotech/ pharma/ medical devices venture capitalist firms mostly saw through this scheme and none invested. Also notably, they did not have any renowned biologists or medical scientists on their board. Goes to show that just because you are skilled in one field - law in the case of Mr. Boies, international diplomacy for Mr. Schultz -- doesn't mean you know anything about another field.
16
I'm not quite sure I ever saw the communications skills the author referenced. To me she had a grating voice paired with an exceptional deer-in-the-headlights look whenever I saw her interviewed that made allegations of fraud completely unsurprising.
This was a stark contrast to Steve Jobs - who, despite being a real sociopath, could command a presentation like few in the history of corporate America.
22
Lose the Jobs autograph turtleneck and she's just a common thief.
25
Like Icarus, Elizabeth Holmes flew to close to the sun. Her wings melted and she fell to earth. He biggest sin may not be fraud but hubris.
6
When you peddle bald-faced lies for years to get rich, it's called fraud, not hubris
3
Icarus did not take hundreds of millions and lie to people.
2
I find Ms Holmes courageous as she chose a hard problem to solve.
When her peers chose to go after easy internet startups, she mustered courage to tackle a very tough problem. I am not defending her by any margin, but biotech companies are a risky endeavor. From what I read through Wikipedia, this seems like a risky and speedy healthcare venture. She overstepped, and paid for it.
1. Her dropping out of Stanford cannot be held against her (as being inexperienced). A similar biotech company, Genentech was founded 1976 by a finance/ chemistry major and did succeed. Nikola Tesla did not complete his formal education but was able to come up with an induction motor that ran on AC.
2. The board consisted of people from CDC, AACC and IFCC
3. Partnerships with Walgreens other firms are necessary for the survival of a startup
3. The FDA did approve the use of the company's fingerstick blood testing device
5. She relinquished 18.9 million shares and voting control- she had skin in the game as required for a startup venture
But for an undergrad student to embark on that journey – a commendable step!
I hope she learns from her mistake. I hope she makes progress and works even harder towards the problem she once set out to solve. I hope she pays no attention to naysayers. I hope her product revolutionizes lab testing in far flung villages in poor countries.
Healthcare is a very risky venture. These are tough times for her. I wish her the best in her endeavor!
14
Ms. Holmes was secretive and evasive and lied about what her company could actually do in terms of blood testing. Actual testing was being done in conventional labs.
She lied. That is fraud. Ms. Holmes should be grateful that she was not indicted.
2
You’re mistaken about Genentech. It was confounded by a PhD level biochemist, UCSF professor, and Howard Hughes Medical Institute investigator, Herb Boyer. In other words.....the cream of the scientific crop. In contrast, Ms. Holmes was practicing science fiction. The was never a chance that a 19 year old had the scientific savvy to develop this technology.
2
Apparently early on she realized that her product was not solving "this very tough problem", but that didn't stop her from lying and saying that it did.
So this was not courage on her part, but mendacity. Hardly a commendable journey, even for an undergrad.
2
Ha, ha, ha. Some enforcement of bilking the public investors! Yes friends the joke is on us.
6
How is she not going to jail?
She risked lives....
32
A fine Of $500,000 hardly seems adequate. She is a crook.
27
When is she and her partners--including socially and politcally-connected- enablers--going to prison? A 20th of the size, but just as vile and cunning as Madoff, she ought to get a few dozen years working on infrastructure and fighting fires.
14
NYT Title: Theranos Founder, Elizabeth Holmes, Accused of Fraud
Sounds more like: Theranos Founder, Elizabeth Holmes, Settles Fraud Charges.
Once she agreed to settle, she is pleading guilty to the charges - this is not merely an accusation - she settled !!! .. and i am sure she knows why!!
NYT: "Ms. Holmes was a self-made billionaire ...."
No she wasn't !!!! She had equity in a company with an artificially inflated valuation - yes, she had shares worth more than a billion, but no way to realize that gain. It was merely wealth on paper.
She and her company were a fraud - and many people knew long before 2016!!
See: https://www.jci.org/articles/view/86318
17
Settling usually is neither an admission nor denial of guilt. It's not a plea.
1
Feeling sorry who invested with her. Disappointed that she turned out to be just another con artist.
2
Don’t feel sorry for them. They didn’t do their homework. They were fools blinded by something that is obvious to me.
1
I don't understand how anyone could have been duped by Theranos and its CEO. Nothing about it made sense scientifically or financially. But I guess people see what they want to see and hear what the want to hear, and the comparison to Steve jobs made people less likely to see and hear the truth. A black turtleneck does not a genius make.
13
I think I am going to be violently ill. Is there a test I can take to confirm this?
12
I’m so glad we’re finally getting ethical leadership. #MeganBarry #AnnaStubblefied #MelissaClick #AnaFranklin #GinaHaspel
4
Steal 700 million and get off with a fine. C'mon, boys, man up and at least put her on trial to scare the others.
16
in the age of intense striving for equality, it’s just fascinating to watch the slim clean-living vegetarian tech-savvy female version of Bernie Madoff. We want so badly to have heroines to put on a pedestal that we don’t do our due-diligence we just applaud. And throw our money at them. Skepticism about what they’re up to is a sign of underlying bias, not good business practice. Affinity fraud is the most successful type, and the most painful to bear.
18
Gird yourselves for a rash of similar cases, as entrepreneurs attempt to take Silicon Valley business practices beyond San Jose and Seattle.
When there are clear, definable benchmarks as to what works and what doesn't, and actionable consequences to using your customers as beta testers, the methods used in the software industry become a gaping liability.
Were Holmes running a software firm, the applicable definition of "functioning product" could be fudged by attorneys post facto to at limit the damage to civil courts, if not escape liability altogether. Or the deficiencies of the product could have been masked through later versions and upgrades - a course of action Theranos actually attempted.
Tesla is next. Musk can't make consumer cars, because he's tried to apply the "we'll change the specifications five times during development" model of software design, which fails profoundly with supply chains physical components. You have to freeze the specifications and own them the moment you start your assembly line. He has been spared so far by the incredible naive indulgence of the media.
After that, there will be even more of these. Perhaps in the next 15 years, we'll evolve the olfactory capabilities to detect this genus of "disruptive" new-think scam artists.
7
Musk backwards landed rocket boosters from space on a platform floating in the ocean.
The Wall Street Journal showed how vital detailed and courageous reporting is by exposing this fraud. Also reminded us that even smart rich people can get hood-winked. Look at the luminaries who invested with her and populated her board of directors! Her lawyers were smart to settle and attempt to hide her away. Maybe she will finally trade in her Steven Jobs look- a- like outfit for something more fitting - any suggestions!
