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posted by martyb on Wednesday January 05 2022, @04:23AM   Printer-friendly
from the the-harder-they-fall dept.

Elizabeth Holmes Found Guilty on 4 of 11 Charges

Elizabeth Holmes found guilty on 4 of 11 charges:

Elizabeth Holmes was convicted today of three counts of criminal wire fraud and one count of criminal conspiracy to commit wire fraud. The jury delivered its verdict after six days of deliberation.

The government's victory in the case is a rare rebuke for tech startups, which often pitch investors on their technological prowess and business acumen using wildly optimistic assumptions.

Theranos was, perhaps, an extreme example, raising over $900 million on the back of claims that its proprietary tests were better, cheaper, and less invasive than the competition. None of those claims was true, and unlike many other Silicon Valley startups, the health and safety of patients was on the line.

Holmes was found guilty of defrauding Lakeshore Capital Management (the family office of the DeVoses) of $100 million, PFM Healthcare (a hedge fund) of $38 million, and an LLC connected to Daniel Mosley (Henry Kissinger's former estate attorney) of $6 million. She was also convicted of conspiracy to commit wire fraud against Theranos investors more generally. On three charges, all alleging wire fraud against investors, the jury returned no verdict. Holmes was acquitted of all other charges, including those that involved defrauding patients. She faces up to 20 years in prison.

With the guilty verdict, Holmes, the founder of the company, is the first Theranos executive to be held criminally responsible for her actions, though she may not be the last.


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  • (Score: 4, Insightful) by looorg on Wednesday January 05 2022, @07:20AM (11 children)

    by looorg (578) on Wednesday January 05 2022, @07:20AM (#1210065)

    Theranos, of course, could never deliver on its signature promise that it could perform more than 1,000 tests. In reality, it could do 12.

    So they could perform about 1% of what they said. Did any of it actually work tho? From the article it seems that when it worked it produced a lot of errors (people having HIV when they didn't and so on) and they more or less had to be rigged to produce something.

    Still a machine that can perform some tests from just a drop of blood, if it works, might still be a viable product couldn't it?

    But it seems most of the charges here are fraud charges against (or from) the investors. Not that the machine wasn't working, or I guess that is why it's fraud -- or that it wasn't working to claim, not that it wasn't working at all. But it seems more about that she took a lot of money and not that the device wasn't working, or well "working" at about 1% of what was promised.

    Is the problem just that they lied to much? After all a lot of companies claim their product does things that they don't really do very well or properly or does in a really shitty manner. Or was it that they lied to the wrong people, as in it's ok to lie a little to customers but not to investors (or people with money)?

    The patients she, or the company, failed or defrauded didn't matter tho. They are apparently the other charges that was dropped. So I guess the lesson here is that you can defraud people as long as they are sick and poor but once you mess with the rich you get the stick?

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  • (Score: 2) by bzipitidoo on Wednesday January 05 2022, @07:57AM (2 children)

    by bzipitidoo (4388) on Wednesday January 05 2022, @07:57AM (#1210072) Journal

    Perhaps it's the embarrassment. The investors should've known better, they really should have. There was all kinds of evidence that Theranos was a fraud, but they wanted to believe it was real. These investors are supposed to be savvy, and an incident of this sort exposes them too. They look like a pack of idiots. She mixed the Kool-Aid. They drank it.

    • (Score: 2) by bradley13 on Wednesday January 05 2022, @09:05AM (1 child)

      by bradley13 (3053) Subscriber Badge on Wednesday January 05 2022, @09:05AM (#1210077) Homepage Journal

      Ah, but why did the investors want to believe? First, let's state the obvious: she was an attractive young woman and the investors were guys. Second, the requirements of progressivism: female CEOs of tech companies are rare, so criticizing her would have been seen as sexist. Combine the two, and they shut down their critical thinking and opened their collective wallets.

      Which was stupid, but doesn't alter the fact that Holmes lied and defrauded them. Just because you leave your house unlocked doesn't mean people are free to rob you. It's nice to see her found guilty.

      Also, as I understand it, civil suits can use this judgement to support damages for patients who relied on Theranos results.

      --
      Everyone is somebody else's weirdo.
      • (Score: 0) by Anonymous Coward on Thursday January 06 2022, @01:33AM

        by Anonymous Coward on Thursday January 06 2022, @01:33AM (#1210389)

        It doesn't really matter if she was a woman. Narcissist gas-lighting sociopaths use whatever God gave them as talents - could be that the very, very best need to be attractive or, as you say, female, and so the ones that end up on TV are in that select class of human.

