Excellent news for American society.<p>“The Chickenshit Club” by Eisinger recently explained why the lack of criminal charges had emboldened white collar crime.<p>Basically, individuals need to have the risk of criminal charges if they do something very egregious - they need to have skin in the game.<p>The US Justice Dept has in the past two decades largely only been fining corporations. And so companies estimate risk and budget for these numbers. So fines are not a completely effective deterrent. The book explains this and how the DOJ policy grew out of backlash to the Enron verdict.<p>Ps we talked about this in May, and @danso predicted criminal charges would come - and he was right. This is good news for the US DOJ. Too bad the US can’t retrospectively prosecute bankers for 2008 and claw back their size-subsidized, low risk premium profits.<p><a href="https://news.ycombinator.com/item?id=17123315" rel="nofollow">https://news.ycombinator.com/item?id=17123315</a><p>Edit: book review here. It’s a really good book. <a href="https://mobile.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html" rel="nofollow">https://mobile.nytimes.com/2017/07/05/books/review/the-chick...</a>
Does anybody know if Theranos got started with at least an idea how to accomplish what they wanted to do? From what I have heard in interviews they started with the thought "Doing xxx would be super useful" but didn't have an approach for accomplishing this but instead took in money and tried to figure it out. It's like me saying "An antimatter drive would revolutionize space exploration" and starting to collect money but without even the faintest idea how to produce one.<p>Does anyone know? Did Holmes have any insight that caused her and the investors to believe she could do the blood tests?
For anyone interested in the Theranos story, the reporter that wrote this article (John Carreyrou) is the same one whose investigation brought down Theranos. He wrote a book called "Bad Blood: Secrets and Lies in a Silicon Valley Startup" (<a href="https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/152473165X" rel="nofollow">https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/...</a>). He was also recently on the podcast This Week in Startups to discuss Theranos: <a href="http://thisweekinstartups.com/john-carreyrou-bad-blood/" rel="nofollow">http://thisweekinstartups.com/john-carreyrou-bad-blood/</a> or <a href="https://www.youtube.com/watch?v=dWQYKVasMoY" rel="nofollow">https://www.youtube.com/watch?v=dWQYKVasMoY</a> ).<p>Basically, Elizabeth Holmes wanted to be a billionaire and restore her family's fortune. She started a medical tech company but didn't include any scientists or doctors on her board. Demos and employment were tightly controlled by NDA, and structured so as few people as possible knew about the scam. Somewhere between 1-8M (10-100%) of blood tests Theranos performed on hacked machines from other companies are suspect or outright wrong. Her company rode the "unicorn" wave at just the right time to get lots of funding and publicity, even though it has been operating since 2006.
While Theranos was flying high, much was made of the company's connections to DC power elite - Kissenger on the board, etc.[1]. And the implication usually seemed to be that the deep bench of Serious And Important And Powerful People allowed the company to get away with things that otherwise would not have been possible.<p>I think it's worth pausing to consider: when's the last time you heard of a startup CEO/CTO team getting indicted for wire fraud? I'm not saying it doesn't happen, and I have no position on whether Holmes and Balwani are guilty of these or other charges.<p>But I do have to wonder whether the degree of attention from the DOJ has more to do with avenging the reputational and possibly financial losses of those same board members, than garden-variety "the DOJ prosecutes fraud".<p>In which case, there'd be a civics lesson as well. Live by .gov, die by .gov.<p>(Edit to clarify, lest I be accused of insufficient virtue signaling: fraud is bad, don't do it, if they committed fraud they should be punished, etc etc.)<p>[1] e.g.<a href="https://www.bizjournals.com/sanjose/news/2018/03/14/theranos-board-mattis-kissinger-schultz-holmes.html" rel="nofollow">https://www.bizjournals.com/sanjose/news/2018/03/14/theranos...</a>
I wonder how Tim Draper will argue this is a conspiracy to take down "another great icon"[0]<p>[0] <a href="http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-holmes/" rel="nofollow">http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-...</a>
Theranos / Holmes, also demonstrated how superficial, almost down to malpractice current so called journalism is.<p>Complete lack of analysis, expertise in the fields they are covering, and clear initial non-biased position.<p>Instead, we get this flood propaganda + sensationalism garbage from these so called 'reputable' news sources.<p>And, as a consequence, con-artists, career politicians, and 'celebrities' -- leverage this legalized malpractice for their purposes.<p>While we, the consumers of 'news' -- are being exploited and treated like as dehumanizing 'advertisement revenue points/votes.