18
Prison-issue orange?
5
For worshipers of Ayn Rand who insist it's the mediocrity of the masses that dashes the dreams of the brilliant, we have the tale of Elizabeth Holmes to disrupt their smug, self-serving ideo-myth.
They want us to believe that privileged elites are the deserving cohort of the capable and conscientious who disrupt the old world and usher forth a brave new one of peace, love and happiness, free from death, disease and dysfunction. Or in Trump-speak, Make My World Great Again.
Their core belief is an algorithm that suspends disbelief, a secret bond they share in the power of positive denial. It's a nifty rationale that humankind's great leap forward happens only if the collective defers to the chosen one (percent) who will part the sea and lead us to the promised land if only the noisy chaos of democracy is tamed and follows. And if not tamed, at least fooled and foolish.
Sound familiar? The parallels between Holmes and Trump are glaring.
Self made stable geniuses who prevail despite the shackles of family wealth and influence. Uniquely brilliant sans formal education. Astoundingly gifted if they say so themselves. We see red but they see scarlet or crimson. They create problems only they can solve. Media is their mirror.
They don't tell truth -- they fake it, patent it, make it in China and sell it with a 1000% mark-up. The hidden hand of capitalism plus private sector genius (and $700 million) equals 30 unicorns or one ugly chimera.
Holmes is ready to be president.
33
Wait a minute !
This can’t be true !
We’ve been told thousands and thousands of times that all America needs is women in charge.
All women are honest, intelligent, empathetic and trustworthy beyond reproach, and would never engage in the nefarious conduct biologically inferior men have demonstrated.
Have we been misled ?
Are women actually equal to men after all ?
17
Is it time to charge that she's being attacked for being a successful woman?
Seriously? Hundreds, if not thousands, of men have done the same in SV over the years with dumb to downright dangerous services and products - they've faced few fines, jail time, or consequences.
1
She should never work in Silicon Valley or in medicine, pharma, testing, science of any kind again. But you know she will.
15
Most fraud's and grand larcenist's do jail time. Rich, white collar, crooks aren't jailed but are fined and forbidden to repeat their fraud's, in this case for ten years. At the least, she now has ten years to dream up her next scam in the comfort her many million's affords.
16
a paltry $500,000? Is that all? She got rich on a scam, now she should be stripped of all her wealth. Take it all and return it to the investors and scammed.
13
You can never have too much money.
2
The lesson here: If you're gonna steal, steal big!
13
Did anyone die because of false test results?
3
One word characterizes Ms. Holmes - “Mendacity”
2
So much for celebrity CEOs who stack their boards with irrelevant celebrities. In this case Theranos had the odious Kissinger among others with neither expertise nor any knowledge of what the company was peddling. Shame on these profiteers who lend their name to thieves.
17
Theranos was founded FIFTEEN YEARS ago. Why did it take so long to shut them down?
14
The Bernie Madoff show lasted almost 20 years.
12
As her company was unfolding a couple of years ago, it was criticized for having no medical personnel on its corporate board advising her....should have been a wake up call. There were other stories in the press about people going to emergency rooms because the lab results were incorrect in 80-90% of the cases. Apparently people on drugs for atrial fib who needed monthly blood tests were some who were given incorrect results....don't know if these tests lead to any deaths?
11
Well, they never published the science behind their technology and they didn't publish their clinical data either (at least not extensively). Only made lots of claims about being able to run multiple tests using nanoliters of blood. All ostensibly using existing technologies such as in microfluidics and standard immunoassay techniques. I work in the field so I have a good understanding of what's out there. These folks never published anything in decent peer-reviewd journals for scientists to review. Right from the beginning, I failed to understand how they could be attracting investors. Just goes to show that it is easy to fool people when they don't understand the science. Very disappointing.
54
The article failed to mention she had to return 18.9 million shares she owned in the company as well, making the penalty much larger. However it does not say the value of the shares or total percent of her shares this was. The value appears to be at least in the hundreds of millions of dollar range. However only a small portion of her total worth.
3
$500,000 penalty is a joke for someone who is a billionaire who committed fraud against investors. No prison time? She needs prison time like Martha Stewart.
20
Yes, and Martha did small potatoes ($50,000 or so in insider trading--one time?). I'm no fan of Martha Stewart, but she did her time. This woman will probably escape that.
2
Didn't we know about this 3, 5, 10 years ago? Why is it taking so long to put a stop to the scam? They were never able to demonstrate that their technology worked on a large scale. They always relied on run-of-the-mill blood testing systems when they serviced clients. It always was a scam.
11
So what happened to Elizabeth Holmes? Is she still CEO at Theranos? She gave up some shares, but how many does she have left? Some basic questions that this article should answer.
5
As a long-time Silicon Valley lawyer, I think this is being blown out of proportion. Theranos was a long shot, a very risky investment, made by sophisticated investors. But they did have some technology. It might have worked. It just did not. Is that fraud? Or just bad luck?
Look at inventors over the years and you will see many who went a lot further than Elizabeth Holmes in touting their inventions. Thomas Edison, for example. You need to sell investors on your invention before you can perfect it. Edison sold people by creating a Potemkin Village of electric lights at his laboratory. But that was nowhere near the kind of system he said he was ready to install.
Silicon Valley works because people are allowed to fail without being punished by the government for it. Elizabeth Holmes and Theranos should be punished just by the market. Even this slap on the wrist was too much. We need to allow companies to fail. Only then will we have successes.
69
The difference is that Holmes knew that her invention did not work as advertised. She knew that the military wasn't using it in the field. Theranos was using existing typical blood testing technology for test results. For other Silicon Valley companies that fail at least they used their own ideas. Their failure is because the market wasn't big enough or someone else gained more mindshare and had better marketing. Holmes had mindshare for her company but it was based on fraudulent claims.
23
"Is that fraud?"
It is if they are not even using the machines they said they are developing. It's not that she failed to develop a technology, it's that she pretended she had the technology. Big difference.
33
But she didn’t say “we’re hopeful, give us money to try.” Maybe that is what she said early on, but later she said “we have the technology. It works. We are employing it successfully. Give us money to develop it further.” That’s fraud. I’m also a lawyer, and I don’t care if it’s Silicon Valley or the Hudson Valley — when you misrepresent your product, when you lie about your company’s capabilities in order to secure financing, that’s fraud.
