8 ms·

Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer

Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over $750 million is returned to defrauded investors and other preferred shareholders. The settlements with Theranos and Holmes are subject to court approval. Someone help me out: Does this settlement really make the affected parties feel the pain? Does it discourage other companies from attempting the same thing? Given the scale of the fraud, shouldn't these two simply be in prison right now?

daxorid 9y ago
> shouldn't these two simply be in prison right now? Compare and contrast with Shkreli sentencing. Some animals are more equal than others.
- leggomylibro 9y ago
  Well, Holmes and Balwani didn't actively and loudly antagonize most of the country. Most rich criminals know that when you scoff at the law, you should do it quietly.
  - jessaustin 9y ago
    It also helps to have lots of family and friends who have given lots of money to lots of politicians. For nonviolent crime like this, the law really is different for different people.
  - username223 9y ago
    Most poor criminals know that, too. Shkreli openly taunted the criminal justice system, and that doesn't end well for anyone.
- charlesdm 9y ago
  Some animals at least are likeable as people. Others are not.
- hourislate 9y ago
  Remember who was on the Board of Theranos. These upstanding Americans will never serve a day in Prison including Holmes and Balwani. Shkreli on the other hand was thrown in prison for raising the price of a drug, making money for his investors and offering a reward for one hair. Justice has been served. Junk away....
  - matthewmacleod 9y ago
    Shkreli was actually thrown in jail for comprehensively defrauding investors.
    - deleted 9y ago
      [deleted]
    - hourislate 9y ago
      Yeah...hehehe....sure he was... And Elizabeth thought her technology actually worked. A honest mistake... Junk away....
- aje403 9y ago
  I'm not really sure that's fair. In fact, IANAL and have zero knowledge of law, but the two had seemingly nearly opposite intent of their crimes. Who knows what was going on in the girl's head, but it sounds more like a bunch of idiot investors gave a lot of money to a dreamer who wanted to make an impact and didn't know when to quit and fold her hand rather than an elaborate con. That gets taken into consideration before pitchforks come out. At a certain point you have to wonder why did a 21 year old get paid 700 million dollars on good faith to start a pharmaceutical company with little oversight? I remember reading about the board a few years ago and just looked it up again. Several generals, Henry Kissinger...huh? This is all seems pretty obvious in hindsight.
  - alehul 9y ago
    > sounds more like a bunch of idiot investors gave a lot of money to a dreamer who wanted to make an impact and didn't know when to quit and fold her hand rather than an elaborate con Until you said 'her', I actually thought you were referring to Shkreli. He ran a hedge fund starting at 23, and when he lost a lot of the money, he made bigger bets and tried to earn the money back rather than admitting his losses. > I remember reading about the board a few years ago and just looked it up again. Several generals, Henry Kissinger...huh? Shkreli raised money from Steven Cohen's SAC Capital, the family of Fred Hassan (former CEO of Schering-Plough), and Brent Saunders, the current CEO of Allergan. Their stories, though they differ in industry, seem quite similar when compared in detail.
    - aje403 9y ago
      While I don't know either of them so it is an unfair judgment to make, I would guess there's a big difference in thoughts in the back of their head: "These idiots aren't getting their money back, wait for my next play..." "If I can hold them off for another year, we'll have a big breakthrough..." Making larger bets to cover for an hide losses is a very common story for traders on wall street. Buying an AIDS drug to price gouge is not. In contrast, it seems like Holmes had an earnest desire to improve medical tech. Again, I'm speculating, we'll see if this unfolds any further. Fun story to follow.
vasilipupkin 9y ago
SEC doesn't put people in prison, it can refer to Justice Department for prosecution. Whether it does or not, depends on the circumstances of the case. They prefer quick resolution rather than years of litigation.
- georgeecollins 9y ago
  Many people are in jail today because they can't post bail. You can discourage ever facing incarceration by being able to afford a good legal defense. You can be forced to accept incarceration without conviction because you are poor.
  - TremendousJudge 9y ago
    "In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread" - Anatole France
    - georgeecollins 9y ago
      My mom was a judge, and I learned that saying because she had it posted in her chambers.
  - mevile 9y ago
    I doubt Holmes can afford much of anything anymore.
    - wolf550e 9y ago
      Surely her family will pay for a lawyer to keep her out of prison.
    - anigbrowl 9y ago
      I'm pretty sure that I won't find her living in a tent any time soon.
- enlightenedfool 9y ago
desireco42 9y ago
I wish we could do this to politicians, once caught in lie and fraud, bar them from taking any public office for 10 yrs :). I agree she got away lightly.
- diggan 9y ago
  Funny fact, in 2013, Italy actually banned Silvio Berlusconi from holding public office for 6 years. But, that doesn't stop him from participating and trying to win elections anyways...
  - danmaz74 9y ago
    He's not participating personally: he can't be elected. But his party wasn't barred.