We are essentially being suffocated by this 'carbon dioxide of information'.<p>So in my view, it is not just the case of E. Holmes misleading investors, board members and consumers -- it is also the case of journalism malpractice.
Reading the theranos story, what’s going on in the political spectrum today, watching the steps people seem to have taken to get where they are to influence the society and then seemingly failing at it, I am always reminded of the documentary “Enron, the smartest guys in the room”. It’s such a simple idea that likely one thing led to another and they have climbed a ladder to defraud investors and tried to cause public harm. Those first steps were maybe of good intentions or maybe of bad ones. But somewhere along the way, they clearly created a bubble of their own where they assured themselves that it’s ok what they are doing. Never lose the outside reference point. Never.
"The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud."<p>WHY DO THIS. Each count of wire fraud is 20 years in prison [1]. If 9 counts are proven you are looking at a 180 years in prison. (life sentence). You are better off doing 2nd degree murder 3 times - at least it is a challenge to prove. Proving wire fraud sounds pretty simple - they just read a bunch of emails and text messages in court. Everyone will turn nasty on each other due to the harsh penalties. Wire fraud = bad times. Just be honest with your investors.<p>[1] <a href="https://www.criminaldefenselawyer.com/resources/wire-fraud.htm" rel="nofollow">https://www.criminaldefenselawyer.com/resources/wire-fraud.h...</a>
There’s a lot of research money in microfluidics. It has huge potential to revolutionise an awful lot of the tedious time consuming laboratory work in health care.<p>Instead of painstakingly pipetting samples into well plates all day, trains of thousands of droplets can be fed into the microfluidic conveyor belt and processed accurately and automatically.<p>It can work very well. I once worked in a startup that was able to achieve exactly this however it was enormously challenging. The core technology was developed in a university and eventually spun out. Then it grew into something much larger as fully functional systems were developed for customers. The cost was enormous and the reliability not particularly fantastic but the customer was thrilled with the potential. Eventually we were bought out and while I took another path colleagues formed another hugely successful startup.<p>There are many many similar stories just like this in this space.<p>Holmes it seems was a highly effective pretender wanting to leapfrog the research she would have glimpsed while at Stanford by promising something that could do it all. So the money rolled in and she no doubt hired good technical people but instead of building something, anything worthwhile she doubled down on the lie.
It's people like Tim Draper that encouraged the fraud. From a totally logical point of view:<p>1. How do you invest millions in technology you cannot even look at even in year 10?<p>2. How do you defend a CEO in public by attacking credible journalists and not even once question the actual concerns in the company?<p>3. A medical company run by a first year drop-out and one without a single licensed doctor on the board?<p>C'mon. Even Steve Jobs did not get that leeway.
For your Friday drive home here is the recent Jason Calacanis interview of the WSJ reporter who broke the story. Great listen. <a href="https://itunes.apple.com/us/podcast/this-week-in-startups-audio/id315114957?mt=2&i=1000413578016" rel="nofollow">https://itunes.apple.com/us/podcast/this-week-in-startups-au...</a>
Holmes is a master obfuscator:<p><a href="https://www.youtube.com/watch?v=eqYHwI87cDQ" rel="nofollow">https://www.youtube.com/watch?v=eqYHwI87cDQ</a>
The indictment shows "No bail, arrest warrants issued" [0]. She'll be sitting in a prison cell by tomorrow morning.<p>Wow.<p>[0] <a href="https://www.justice.gov/file/1072521/download" rel="nofollow">https://www.justice.gov/file/1072521/download</a>
Biannual reshare of a pilot I wrote for a TV parody of Theranos: <a href="http://www.blakeross.com/pricks.pdf" rel="nofollow">http://www.blakeross.com/pricks.pdf</a><p>:)
Martin Shkreli is in prison now - he deserves it, though he was guilty of _far_ less then Elizabeth Holmes.<p>Holmes should already be in prison for massive fraud. The fact she is a female and mimicked Jobs seems to have saved her so far though.