27
Through all of this we have been unclear to what extent Theranos falsified results and the health implications for those who went for blood tests presumably to guide themselves based on the results of these tests
7
And what the FBI is going to do about it (nothing).
5
A number of commenters seem to be assuming that Holmes was able to cash out to at least some degree. I haven't actually seen any reporting to that effect though. Forbes downgraded her estimated net worth from $4.5B to 0 (yes, zero). The billions were all paper money based on the hyped valuation at the time of investments. Theranos never went public. Their only cash was the $700M raised from investors (it's highly unlikely that there were any profits from operations since they got shut down so early on). The company spent a significant portion (half maybe?) of the cash on R&D, and any that might be left over within the company is not longer accessible to her. So she was never truly a billionaire, and may not have any significant personal assets at this point.
7
So she's left with very little money? Let's throw her a pity party, and all chip in a few bucks so she can at least get a Starbucks latte once in a while.
It's difficult to fathom the damage done by the "Bernice Madoff of Health Science" and many, many fans, in broadcasting false data about proprietary innovations and emerging monopoly wealth.
How many other public and private innovators were dissuaded or unsponsored for years, before Theranos was first clearly exposed?
Then, like Lance Armstrong, Holmes and followers attacked all critics to the bitterest ends. So much for the "free market" vs NIH public R&D?
10
Good article, but in the "Related Coverage " section, The Times should have included the article published on October 25, 2015 in the Magazine section.
That rather puffy piece praised Holmes as "standing up to lawmakers and entities with vested interests for individuals' fundamental right to access their health care information" and as "persuading lawmakers that every person has a basic right to information about his or her own health."
It also said that she was "working to reduce Medicare and Medicaid rates for lab tests, to the tune of potentially hundreds of millions in government savings."
It even implied that she was an all-around terrific person: "She only pauses in her work to run -- seven miles a day."
Let's face it: She managed to con everyone, including The Times.
177
Especially troubling since the Wall Street Journal had already uncovered her fraud in a story published on October 16, 2015. That story led to the SEC investigation.
https://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-144...
16
It's hard to believe that anyone who runs "7 miles a day" has any quality energy left to invest in other endeavors, like developing a company with a real product...
2
A riddle for you...
What do Meg Whitman, Carlie Fiorina, Marissa Mayer, and now Elizabeth Holmes have in common?
20
You mean she might run for president in the next election?
That they can turn out to be like Ken Lay, Jeff Skilling, Arthur Andersen, Bernie Ebbers, Hank Greenberg, Bernie Madoff or the Pharma Bro?
Or maybe you just have a problem with women being in the corporate world? What did Meg Whitman do wrong btw?
And how is she so different from the rest of the self-deluded tech monstrosities whose whole life is predicated on the notion that they deserve riches without effort or care for their victims? She seems fit seamlessly into the modern tech world.
16
Assuming that this John Dwyer is the same lawyer who defended her, I think his contact info is now frantically being added to a lot of iPhone Xs from Los Gatos to Hillsborough.
2
$700M - $50M = $650M. where did it go?
2
Medical diagnoses are made without looking at the evidence all the time. This just made an app for that.
1
Ladies and Gentlemen, Trumps next Secretary of Veterans Affairs. Or Health and Human Services. Fits RIGHT in.
8
I have little doubt that the 340 laid-off employees will suffer more than Ms. Holmes will.
17
Wonder if they received a lot their compensation in stock!
That stock is worthless now.
Holmes knew nothing about science and was a complete fraud. Why was General McMattis talking about using her system on the military without knowing that it actually worked? Tech start-ups like Facebook are easy, science on the other hand is more complicated. Who knew.
14
Actually, I had heard through a number of confidential sources that it was previewed by the Pentagon and that it flopped.
3
Pharma bro goes to jail, what about pharma sis?
28
Once again, any black guy in any Red State caught with a small amount of Pot would have been sentenced to 20 years. The " pretty " blonde girl
Defrauds investors of 700 MILLION Dollars, and gets fined a pittance of that amount. What's wrong with this picture ? Everything. White collar crime is just code for White " business " people. Seriously.
193
Martin Shkreli is white and went to jail, so I'm not sure exactly how you came to believe you've proven some point conclusively.
6
Let's see...Bernie Madoff is white and away for 150 years. A lesser known grifter Edward Okun (1031LLC) is doing 100 years for swindling many small investors and on and on. If you start with a biased conclusion, it's difficult to walk back to the true facts of the matter.
2
A grifter like Ms. Holmes knows educated people are the easiest to defraud, especially in a long con like Theranos, because the educated think their education allows them to always make correct choices. In Silicone Valley there's a sucker born every nanosecond.
19
It's good to know that greed is a gender-neutral vice!
11
(Edited) Please be more specific, NYT. When & why did the events & players turn to the Dark Side?
1
Scroll up the page Jim, there are a series of links to NYT articles that give a timeline to this evolving story.
1
Please by more specific, NYT. When & why did the events & players turn to the Dark Side?
2
Hmm, okay. She lies her way to a $700M investment. Some significant part of that investment has to have evaporated when the company imploded. She has to pay $500k and can't be an officer or director of a *public* company (note that: public) for 10 years. Meanwhile, the poverty-to-prison industry is throwing countless thousands in the clink for shoplifting, petty drug crimes, or plain old poverty. O, Capitalism, how we love thee.
48
Well, at least is was a win for equal treatment of the sexes. She got the same consequences as all the men who came before her.
8
"It turned out that Theranos was exaggerating the promise of its proprietary blood tests and was actually conducting the vast majority of blood tests using traditional machines made by other companies, according to the S.E.C. complaint. Ms. Holmes also claimed that the Defense Department was deploying the company’s test in battlefield settings, which was untrue."
How is that not a jail-able offense? It is complete bs that she can get away with paying a fine and a slap on the wrist.
32
Is calling Theranos "darling" politically correct?
6
Ask SCOTUS. They're the ones who decided corporations are people, although they have not yet ascribed a gender to them. They're feminine in French, German, and Italian, but only grammatically.
"Theranos announced in October that it was closing its lab and laying off about 340 employees, or more than 40 percent of its work force."
Yeah, that happened...in October 2016! Not 2017. Shouldn't you have included that piece of information?
7
The pharma bro got a 7-year sentence for far less.
15
She was always a fraud. However, even smart people are looking for a messiah of dreams. That is what elevated her to pedestal. A high school graduate knowing enough details of chemistry and instrumentation to dream up something like what she promised is a pipe dream. That is what people got. People - even high achievers - can be so gullible.