    - icebraining 9y ago
      Right, they find someone else to sign the paperwork.
- cmurf 9y ago
  Impeachment provides for this. At the federal level, you are bared from public office for life upon conviction. And it doesn't apply only to elected officials, but all public officials. Even some low person on the totem pole could be impeached, removed from their office, and bared from holding any public office ever again. Pardons do not apply to impeachment convictions. States vary in their impeachment proceedings and what burdens must be met.
georgeecollins 9y ago
If you are convicted for drug trafficking or plead guilty to it, any asset that you can't prove you received through other legal means is likely to be subject to seizure.
- SilasX 9y ago
  Isn't that also true without your if-clause?
  - throwawayjava 9y ago
    The "is likely to be" part is not true in general. Changing that "likely to be" into a "may be" would make the statement true(r) without the if-clause. Also if the if-clause stated "suspected of" rather than "convicted of", then the "is likely to be" part would be true in general.
    - georgeecollins 9y ago
      Let me show why I believe what I said. I'm no expert, and I would like it if you could clarify my understanding of why you think seizure of assets is not likely. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
      - debacle 9y ago
        The civil forfeiture epidemic is more localized.
      - throwawayjava 9y ago
        Yes, I know exactly what you were referring to. I think this sentence is accurate: If you are suspected of drug dealing, any asset that you can't prove you received through other legal means is likely to be subject to seizure. I think this sentence is accurate: any asset that you can't prove you received through other legal means MAY be subject to seizure. I think this one isn't accurate, though: any asset that you can't prove you received through other legal means is likely to be subject to seizure. Maybe I'm just surrounded by extremely lucky people, but none of the people around me (all of whom aren't partaking in illegal behavior / have never been suspected of illegal behavior) have had the police show up and randomly take their stuff.
briandear 9y ago
So she can’t be a director of a public company? Other than Yahoo, who would even consider hiring her? This “punishment” doesn’t seem like one. She should be in jail.
- hluska 9y ago
  I don't know if I agree with you. Personally, I can't imagine the humiliation of carrying this around with me...
  - mikepurvis 9y ago
    Lots of people currently in prison would happily choose "carrying around humiliation" as an alternative, I expect.
  - BinaryIdiot 9y ago
    Everyone loves a comeback story, though. In a few years she'll take the circuit of podcasts / news outlets. "I thought we could do it. It started with a single, tiny lie and then it snowballed. I get out of control. I took some time off and now I'm starting my own company. We will be the most transparent company in the world and we're innovating X!" Something along those lines. It's not a life or career ender IMO.
    - gaius 9y ago
      Even Tonya Harding is the subject of a flattering movie now
  - fiblye 9y ago
    She got to live a few years as a billionaire. She could easily get a normal, non-executive job like 99% of Americans after this. I think most people would take a lifetime of "humiliation" if they got to live an unreasonably extravagant life for a while then return to an upper middle class lifestyle, occasionally having news articles written about them until it all fades away completely after 5-10 years. A sentence of "humiliation" would only make scams like Theranos a more appealing idea to many people. And frankly, if someone could go so deep with a scam like Theranos, I don't think they/Holmes have much of a sense of shame to begin with. They'll justify their fraud to the very end.
saas_co_de 9y ago
Settlement is probably best for investors because they immediately get control of the company and Holmes basically gets nothing. The job of the SEC is to protect investors so they are probably doing the right thing here.
- gjem97 9y ago
  Yeah, I don't think she gets nothing. She was paid a salary for many years, I would't be surprised if it was a pretty hefty one. There were probably other perks, too (wasn't she known to fly private for business trips?). It looks like she simply relinquished some equity that probably wasn't worth very much anyway. This settlement doesn't look like much of a deterrent to future would-be fraudsters.
- Nanite 9y ago
  True, and besides having lost money, their investors also continue to lose credibility, considering the poor if not complete lack of due diligence on their part, as long as this fiasco is in the spotlights.
mathattack 9y ago
This will wipe her out, and likely kill her career. Remember, this is just the SEC. The pain they inflict is commensurate to investor pain. The government still should go after them for endangering people’s lives. There should be long jail terms for that.
- Kalium 9y ago
  > The government still should go after them for endangering people’s lives. There should be long jail terms for that. But the SEC won't, because that's not what they do. And this is, I think, as it should be.
  - mathattack 9y ago
    Exactly - separate group.
- spaceflunky 9y ago
  >This will wipe her out Will it though? Surely Holmes still has a few million stashed away somewhere that she can live comfortably off of? This settlement isn't going to leave her destitute. Either that or I'm sure she set up some clever offshore accounting structure that has $10M stashed in the cook islands or some shit. As soon as you get some cash, I think "rich person 101" is you set up some complicated structure to hide rainy day money for this very reason. I would venture to guess she took home at least $50MM in all those rounds of investment (maybe more? i have no idea how that works.), I doubt she blew it all or was stupid enough to leave it in plain sight.