  • (Score: 0) by Anonymous Coward on Wednesday January 05 2022, @11:02AM (1 child)

    by Anonymous Coward on Wednesday January 05 2022, @11:02AM (#1210085)

    So I guess the lesson here is that you can defraud people as long as they are sick and poor but once you mess with the rich you get the stick?

    Precisely.
    There is no longer even a pretense that people are equal. The 1%* is an exclusive club and you aren't in it.
    (khallow will be along in a minute to claim that is exactly the way things should be.)

    ---

    * It's actually less than 0.01%, but the 1% label has stuck now.

    • (Score: 2, Funny) by khallow on Wednesday January 05 2022, @06:41PM

      by khallow (3766) Subscriber Badge on Wednesday January 05 2022, @06:41PM (#1210205) Journal
      Hi!

      There is no longer even a pretense that people are equal. The 1%* is an exclusive club and you aren't in it.
      (khallow will be along in a minute to claim that is exactly the way things should be.)

      Of course not. What probably happened here is that the fraud against patients and doctors wasn't as open/shut as the fraud against investors. At a glance, there are several ways this could fail. Perhaps it didn't meet the conditions [investopedia.com] for wire fraud.

      The U.S. Department of Justice Criminal Resource Manual Section 941.18 U.S.C. 1343 cites these as the key elements of wire fraud: “1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money; 2) that the defendant did so with the intent to defraud; 3) that it was reasonably foreseeable that interstate wire communications would be used; and 4) that interstate wire communications were in fact used.”

      If interstate communications weren't used to market to patients and doctors (apparently, Theranos's product was only distributed in two states - everything in California would likely not qualify as interstate wire fraud, and if Arizona products were similarly managed/marketed in state, then that's it). The hung jury charges might also have come from this.

      There are some other possibilities. Alternately, maybe she wasn't involved in the advertising and marketing on the patient side, but that's a pretty thin defense. Or that perhaps the false advertising didn't meet the conditions of fraud.

      For example, this story [nbcnews.com] claims Theranos was secretly running almost all blood tests on competitors' machines. In that case, it may well be that Theranos delivered on almost all of its promises to patients and doctors, which would greatly weaken the charges of fraud since the patients likely received the services they paid for.

  • (Score: 2) by crafoo on Wednesday January 05 2022, @03:19PM

    by crafoo (6639) on Wednesday January 05 2022, @03:19PM (#1210135)

    It doesn't work at all. They would take full blood samples "just in case, to have some spare material" and just run standard blood tests on that, faking the machine results. It was all a 100% scam from day 1 to defraud investors.

  • (Score: 2) by ElizabethGreene on Wednesday January 05 2022, @04:18PM (1 child)

    by ElizabethGreene (6748) on Wednesday January 05 2022, @04:18PM (#1210160)

    You've hit on my big disappointment with this case.

    People got bad test results and made medical and life decisions based on bad data. The physical and emotional pain this caused is incalculable, and that was just written off. That sucks.

    I understand the logic of it too; it's relatively trivial to prove fraud against investors. It's much harder to prove that a specific patient was harmed beyond what they would have been if things worked properly. It still sucks.

    • (Score: 0) by Anonymous Coward on Thursday January 06 2022, @09:35AM

      by Anonymous Coward on Thursday January 06 2022, @09:35AM (#1210482)

      It didn't suck if you made money off of it. Just sayin'. That's how it is in the bright new world.

  • (Score: 4, Informative) by DeathMonkey on Wednesday January 05 2022, @06:30PM (1 child)

    by DeathMonkey (1380) on Wednesday January 05 2022, @06:30PM (#1210203) Journal

    My understanding is that she didn't defraud any end users, though.

    She didn't defraud sick people because she just sent those samples out to normal labs to get the results done then lied to the investors about how her magical machine actually did all the work in a second.

    • (Score: 1, Informative) by Anonymous Coward on Wednesday January 05 2022, @08:03PM

      by Anonymous Coward on Wednesday January 05 2022, @08:03PM (#1210236)

      as usual, many poops for you. so many poops!

  • (Score: 2) by krishnoid on Wednesday January 05 2022, @07:57PM

    by krishnoid (1156) on Wednesday January 05 2022, @07:57PM (#1210232)

    and they more or less had to be rigged to produce something.

    Yes! This is exactly what I want from a *diagnostic* system, of all things. In retrospect, it looks like it would have been easier to just convince an existing testing lab [questdiagnostics.com] to provide it as a consumer service.