15
That's what got her on 60 Minutes, sk.
3
This biologist was always skeptical of her claims. They were always vague, always too good to be true.
But I bet she managed to hold on to at least a few million, which is more than many people have. Perhaps I should go and find some gullible VC and give my elevator pitch a shot.
20
Bolmes needs an Inspector Javert to hound her while she enjoys her billions.
Extensive fraud, lack of qualifications and enormous hubris. Sounds like her next step is to be nominated as the US Surgeon General in our current administration.
32
Except that she held fundraisers for Hilary Clinton when she ran for President.
4
Sounds like the whole of the US, a society built on fraud.
3
Theranos was what software companies call "vaporware" - a company with a product that exists only in the minds of its founders or developers. Anyone familiar with the Theranos story knows that Ms. Holmes was told at the outset by her professors at Stanford that her idea was unworkable. Instead of doing the adult thing and dropping her idea, or the hard work of actually developing real technology, she chose to engage in a scam. It's about time the SEC shut it down.
39
Holmes has gotten off too easy. She put patients at risk who received extremely inaccurate lab test results from Theranos, for conditions like atrial fibrillation, which required timely titration of drugs. She should be in prison.
The WSJ had an excellent series of articles on the rise and fall of Theranos, with heroes like the whistleblower Tyler Shultz, grandson of Theranos board member George Shultz. George Shultz’s poor judgement, Balwani’s arrogance and mendacity, along with the execrable behavior of Holmes stand in stark contrast to Tyler Shultz’s laudable behavior. A grand story of greed, manipulation and stupidity.
411
Holmes, Balwani, and legal pitbull David Boies treatment of Mr. Schultz, Mr. Gibbons, and the Fuiszes' family was criminal--not to say the businesses and end-customers who got defrauded.
"Beyond business: Disgraced Theranos bloodied family, friends, neighbors"
https://arstechnica.com/science/2016/11/the-personal-bloodbath-behind-th...
2
She's got blood on her hands with the suicide of one of her lead scientists.
1
Yes, she should be in prison She knew exactly what she was doing and how it would hurt others.
If the Justice Department does not file criminal charges against her, then Congress should investigate the Justice Department for corruption.
How can a fraud this large go unpunished by significant jail time?
23
Is she wealthy?
People assume that she is still a billionaire.
Most of her wealth were paper gains from her company. When fraud was uncovered her wealth vanished.
Forbes is now saying that her worth is nothing!
https://www.forbes.com/sites/matthewherper/2016/06/01/from-4-5-billion-t...
3
Fair enough. But prisons are real. There should be one waiting for her abode.
4
Many prominent people, including past and present Cabinet members, enabled this fraud. These include George Schultz and James Mattis.
8
Does anyone know if the underlying technology is actually reasonable, but they just couldn't pull it off fast enough? Or was it all a "Bernie Madeoff" from the get go?
3
It will be viable, with MUCH research and valid testing. In about ten to fifteen years. But not with this company, LOL.
4
Perfect qualifications for the next Secretary of State for Trump administration (after Senate turns down Pompeo confirmation).
Even better as heading up FDA or Health and Human Services or as Surgeon General in Trump administration.
Perfect to head up SEC.
Primary qualifications for Trump administration are fraud, incompetence and love for Putin.
She is already highly qualified in the fraud and incompetence departments, just needs to develop that unconditional love for Putin.
5
Yeah. Too bad that she is a liberal Democrat.
5
Well, her board member Jim Mattis became Secretary of Defense under Trump.
I have been following her company for 4 years. At first, I was impressed by her presence, character, innovative insights.
Now it appears she was acting and is just a counterfeit. She dropped out of Stanford, she might need to consider asking the university to allow her to return to complete her degree.
2
"Ms. Holmes was a self-made billionaire"
Except she wasn't - there was no actual value - just a untenable valuation from narcissists who failed to perceive the fraud of another narcissist.
17
My understanding is that she is now broke since her company is worth nothing, and in quite a bit of debt, given that the company needs to repay its investors.
And the legal bills from the forthcoming criminal investigation and subsequent imprisonment will put her over the edge.
1
I have been a physician for 33 years. Theranos never made sense to me. To think that healthcare would be 'revolutionalized' by drawing smaller aliquots of blood is laughable. Apparently, i didn't realize it was also fraudulent.
Real healthcare revolution happens rarely--the development of insulin and pacemakers are good examples. Most improvement work is labor-intensive and involves enhancing the safety, quality, timeliness, efficiency, patient-centeredness, and equitability of care. Not something that will attract the attention of old men or venture capitalists besotted by a pretty blonde in a turtleneck.
442
As an RN for 40 years and a nurse practitioner for 20 years, I have to say BRAVO!
13
Nah, no interest in that. Everyone likes glamour, and quick easy bucks!
Abbot Laboratories makes fluorescent dyes that can detect up to 200 diseases, such as cancer. Using these dyes combined with a "Polaroid type instant development process" allows offering medical diagnostics like Theranos pitched. Its like a pregnancy test for cancer and heart attacks. The fraud was burning through $700M, not the lack of science.
This was an investment where the money got well ahead of the science. It has happened before, and it will likely happen again.
Yes, Ms. Holmes is to blame for concealing that progress was not as expected, but where was the board in terms of accountability? Unfortunately, there are a lot of "important" people on the board, but important doesn't mean qualified.
I, for one, hope that the technology continues to be developed despite this business fiasco.
4
So she is charged with massive fraud...and walks?
22
'So she gets away with massive fraud. No other consequences than a $500K fine (a pittance for her) is getting away with it.'
There would be no 'massive fraud' if more prospective 'investors' were actually doing their hard work due diligence before handing over those hundreds of millions of dollars. As much as anybody else, I want to see
people who commit these kinds of crimes punished. But- I also know that
there are far too many people with far too much free time and billions of dollars at their disposal who do not know how to use their money, invest their millions, wisely or intelligently. They will jump at the slightest hint of an individual who promises too much, far too soon. I know. My father worked for twelve long and excruciatingly painful years to correctly develop and market (thru Exxon, then) one of the first of the affordable facsimile machines. Key word, correctly. His funding was underwritten, not by Type A Venture Capitalist screamers, but by corporate industry. Not by individual Venture Capitalists waiting to circle in for the big payoff kill.
I have no sympathy for anyone in this long sordid story.
