Theranos Founder Elizabeth Holmes Criminal Fraud Charge Update

Gord_in_Toronto said:
I could not find the original TheranosWP thread but this seems like the latest news. (I'm posting here because it never was science).

Elizabeth Holmes’ legal filings suggest a mental-health defense

https://www.theverge.com/2021/8/28/22646130/theranos-elizabeth-holmes-sunny-balwani-abuse-fraud

She appears to be using the "Devil Made Me Do It" defence.
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More specifically, "my boyfriend made me do it."
Former Theranos chief executive Elizabeth Holmes is likely to argue in her criminal trial that abuse by her ex-boyfriend, who was the company’s president, rendered her incapable of making her own decisions, according to documents unsealed in the case early Saturday morning.
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https://www.washingtonpost.com/technology/2021/08/28/elizabeth-holmes-trial-unsealed-documents/
 
I read the book, Bad Blood, written by the WSJ journalist who really broke all this, John Carryrou (apologize if the spelling is off). He has a new podcast out called Bad Blood: The Final Chapter. He’ll be covering the trial as it happens so I’m glad to have his perspective.

Two episodes are out now. The 2nd one details something not in the book: how Theranos tried to scam investors by capitalizing on the Ebola scare. Holmes and Bulwani approached investors with a crazy claim: they had a test that could detect Ebola even if there were only 5 viruses per milliliter of blood. It wasn’t true, of course, but the details are fascinating.

Can you imagine how hard they would have scammed us all with Covid?
 
gabeygoat said:
Trials and Errors might have made more sense, but I don't mind.
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I suppose so but this started out as a "business" story (more or less). I think the original thread was in "Science, Mathematics, Medicine, and Technology".
 
Seems awfully desperate. I suppose they have to try something, because the evidence of guilt seems to be overwhelming.
 
SuburbanTurkey said:
Seems awfully desperate. I suppose they have to try something, because the evidence of guilt seems to be overwhelming.
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Yeah, I doubt there will be any defence argument against what the prosecution put forward as the events, that evidence is overwhelming so all they are left with is a mitigation defence. These seem much more common in the USA system where plea bargaining seems to have become the usual[ /I]route to a prosecution for many serious and not-so serious crimes.

I'd post more but on the way to the forum a man stole my bag which had all my posts in it, but not my phone, lunch, sports kit and textbooks.
 
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SuburbanTurkey said:
Seems awfully desperate. I suppose they have to try something, because the evidence of guilt seems to be overwhelming.
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It's one of those where the whole idea of "due process" becomes a circus and might lead to a couple of criminal psychopaths going free.

It was so obvious from the start that the whole Theranos thing was fake; Holmes and Wassisface cannot but have known this; why all those "clever folk" in Silicon Valley and elsewhere could not spot that it was fake is beyond me, but once the snowball started rolling no-one was going to admit that it was fake for fear of looking daft (pro tip: you all now look more than daft, but also a tad criminal yourselves).

I mean, the whole "It's totally new and no-one else knows how it works; we aren't going to publish in any reputable peer-reviewed journal, but give us a shed load of cash!" approach just screams honesty and truthfulness, doesn't it? Or maybe it does to a whole load of other hucksters and shysters?

I'd be surprised if they let anyone with more than very basic, rudimentary scientific knowledge on to the jury, as they would obviously be biased by dint of knowing that the whole thing was BS piled on BS right from the start.

Can't we just go straight to sentencing? Or is Holmes going to use that highly convenient child as a bargaining chip again?
 
Carrot Flower King said:
It's one of those where the whole idea of "due process" becomes a circus and might lead to a couple of criminal psychopaths going free.

It was so obvious from the start that the whole Theranos thing was fake; Holmes and Wassisface cannot but have known this; why all those "clever folk" in Silicon Valley and elsewhere could not spot that it was fake is beyond me, but once the snowball started rolling no-one was going to admit that it was fake for fear of looking daft (pro tip: you all now look more than daft, but also a tad criminal yourselves).