> "The indictment further alleges that Holmes and Balwani knew that many of their representations about the analyzer were false. For example, allegedly, Holmes and Balwani knew that the analyzer, in truth, had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines."
<a href="http://www.paulgraham.com/founders.html" rel="nofollow">http://www.paulgraham.com/founders.html</a><p><i>4. Naughtiness<p>Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.</i><p><i>Sam Altman of Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they'd hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.</i>
>Theranos’s investors, most of whom poured money into the company after its commercial rollout in Walgreens stores in late 2013, have collectively lost nearly $1 billion. They include the Waltons, heirs to Walmart Inc. founder Sam Walton, media mogul Rupert Murdoch, Atlanta’s Cox family and the family of Betsy DeVos, the Secretary of Education. Each invested more than $100 million in Theranos—investments that are now worthless.<p>edit: sometimes you are brought to justice b/c you conned the wrong people...
It's great news for justice. These guys should do time. I read back in March (I can't find the link but I think it was the Economist) that the case had been dismissed.
Here's Tim Draper's interview on CNBC telling people in 2018 that Elizabeth Holmes is an icon and hero. He was an early investor in Theranos and likely responsible for bringing in a lot of the major investors. As far as I'm concerned he should also be investigated for his part in this massive fraud.<p><a href="https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-founder-elizabeth-holmes-was-bullied-into-submission.html" rel="nofollow">https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-fou...</a>
"Wire fraud" - it's amazing the litany of things one can do, and ultimately get caught up in this specific basket. Al Capone went down for tax evasion ...
Someone asked how she hadn't been indicted a few weeks ago, and I said that the investigation was ongoing but she would surely been indicted. Everyone following this case closely saw this coming.
So I mean like, fraud is definitely not a good thing, but <i>COUNTLESS</i> government contractors committed outright fraud and embezzlement during the Iraq War, and none of them were ever held accountable.<p>One of them even made 8 billion USD completely disappear from the "Iraq Reconstruction Fund".
I have been in this exact place before. For the two of them, this day will be just about the worst of their lives.<p>This is ordinarily when hard-core criminals are taken into custody. If their experience was like mine, they had to show up in front of a magistrate with their lawyers, plead not guilty, then go to a dungeon for about 30 minutes while they get handcuffed, fingerprinted, mugshotted, and DNA-swabbed. Then, off they go until trial. It's basically like being free, but you have to stay out of trouble and report all contacts with law enforcement.<p>Being rich (or from money), they won't have to worry about federal defenders or CJA representation, which wouldn't be near as bad as dealing with a state-funded public defender. There's a small chance they'll have to go this route anyway, since the government can snatch the money in dispute and block you from spending your ill-gotten gains on high-priced legal representation.<p>Don't let the "sticker price" fool you. They're not going to have to serve consecutive 20-year terms for what they're accused of, even if they take it to trial and get found guilty.<p>They will probably get their first plea offers in about a year. Most people take the plea. In the event they refuse to plead guilty, trial will probably take about 2-3 years from today.<p>Holmes will be offered, I'm guessing, about 6-9 months and a joint-and-several "money judgment" (restitution + forfeiture). Balwani, about 5 years and a joint-and-several "money judgment". This may be a package deal too, so Holmes may not be able to take it if Balwani won't. Why the discrepancy? The 28th amendment hasn't been ratified yet.<p>Before my experience with this world, I would have been eager to join in the collective bloodlust, with the pitchfork-and-torch crowd clamoring for these overprivileged defendants to sit through a trial and rot in prison. Take it from me: I wouldn't put my worst enemy through even just the trial.
Anybody have a link that talk about Holmes, personality, career, why she is special, etc. I have heard she is referred to as the next Steve Jobs...<p>Actually this has enough info for most people: <a href="https://en.wikipedia.org/wiki/Elizabeth_Holmes" rel="nofollow">https://en.wikipedia.org/wiki/Elizabeth_Holmes</a>