17
All her supposed wealth was tied up in the company, and this reportedly went from billions to zero. I believe her net worth is now at negative numbers, so $500K is likely no pittance for her at all.
2
No, it is still a pittance. If she doesn't have it at hand, that's her problem.
3
As a now-retired participant in Silicon Valley in vitro diagnostic community, a friend of Theranos' now-deceased product development head, and a close follower of Theranos' sad story, I've come to the opinion that Ms. Holmes was guilty mainly of hubris, sadly lacking in the kinds of practical experience needed to administer such a difficult project, and unwilling to consider sage advise when offered. When things went awry, she apparently continued to believe that she could get it together and make things right long after that became highly unlikely.
I also think that something's gone a little out of focus in the Valley venture capital community. To their credit however, most of the better known firms passed on this opportunity, and a founder of one that didn't had a personal connection to the Holmes family. It was just kind of a perfect storm. Inactive board and overconfident executives who bit off more than they could chew.
17
She was guilty mainly of defrauding investors.
3
@Ken Rubenstein Santa Barbara
So her defense is she was too stupid to know better? LOL
5
Obviously, I'm talking back-story.
how about George S?
5
I hear there a few openings in the Trump administration that she sounds perfect for!
18
Remember the Enron scam where the founder and CEO Ken Lay likened himself to Paul Newman's character in "The Sting" when he gave a tour of the company's headquarters and instructed employees on its fake trading floor to all get the phones and pretend they were trading energy contracts? Holmes pulled the same antics during her company tours by not allowing investors to see the Theranos diagnostic lab in action citing confidentiality reasons. A fool and his money soon parts.
20
What this CEO needs is a real blood-letting. This is Mickey-Mouse stuff.
4
this always smelled bad: the "one drop" snakes oil method of detecting all diseases. She's done son!
4
Why is she not trading in the black turtlenecks for an orange jumpsuit? Fraud? $700 million? A $500,000 fine? No wonder people disrespect our system of justice. She should serve life in prison.
100
Why the settlement? She should be in prison for a long time.
43
Because she is a woman with connections in high places.
10
Slapped with a ten year exclusionary penalty and chump change fine? Easy money baby,
23
It seems like her board of directors should be outed as clueless and gullible and probably not the kind of people anyone else should want to see on any other board of directors...
21
Elizabeth has the perfect qualifications to work on behalf of the American people. She should immediately apply for any number of current job openings in the White House administration. She appears to have all the boxes checked:
Minimal education - check
Expert Prevarication Skills - check
Ability to Perform Fraud - check
Ability to get away with fraud unscathed - check
It's everything the Donald needs!
142
Yes, and it helps to explain why Trump won the presidency: The new American Dream is to get rich via fraud.
5
You forgot: No Ethics- check
1
As I have watched this story play out over the last 4 or 5 years, from the early "wunderkind" articles to accusations of massive fraud, there is one factor I haven't seen directly mentioned in the reporting. Even with her family connections, could Elizabeth Holmes - a college dropout with no background in chemistry or biology - have raised that much venture capital and kept all the fake plates spinning for as long as she did, if she weren't so conventionally attractive that Jennifer Lawrence is signed to play her in a film version of this mess - directed by no less than Adam McKay (THE BIG SHORT)?
Silicon Valley VC's are almost all men. She had a great story, a too-good-to-be-true product, and she looked like someone Hollywood would cast to play a female research scientist in the next zombie outbreak movie. They bought it hook, line and sinker. Makes for an interesting sidebar to our #Metoo moment...
94
@Chuck, not to nitpick, but Robert Redford was cast to play Woodward (of Woodward & Bernstein) in "All The President's Men".
Just saying, "casting up for looks" in Hollywood movies, is par for the course.
6
Oh stop. People get hooked and "buy stories" from unattractive men all the time. Maybe look at the other aspects of her fraud, the precedents set by college drop out men, the uniqueness and potential gains of her pitch ... the list goes on, but why think when you can explain investor's missteps on being awestruck by a female's appearance.
#metoo
2
One step forward for women, and then a giant step back. The fact that she is a female fraud, and not just a fraud has negative consequences for women.
6
So? She will not be the first or last woman that commits fraud. There are just as many bad women as there are men in the world.
6
I doubt that. Back in the day when women with any sort of power were rare as hen's teeth, maybe, but not now. You don't see Clinton's incompetence resulting in fewer women seeking public office.
2
A self made billionaire settles for half a million dollars? That’s less than 0.0005% of her wealth (or is she not worth that much anymore?). No day in court. No jail sentence. Crazy!!
23
I don't think she's worth anything anymore. All her supposed wealth was tied up in this company. Her billions effectively went to zero a long time ago.
Not that I think the penalty is sufficient -- it seems light -- but she was worth $4.5 billion based on her 50% stake and the peak valuation of Theranos of $9 billion a couple years ago. Now it is worth close to nothing.
2
Black is the new orange. I'm delighted.
4
She has all the necessary qualifications for the next White House Communications Director.
9
Well we can see just how ethically unbalanced (and possibly corrupted) the SEC has become. Massive fraud is allowed to be punished by a fine. This is fraud, in itself.
29
Martin Shkreli is sentenced to seven years for securities fraud related to two hedge funds he ran and to his former drug company Retrophin.
Ms. Holmes gets fined $500K for securities fraud and walks away.
I guess the young and blonde really are different.
37
So this women breaks the law - gets slapped on the wrest and keeps her ill gotten billions?
This country is clearly corrupt
15
A thought for the group - it's not at all clear how much ill gotten gains Holmes has actually ended up with. She was a billionaire only because of the value of her share interest in Theranos, which in the case of a real privately held startup is measured by the most recent amount invested for an interest in the company. For example, if $700MM were invested for 25% of the company, and she owned the rest, the value of her 75% interest would be by definition $2.1Bn and therefore she would be a "billionaire". But 75% of nothing, which is what Theranos is presumably now worth, is nothing. So - unless she managed to diversify out of her Theranos interest, which most founders are not allowed to do by their investors - she has no ill gotten gains from her fraudulent behavior, at least. And that's why her penalty at $500,000 is in fact probably at least somewhat painful in her current context.
But that having been said, some jail time for her would have been appropriate - being barred from public company positions for ten years is nothing. Martin Shrekli, an equally offensive fraudster in the misleading investors arena, must be wondering today why he got 7 years in the slammer and $7.4MM in fines and Holmes wanders away for a mere $500K.
4
White collar crime pays. Very well indeed.
14
@sam
They say you can steal more money with a briefcase than a gun.