I mean, the whole "It's totally new and no-one else knows how it works; we aren't going to publish in any reputable peer-reviewed journal, but give us a shed load of cash!" approach just screams honesty and truthfulness, doesn't it? Or maybe it does to a whole load of other hucksters and shysters?

I'd be surprised if they let anyone with more than very basic, rudimentary scientific knowledge on to the jury, as they would obviously be biased by dint of knowing that the whole thing was BS piled on BS right from the start.

Can't we just go straight to sentencing? Or is Holmes going to use that highly convenient child as a bargaining chip again?
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With all the wild fortunes being made in silicon valley, I think there's a lot of FOMO going around that is clouding a lot of people's judgement. Everyone wants to be an early investor in the next Apple or Facebook or whatever. It's very telling how much effort Holmes and the company made to emulate the aesthetic of these famous fortune makers. It's interesting how many people were hoodwinked by someone adopting the affectation of a savant techno-wizard.

It is interesting that none of these people investing huge piles of money ever did the due diligence to see if any of the purported technology even worked.
 
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I put part of the blame on the favorable coverage she got from the media, the storyline of a cute blond being the next Bill Gates was irrestiable.
Looks a if she will be exchanging her turtleneck sweaters for an orange jump suit.
 
Reading the book, it seemed like there were a lot of people who should have known to look past the hype and the media coverage, do their own due diligence, and notice the emperor's distinct lack of clothing.
 
I am wondering if Holmes will continue her strange, forced low voice during her testimony. IIRC, people who knew her before her Theranos days insist that it's a put-on and not her real voice.

If she's going for the "my abusive boyfriend made me crazy" defense, I suppose acting normal at the trial would probably be important.
 
theprestige said:
Reading the book, it seemed like there were a lot of people who should have known to look past the hype and the media coverage, do their own due diligence, and notice the emperor's distinct lack of clothing.
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This is exactly my impression.

The claims were, at their core, scientifically improbable, if not outright impossible. I mean 100+ tests from a few drops of blood? Get serious.

They were lying from the get go and this should have been uncovered by any venture capitalist worth their salt.

Really, this exposed the investment community every bit as much as it did the company itself.
 
I seem to recall there was one national service chain - a grocery store, I think - that looked into it, decided it didn't make enough sense, and noped out before getting to the investment stage. Their competitor went all-in and wasted a lot of money on a pipe dream.
 
I have a memory of a Radio 4 programme over here (Evan Davis' The Bottom Line, which is a slot devoted to exploration of business issues) about the whole Theranos thing.

It had me screaming at the radio as they completely ignored the utter scientific implausibility, if not impossibility, of the whole thing, which should have stopped anyone with a brain right at that point, but they all wiffled on about investment decision-making without looking at what should underpin that...

It was, for me, a damaging insight into sections of our education system: Davis was educated at Oxford and Harvard; his guests were the usual bizniz folk, with MBAs; the programme is a co-production with the Open University and no-one seemed at all capable of grasping the flaw right at the start, to the point that Theranos was built on lies was not even mentioned...

At least Fox Mulder wasn't quite that credulous.
 
SuburbanTurkey said:
I am wondering if Holmes will continue her strange, forced low voice during her testimony. IIRC, people who knew her before her Theranos days insist that it's a put-on and not her real voice.

If she's going for the "my abusive boyfriend made me crazy" defense, I suppose acting normal at the trial would probably be important.
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The problem with the abusive boyfriend defense is that the fraud started before Sunny got to the company. I'm having a hard time with a defense of, "My boyfriend made me continue my criminal enterprise that I started before we met".
 
theprestige said:
Reading the book, it seemed like there were a lot of people who should have known to look past the hype and the media coverage, do their own due diligence, and notice the emperor's distinct lack of clothing.
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Yeah, I saw the documentary on Hulu yesterday. Jim Cramer, of CNBC's Mad Money did some tap dancing trying to explain his cheer leading of Theranos when it was the NBT. It wasn't quite as revolting as his assault on the truth after he tried to explain his buy recommendations for Bear Sterns a week before the company collapsed.
 
