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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: 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?

    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

    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 [] 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 [] 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.