2
There's an old saying that the best way to make money is to use other peoples brains and other peoples money. Theranos is an anagram for anothers. Just sayin.....
8
500k for a billionaire? See, that’s why you can often see the Cadillac Escalades and Lexus LX SUV’s parked in red zones!
8
Her supposed "billions" were all in Theranos stock, which is now valued near zero, with no prospective purchasers to take it off her hands. She's probably close to insolvent, just like Theranos.
1
She doesn't have billions. Her wealth was tied to a company that is now worthless. She's got nothing.
1
Justice for the well connected !! Homes commits FRAUD to "steal" $700 Million from investors, gets very rich in the process and her "penalty" a $500,000 fine ?? Poor people go to jail every day for stealing some groceries or a coat or for using drugs. Too bad for them they were not born Elizabeth Holmes !
51
How does such a fraudster manage to keep so much of their ill-gotten gains and avoid prison? Our justice system should allocate much more resources and attention towards prosecuting and incarcerating perpetrators of white-collar and financial crimes.
29
$700,000 fraud - $500,000 penalty + no jail time = (white collar) crime pays.
12
"Self-made billionaire"? Not.
16
Defraud investors, get time in jail. Defraud a country, get elected President.
6
self deluded with illusions of grandeur... or garden variety snake oil saleswoman?
both seem very popular these days, and Americans keep falling for their grifts. is it that we can't tell truth from fiction, or just that we don't care?
7
There is ongoing interest and often to the level of fervor over the Tesla experiments a century ago.
Believe me, if it were that simple, with equipment that could be constructed with the technology back then, our more modern and ever more capable manufacturing processes (which do at times limit discovery until they are improved) would have put Tesla's stuff on the market.
Yet we all believe in conspiracies, in hidden genius, and indeed, snake oil.
The lack of teaching on common sense and the skeptical inquiry has opened up a whole new generation to believing wonderful things. Some are true, but they can be tested.
Her first huge red flag, well among others, was refusing to have independent verification of her testing lab (while supervised) results compared to a gold standard.
3
And she laughs all the way to the bank.
This was obviously a con game from very early on.
8
What I don't get is if this was as the SEC characterized, "a massive fraud", why the sweetheart deal?? Why does she get a plea deal that includes not admitting guilt and no jail time?? You really wonder what the American Justice System has come to....
11
SEC penalties are civil. DOJ and/or a state AG would have to prosecute her for criminal offenses.
Exaggeration? Hasn't that always been Trump's stock in trade? Why hasn't he been fined and dismissed?
4
$500k fine. That’s it?!
8
The punishment should fit the crime. If she got rich by fraud, when the punishment is over, she should not be rich. To the extent that her gain was based on a fraud, when the dust settles, she should be broke. Otherwise she successfully gamed the system, and she stands as an example to numerous others.
If you get caught with your hand in the cookie jar, putting back part of the cookie is not enough.
546
I agree. But her wealth was probably in the stock. Once the co failed she wasn't a billionaire any longer
She was rich when she was born, because of daddy. The "riches" she earned through Theranos were just on paper -- as much of a fraud as the "data" she showed to investors. When she tanked, her Theranos-driven net worth tanked. But she's still rich, because of daddy.
Elizabeth belongs in prison. She should get an education about fraud and public trust. And I agree she should not be enriched by this scheme.
1
When will Trump hire her? Another snake-oil salesman who was embraced by Silicon Valley despite all of the warning signs.
3
Did she ever complete any degree after dropping out? She was intruding in a field where most people need a doctoral degree to even start to get noticed, let alone invent breakthrough technology. A crook got so much free publicity and raised so much money, when there are so many bonafide scientists struggling to advance in their fields. I am glad all of this finally came out into the light. What makes a true scientist is hard study.
15
Our country has always been enameled with the idea of the self-made genius. Somebody in his garage, no education, just a big idea. Which, I don’t know, maybe that makes sense for someone attempting to write a novel. It makes absolutely no sense for medical research.
3
For the record, I did not write “enameled”! Thank you, iPhone.
2
Funny because I read it as "enamored" anyway.
1
Let's see: $700M minus $500K. Sure, she spent some on the "machines" and paid personnel (in a workforce that got much smaller in October.) So, no jail time and she pockets whatever's left? She should teach a course in business school. (Actually...no. There's already enough of this going around.)
5
She isn't pocketing anything. Her net worth effectively went to zero a long time ago.
2
Can we stop putting on pedestals and calling Silicon Valley executives 'stars'?
The latest tech wonder boy or girl is not some kind of miracle.
Zuckerberg, Musk, Schmidt, Page and Brin and others are just people in business to make lots of money. Tired of the crowning of these individuals as if they are gods or saintly. Their bottom line or interests are basically unethical. Question their motives, all of them. This includes Gates and Bezos. 21st century robber barons on steroids.
10
The corporate crime wave rages on, exactly as one would expect with the threat of jail time removed as a consequence.
9
She cannot run a public company but she will surely stay in charge of Theranos. Strangely, I point out that the original premise was that lab medicine took too much blood and everyone would awaken to tiny blood sample benefits.
Essentially, Theranos continues and has recapitalized and still has Elizabeth and money in the bank. The washed-out academic that are sticking with her includes a sham board of directors and a group of has-been types. She will be asking for new money soon and all of the product ideas are still illogical and impractical from a lab medicine scientific perspective. The SEC just gave Elizabeth a freedom to operate pass and again, the small blood volume premise was pure lab medicine hooey. You do not see Abbott labs, or J&J, or LabCorps trying to pick up the pieces of Theranos. That's because Ms. Holmes was more Rasputin than the daughter of lab analysis. Her costume of black on black (copying Steve Jobs), and big eyed innocence had everyone hoping she was real, but unfortunately, not. Theranos will be in the SEC stew once again and long before she reaches her 35 birthday.
1
Glad to see this though not punishment enough in my opinion. It always bothered me when the New Yorker ran a fawning expose on Holmes in 2014. She struck me a phony even back then. With Henry Kissinger and the former CEO of Wells Fargo on the board, who couldn't see this coming?
4
This is a start, although I'm sure there will never be a lack of people to help prove that P.T. Barnum was right (see also, Juicero)
3
So much for her being the prototype "female genius of the future". Her company always had red flags to those who cared to look.
8
Let’s not forget that General Mattis, the so-called “adult” in the Trump administration, served on the board of this sham. He even pressured other military officials to use Theranos’ faulty technology on OUR SOLDIERS in Afghanistan. The fact that Mattis was applauded as a good appointee baffled me.