Craig4 said:
Yeah, I saw the documentary on Hulu yesterday. Jim Cramer, of CNBC's Mad Money did some tap dancing trying to explain his cheer leading of Theranos when it was the NBT. It wasn't quite as revolting as his assault on the truth after he tried to explain his buy recommendations for Bear Sterns a week before the company collapsed.
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It's strange that people who claim to have a "system" for winning at scratch tickets are treated as degenerate gamblers, but those that advocate gambling on the stock market get respectability and a TV show.
 
Elizabeth Holmes has arrived at the courthouse and is surrounded by cameras. Three of her fans try to catch a glimpse without losing their spot in line.
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https://twitter.com/doratki/status/1435621048473456643

Three fans dressed as lookalikes in the infamous black on black business-wear were at the courthouse to greet Holmes.

Kinda glad Theranos turned out to be a dud. The Holmes aesthetic, especially the ridiculously forced low voice, is one I'm glad isn't going to catch on.
 
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SuburbanTurkey said:
https://twitter.com/doratki/status/1435621048473456643

Three fans dressed as lookalikes in the infamous black on black business-wear were at the courthouse to greet Holmes.

Kinda glad Theranos turned out to be a dud. The Holmes aesthetic, especially the ridiculously forced low voice, is one I'm glad isn't going to catch on.
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Makes it easier to identify the gullible fools, I suppose.

Do you have any magic beans or well known bridges to sell them?
 
From this - https://www.theguardian.com/technology/2021/sep/07/elizabeth-holmes-theranos-trial-begins-latest - report we have the following gem: "Legal experts say beyond the alleged abuse defense, it appears Holmes will argue she did not fully understand the complex science behind the devices and believed they worked."

OK, we have someone who was an engineering student at Stanford, which I believe is highly regarded by US-ians, who was told by the dean of the medical school of said university that what she was suggesting would not work...Are we actually required to believe that the American education system is so poor that someone accepted on to an engineering course at Stanford has such a poor understanding of basic biology and chemistry that they think this nonsense works, while still being so convinced of their own intellectual superiority that they ignore the dean of medicine?

Or have we just got a straight up psychopathic con artist? Who is still trying a version of the con?
 
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Enh. I can see it, actually.

"I had an idea for a world-changing medical device, that I believed could be made to work. I hired engineers that I believed had the necessary expertise to solve the complex problems and make it work. Unfortunately, I was naive and did not fully understand the magnitude of the challenge or the shortcomings of my team. It didn't help that they hid the full details of their failures from me. Then, to make matters worse, I partnered with an abusive conman who exploited my naivete and the opacity of my team to enrich himself via the venture capital mechanism. It was only much later that I came to understand the magnitude of my ignorance. I still believe the idea can be made to work, though. I look forward to putting this all behind me and starting fresh with a new team and a better understanding of how to manage a project like this. I look forward to raising funds just as soon as I figure out how to get around the current regulatory restrictions."
 
Carrot Flower King said:
From this - https://www.theguardian.com/technology/2021/sep/07/elizabeth-holmes-theranos-trial-begins-latest - report we have the following gem: "Legal experts say beyond the alleged abuse defense, it appears Holmes will argue she did not fully understand the complex science behind the devices and believed they worked."

OK, we have someone who was an engineering student at Stanford, which I believe is highly regarded by US-ians, who was told by the dean of the medical school of said university that what she was suggesting would not work...Are we actually required to believe that the American education system is so poor that someone accepted on to an engineering course at Stanford has such a poor understanding of basic biology and chemistry that they think this nonsense works, while still being so convinced of their own intellectual superiority that they ignore the dean of medicine?