3
And when will the Department of Justice pick up the case of Ms. Holmes and criminally prosecute her for fraud ultimately leading to prison time for a CEO who was, apparently, in it for herself at the expense of everyone else.
A SEC $500,000 penalty is a drop in the bucket for Ms. Holmes who is a self made billionaire. Being barred from public companies by serving in a official capacity for 15 years is meaningless to someone who is a billionaire. Prison, on the other hand, would be meaningful and, I am sure, memorable.
9
Why do they always get away with paying fines and no jail time?
4
Greed, no Gov't oversight, aside from the paper tiger of the SEC, where was Food and Drug. Not least of all unfettered capitalism. Did I mention Greed?
1
She can't hold an office in a public company for 10 years. But who's to say she's not the next Trump nominee to head the SEC?
And George Shultz turned on his grandson for this grifter?
5
Yeah, and I interviewed for a start up company called I-Stat in Princeton during the 90's that was pursuing similar handheld blood test technology. Never took their job offer, but then again, the engineer I was going to work for at I-Stat was clearly about to lose it because he was being pushed around by an inventor / investor who wouldn't make up his mind. On reading about this, I think about that offer, about how distracted and distraught the chief engineer was, and see more controversy over the same type of devices, and I'm relieved I never went in that direction. I wonder if any of the same I-Stat players reprised their roles for Theranos? Hmm......
i-Stat has been a successful product line for years. It was acquired by Abbott a long time ago. But, it's not the same thing that Theranos was promising. i-Stat was a point-of-care Dx pioneer, but it didn't promise the type of comprehensive lab testing from a drop of blood that Theranos said it could produce.
1
Evidence that greed isn't limited to Wall Street.
1
Theranos had a big presence where I live, both in Walgreens and in stand-alone Theranos collection facilities. I had blood drawn multiple times at both types of Theranos facilities and they were always spotlessly clean, well run and compliant with rules/regulations, and the online site giving results was less than 24 hours turnaround on my tests (CBC, CMP, thyroid panel, urinalysis, etc.). The cost was fair. The results belonged to me, by my choice in paying for them myself rather than using my insurance coverage (and if you don't know WHY this matters, you are either under 40 or fortunate or both). I am sorry to see Theranos go. I will continue to benefit from them because Theranos forced the labs in my state to also come into the modern age and let customers self-order lab testing (rather than having physician orders). Its too bad the lab big boys like SonoraQuest got Theranos shut down.
79
The FDA issued multiple warning letters to Theranos following on-site lab inspections saying they were failing to comply with even the most basic laboratory procedures when processing patient samples. These are public documents available online.
Theranos either failed to or was unable to comply with the FDA guidelines and regulations for how to handle and manage patient samples and the resulting data. The appearance of cleanliness is not laboratory cleanliness or materiel management.
Theranos endangered the health of thousands of patients through improper laboratory procedures.
28
But it was based on fraudulent claims: "It turned out that Theranos was exaggerating the promise of its proprietary blood tests and was actually conducting the vast majority of blood tests using traditional machines made by other companies, according to the S.E.C. complaint. Ms. Holmes also claimed that the Defense Department was deploying the company’s test in battlefield settings, which was untrue."
Why is that ok to you?
17
It is useless to be able to order your own tests, if the results lead to a misdiagnosis. When Theranos results on some basic tests were compared to the major testing labs, some of the Theranos results were off in ways that could lead to serious consquences because people who needed treatment gave a false negative in the Theranos tests.
26
Like a movie?
Pretty blonde assembles Board of Directors of old white men with no background in the company's business, thus corporate governance was suspect.
Theranos positioned in Silicon Valley and in media as a "technology company," when in reality it was a medical testing company -- a famously low margin/high volume business with extremely high barriers to entry.
Company leader mimics the iconic fashion style of THE virtuoso corporate storyteller.
Company leader tells outright falsehoods about her company's technology, all of which diligent investors could have easily unravelled during normal pre-investment due diligence, but didn't.
Poor practices at company labs endanger the health of thousands of patients, redsulting in swift and stiff action by State and Federal regulators.
Turns out the company was actually using competitors' technology to perform tests, rather than its own -- which never worked.
Rather than being barred from ALL financial markets, former company leader is now free to engage in fundraising for non-public ventures.
As an investor in early stage (still private) healthcare companies, all I can say is, "I'm shocked, shocked to find that gambling is going on in here!"
94
Speaking of the board, they were paid to be there. What a great way to make money without having any responsibility for the fraudulent business they were overseeing. Seems like some reform around being a corporate board member is in order.
4
Like a movie indeed. Hollywood was already working on "Bad Blood", about her story, two years ago, before the entire thing had even unfolded.
4
Correct Adam. Holmes knew next to nothing about hematology and physiology. And her knowledge of electrical engineering pales compared to a woman like degreed-engineer Marissa Mayer.
And then Theranos had career diplomats Henry Kissinger and George Schultz on the board overseeing the market for medical testing, the medicine, and the technology.
What were those old men on the board thinking? Power? Expensive perquisites like private jet rides and good wine? You'd think they would ask their academic friends at Harvard and Stanford about the components of blood, the technology, and the plausibility of making Theranos into a profitable business? It boggles the mind how these bright men could be so derelict in their duties.
The blind leading the blind, in a Silicon Valley swindle.
Here in Arizona, Walgreen's was offering Theranos testing in drug stores. That corporation has a multitude of people with doctorates in science, and they still went along with Holmes. It would have been more seemly to have a life size cutout of John Holmes next to a display of condoms.
11
What immediately bothered me was the idea that a pin prick, a drop of blood could be a reliable sample of blood chemistry. Prove that and we have a start, but I could not imagine how a drop of blood could be a representative sampling.
10
It depends upon what is being measured. For most molecules and most clinical purposes, the mixing of blood in the heart is sufficient to assure that the blood in the periphery is representative of the whole body, even in small samples.
12
Blood glucose monitors use very tiny amounts of sample taken from a finger. But the technology to measure that single analyte (glucose) took decades to develop.
10
Diabetics rely on it multiple times per day to calculate their insulin dose.
It can be a pretty reliable, depending on what you are measuring, what the intrinsic error of the method is, etc. If I were an investor, I would want to see the primary data, proof-of-concept studies, and, most importantly, the insides of the "machines" doing the measurements.