Or have we just got a straight up psychopathic con artist? Who is still trying a version of the con?
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In a judicial sense, this type of defence (the "I didn't knowingly mislead anyone - I didn't understand my company's products/services sufficiently, and I was exploited/lied to by people below me" defence) is on very thin ice indeed in most jurisdictions. The law usually adopts the view that someone so senior in a company - especially if they have significant equity ownership in that company - has a fiduciary duty to know what is and is not true/accurate about their company and its products & services. And that holds even more if the person is involved in soliciting outside investment into the company.

As a result, I'd be very surprised (to say the least) if a US federal court were to deem this an allowable component to her defence. The same general rule applies to any possible boyfriend-coercion component to her defence*.


Incidentally, while what you say about Holmes' own educational background is completely correct, it wouldn't actually matter if she'd attained her position of responsibility at Theranos on the back of zero formal education - what matters is her responsibility under the law once she's attained that position at Theranos. But as regards the (verifiable) matter of her being told by a qualified person that her product simply wouldn't - and couldn't - work as described, well that ought to make the prosecution's case stronger still.


* almost all courts simply refuse to buy this sort of notion: if one finds oneself in Holmes' level of fiduciary responsibility, especially when one is soliciting so much in outside investment, one cannot play the coercion card - if one thought one was being improperly coerced, one is expected to resign and to notify the appropriate authorities (whether financial, regulatory or judicial) right away.
 
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Incidentally, when it comes to the matter of the Stanford Dean of Medicine telling Holmes that her product was effectively a fake...

... I can only shake my head in wonder at the apparent ease with which so many investors threw so many millions of dollars into Theranos. I can understand how it would be tempting to want to get relatively-early-stage investment into a company which might end up (were its product(s) to be effective and globally successful) being worth at least tens of billions, and I can - to an extent - understand them being emotionally seduced by Holmes.

But I simply can't understand why none of these investors (it would appear) did anything even remotely approaching proper due diligence prior to making their investments. There were plenty of people within the relevant scientific communities - most notably, senior academics - whose expert opinions could, for a relatively minuscule fee, have been sought under NDA.

I somehow suspect that Holmes and Theranos may have provided a misdirection on this matter by telling prospective investors something along the lines of "If you seek expert third-party opinion, they'll probably all tell you that our product cannot work. But we at Theranos know it works. We've shown you lots of evidence that it works. And bear in mind: if you'd asked the experts in the days of Copernicus whether the Earth orbited around the Sun, they'd all have loudly & emphatically told you that it did not."

Irrespective of that, these prospective investors could and should have carried out sufficient due diligence to allow them to conclude that they should stay well away from Theranos. But the potent combination of greed and fear (FOMO) can make even expert investors do stupid things sometimes.....
 
Theranos just had the ambitious dream of restoring balance by vaporizing half the money in the universe.
 
Holmes was the face of the company. She was promoting this lie before Bulwani came on board. It was her image that convinced people to invest. She was well acquainted with the fact that her idea simply wasn’t workable.

Bulwani became her enfurecer. He was also well acquainted with the fact that the product was bunk.

Together, they engaged in fraud. Neither was fooling each other. All the facts were known to each of them.

This should be an easy case for prosecutors. The only unknown is if Holmes has enough charisma to fool the jurors. I hope the prosecutors have their case straight. The evidence is clear.
 
If anything this case confirms that in the US especially, it's not a crime to convince people to throw a bunch of money at you based on a load of complete ********. Caveat emptor, if you will. Makes me wonder why religious leaders are not hauled into court for the same reason.

I think what is lost on most people is that she is being charged with wire fraud and conspiracy to commit wire fraud. That's not the same thing as knowingly deceiving investors, which is exactly what she and Bulwani did.
 
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Carrot Flower King said:
It's one of those where the whole idea of "due process" becomes a circus and might lead to a couple of criminal psychopaths going free.

[...]

Can't we just go straight to sentencing?
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No matter how hard I try, I will never understand this attitude. I'd much rather live in a society where Holmes and Balwani are set free by due process, than in a society where we deride due process and skip straight to sentencing everyone we think is "obviously" guilty.
 
Lerxst said:
If anything this case confirms that in the US especially, it's not a crime to convince people to throw a bunch of money at you based on a load of complete ********.
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How do you figure that? Fraud, under a variety of legal names, is indeed a crime in the US. In fact, it's the very crime she's being charged with. It's really weird to say that a criminal trial for fraud confirms that fraud is not a crime.
 
DevilsAdvocate said:
I think it was Popehat who asked the question of whether in court she will switch from her fake-sounding baritone voice to a giggly little girl voice.
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Another reason for the prosecution to show the jury lots of videos of her public promises about all the wonderful things her gadgets could do. The jury should have a firm opinion about her long before she gets on the stand -- which I actually doubt she will do. It could only hurt her.
 
theprestige said:
How do you figure that? Fraud, under a variety of legal names, is indeed a crime in the US. In fact, it's the very crime she's being charged with. It's really weird to say that a criminal trial for fraud confirms that fraud is not a crime.
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After looking at the definition yes it appears that at best my post was misleading and did not convey what I intended to say. By charging her with wire fraud it would appear to the layman that she is only guilty of breaking laws around wiring money to someone else. The legal definition clears this up for me:

A person can be found guilty of that offense only if all of the following facts are proved beyond a reasonable doubt:

First: That the person knowingly and willfully devised a scheme to defraud, or for obtaining money or property by means of false pretenses, representations or promises; and

Second: That the person knowingly transmitted or caused to be transmitted by wire in interstate commerce some sound for the purpose of executing the scheme to defraud.

It is not essential that the government prove all of the particulars concerning the exact nature and purpose of the scheme; or that the material transmitted by wire was itself false or fraudulent; or that the alleged scheme actually succeeded in defrauding anyone; or that the use of interstate wire communications facilities was intended as the specific or exclusive means of accomplishing the alleged fraud.
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Reference: https://definitions.uslegal.com/w/wire-fraud/

This still seems to me like it is being portrayed as a classic white collar crime that many people in the US could be charged with. What Holmes and Theranos did is far more serious than this but it doesn't seem there is anything else the govt is willing to charge her with.
 
theprestige said:
How do you figure that? Fraud, under a variety of legal names, is indeed a crime in the US. In fact, it's the very crime she's being charged with. It's really weird to say that a criminal trial for fraud confirms that fraud is not a crime.
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Also scratching my head.

Ripping off other rich people remains the express-lane for criminal prosecution in this country.
 
Lerxst said:
This still seems to me like it is being portrayed as a classic white collar crime that many people in the US could be charged with. What Holmes and Theranos did is far more serious than this but it doesn't seem there is anything else the govt is willing to charge her with.
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The reason interstate wire's are involved in the fraud charge is that in the USA states are the ones that prosecute most fraud crimes. The federal charges require some sort of interstate activity else they don't have jurisdiction. Generic murder, for instance, is not a federal crime outside of certain areas like murder of an elected official et al. And they are 99% chaged as state crimes. The distinction is based on the US Constitution which generally limits jurisdiction to things that involved some sort of interstate activity. A classic is the Mann Act which applies to sex crimes across state borders.

Federal crimes also typically have much more serious penalties and there is a higher conviction rate for federal crimes.
 
theprestige said:
No matter how hard I try, I will never understand this attitude. I'd much rather live in a society where Holmes and Balwani are set free by due process, than in a society where we deride due process and skip straight to sentencing everyone we think is "obviously" guilty.
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Yeah, it was more a fit of annoyance rather than a genuine view: I'm pissed off with seeing white collar fraudsters, thieves and con artists walk away from any consequences of their actions (see a couple of infamous cases over here where folk managed to use Alzheimer's as a mitigation and then miraculously recovered from it...), when I know folk who pick up criminal records for pretty minor stuff.
 
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