7
This is also about how important investigative journalism is to our democracy and to investors. The main reason that the SEC got involved in this case is because of the investigative reporting from John Carreyrou of the WSJ. It is one reason we need a real free press not paid for by the Koch brothers or other wealthy oligarchs who have financial gain as their primary motive.
401
Is Robert Murdoch not an oligarch?
1
If you go back and read Forbes' early coverage of Theranos and Holmes it was unquestioning and fawning (I remember a tweet from one of their reporters gushing that Holmes was "astounding."). After Carreyrou's reporting, they all of a sudden became critical and decided to ask some real questions.
6
"...we need a real free press not paid for by the Koch brothers or *Jeff Bezos* or other wealthy oligarchs who have financial gain as their primary motive."
I fixed your sentence for you... not every media oligarch tilts right (do the Koch boys even own a media company?)
3
A mere $500K settlement seem practically like an endorsement considering the hype, hyperbole and cash she and Theranos whipped up out of nothing. That said, its hard to feel sorry for Theranos investors, who happily poured money into a startup built on the iconography rather than the substance of success.
Look back at the interviews and disclosures - Holmes was celebrated for being a Stanford drop out with no experience or credentials in chemistry or related sciences, her explanations of the Edison black-box were vague and cartoonishly simple, and what peer-reviewed evidence was there of the technology? It seems her qualifications were that her family had connections in finance and big names outside of health sciences and jumped onboard her project.
Holmes is just a modern example of how hype and hubris separate fools from their money, and how the scientific method will always be subject to greater powers of money, power, and empty visions of greatness. The only positive to come out of Theranos is a fleeting reminder of importance of journalism and open peer-review of claims to empirical truth. Until the next one.
274
Holmes would never have happened without Steve Jobs – Jobs defined the personal symbols as part of his bonafide success, and Holmes aped them to a T, with no apparent talents beyond acting.
6
Yes, a piercing reminder that truth matters and that there are too facts.
3
Maybe, but selling a cell phone or computer is nothing like marketing an important part of your healthcare.
3
The story was always that of The Empress's New Clothes, a completely ridiculous facade of a company that was wildly applauded. The sociological question is what made for the acceptance of the facade as substantive.
94
Ms. Holmes should sere time behind bars. Martha Stewart did less and her punishment far severe.
423
M.S. had a public company. E.H. had a private company. Very different.
1
So interesting that you brought this case together with Martha Stewart's in recommending the harshest sentence. What do these two have in common? Let me think . . .
It was unfair to Martha when you consider the non-punishment meted out to the insider trading men did in that era.
But I kind of admire that Martha Stewart came out of that experience a better, funnier, cooler person. She was always imperious to her staff, but she came out a better, more well-rounded, braver person. I really enjoy her shows with Snoop Dogg.
3
Theranos was a fraud from the start. She should be forced to disgorge all the money she made from the sale of private stock, not just a $500k fine.
315
Additionally, she paid herself around $49 million per year as CEO. No mention of that here.
6
The SEC issues another slap on the wrist to the thieving billionaire class.
Now let's go lock up some poor people for stealing socks and a candy bar.
"Government of the oligarchs, by the oligarchs for the oligarchs"
580
Uh, Soc, "Forbes" said her net worth is $0.00.
https://www.forbes.com/sites/matthewherper/2016/06/01/from-4-5-billion-t...
Facts -- they take work, to find.
5
poor jean valjean never stood a chance.
3
Theranos was never publicly traded. So it would appear to be a case of the delusional rich stealing from the gullible rich.
5
I think the facts that Holmes rises $700,000,000 for a private equity company but was only fined $500,000 for her fraudulent behavior says all you need to know about the SEC and its attitude toward white collar crime. This has been going on for far too long!
606
Great deal for her. Defraud 700 million, pay 500 thousand dollar penalty. Wish I could get away with that.
429
$ 700,ooo,ooo,.fraud was fined $ 500,000.00 what am I missing. I forgot that she will not be able to be any officer or on the Board of Directors of ant PUBLIC COMPANY for 10 years. No restrictions on private employment.
57
i believe here "public' means "publicly traded."
2
Many of her investors were supposedly 'smartest guys in the room' types from the VC community. If I had money with these firms I would go after them as well for the faulty (non existent?) due diligence. Oh, and her board during this time exhibited no oversight and showed a dedicated lack of curiosity.
72
Supposedly, George Schultz and Henry Kissinger, both on Theranos Board of Directors were experts in phlebotomy.
18
In truth, one of the red flags for many potential investors, or at least yellow flags, was the paucity of truly first-class VC's who invested: there were very few... I think the fact of the matter is that most who actually did their due diligence didn't invest much, and those who did invest did so on faith and hopes and dreams and perhaps were caught up in the celebrity.
5
Current Defense Sec. Mattis was on that board, along with former senators Burr and Bill Frist (the only one with a medical background).
I truly wanted to see her and her company succeed for a multitude of reasons. However the application never lived up to the hype and investors (such as myself) were left holding nothing but broken dreams all while her self enrichment gained exponentially. As with all other recent financial investigations of memory I am very doubtful any justice will prevail. Cynical outlook yes but based from experience.
132
Did you not think it was suspicious that there were no M.D.s or medical researchers on Theranos Board of Directors? That seemed like a red flag.
192
The old saw applies-"If it sounds to good to be true....."
9
Former Senate leader Bill Frist was on that board though (he’s an MD)
5
SEC can only bring civil actions punishable by fines, prohibitions on future activities etc. We'll have to see if the case has been referred to DoJ, which can bring criminal actions.
107
Holding my breath on that one.
So she gets away with massive fraud. No other consequences than a $500K fine (a pittance for her) is getting away with it.
195
https://www.sec.gov/litigation/complaints/2018/comp-pr2018-41-theranos-h...
According to the SEC complaint, Holmes received a salary between $200-390k/year from 2013 to 2015. Although she had millions of shares of Theranos, she never sold any of her stock. Additionally, most companies do not indemnify their directors and officers for fraud.
This means that Holmes will likely have to pay $500,000 out of her pocket. This is a significant amount for Holmes unless she has a source of income other than her Theranos salary.
11
Her stake in Theranos is worth nothing, and it's not like she any wealth apart from her stake in Theranos, so I would disagree that $500K is a pittance for her. More important is that she will probably never be able to get a good job after this.
1
Nor was anyone prosecuted for the multi-trillion dollar fraud that caused the devastating 2008 global financial crash. Those banks were even repaid.
The rich "just got a whole lot richer" with Donny's and the R's tax cut.
How about taking back our democracy while there's still a democracy to take?
1