  - ericd 9y ago
    Did she take money off the table? Not everyone does/can, even when they raise a lot.
    - spaceflunky 9y ago
      I often wonder about this. I know founders that have instantly taken $100k off the table on a $1M angel investment. but such is silicon valley life i suppose?
icantdrive55 9y ago
Not in my opinion. I remember those interviews, with the black turtle necks. She was playing the part of genius, but looked full of it, especially with all the secrets. She is basically being fined $500,000. This is pocket change. I imagine so much money is hidden. This hidden money just might be the next fraud charge? "Bared from hiring as an officer, or director for 10 years." She will get hired on somewhere under Something of Something, even though she's a complete fraud? She didn't even finish her degree? Hell--most people don't know anything about blood testing. In a few months, the victim will be on stage somewhere. "If a was a ---, I wouldn't be treated this way!" She got off very light. She's pretty enough to be scooped up by a Valley Boy. We have not heard the end of her. She will be fine. I can't imagine any retirement money went into the company, so I really don't care about the 1 percenter's who lost some pocket change. The only thing I'm glad about is no one is going to sport the black turtle neck, for awhile at least--that look belongs to Steve anyways. Any maybe, when the genius card is thrown around, people might do a little homework? She did enter the market, with the right look, pedigree, though. The Lookers were looking for the next Zuck. Oh well, and the band plays on. (I have a feeling under Trump's reign, the SEC, federal courts will go very easy on these types. So--if your planning on doing something fraudulent, white, and have family money; go to work.)
- jbellis 9y ago
  Fined $500k AND she returns 19M shares. Unclear if that's "effectively all of it" without doing more homework.
- mv4 9y ago
  I remember seeing one of her public appearances for the first time (when they were flying high and before there was any doubt), and she seemed incredibly fake to me.
joering2 9y ago
Pharma Bro was just sentenced to 7 years in jail for misrepresenting facts to investors, despite said investors did not lose any money but actually made some [1] Here Holmes not only doctored power point presentations to baloon numbers to investors, but put thousands of lives in danger (if some were lost, we will eventually find out) by providing wrong results for tests to many patients that lives relied on it, and she gets jail-free card and slap on the wrist. [1] https://www.cnbc.com/2018/03/09/pharma-bro-martin-shkreli-sentenced-to-7-years-in-prison.html https://www.cnbc.com/2018/03/09/pharma-bro-martin-shkreli-se...
- AcerbicZero 9y ago
  Yeah, he was kind of a douche, but it's pretty obvious he only got slammed with that kind of time because he didn't play the game right.
- danso 9y ago
  Shkreli received 7 years in prison because he was found guilty by a jury for securities fraud. What you refer to as "Here Holmes..." was were SEC civil charges. A criminal investigation was opened in mid-2016 and, as far as we all know, is still underway: https://www.npr.org/2016/04/19/474868428/innovative-blood-testing-company-theranos-under-criminal-investigation https://www.npr.org/2016/04/19/474868428/innovative-blood-te...
kqr2 9y ago
Most likely she also has Directors and Officer's Liability Insurance: https://en.wikipedia.org/wiki/Directors_and_officers_liability_insurance https://en.wikipedia.org/wiki/Directors_and_officers_liabili... As part of the settlement, there was no actual admission of wrongdoing or fraud, so it's quite possible that the insurance would pay the fine.
- sk5t 9y ago
  Maybe, maybe, if the insurer had the option to direct any defense, but it's still mighty hard to insure against willful acts.
eggpy 9y ago
Well, according to Forbes, Holmes is worth _nothing_[0], so $500,000 is probably fairly painful. Plus, relinquishing ~19 million shares regardless of their value has to hurt. Also she no longer has the majority of votes in her own company. And as a CEO who can't be an officer of a public company for 10 years, yeah that probably really hurts too. Not to mention her name is effectively toxic pretty much forever now. So she's not going to jail, but those penalties certainly look painful to me. [0] https://www.forbes.com/sites/matthewherper/2016/06/01/from-4-5-billion-to-nothing-forbes-revises-estimated-net-worth-of-theranos-founder-elizabeth-holmes/#56ac4b833633 https://www.forbes.com/sites/matthewherper/2016/06/01/from-4...
- kristianov 9y ago
  Her family is rich and connected. I don't see the punishment is too harsh without her going to jail.
- perl4ever 9y ago
  It seems like a much larger fraud than Shkreli's, who got 7 years. Also, as someone pointed out, they didn't just deceive investors, they deceived the people who were getting blood tests and that seems much worse. So one might suspect there's some sort of privilege going on. Or maybe the story just isn't complete yet.
  - Clubber 9y ago
    Politicians needed the prosecutors to make an example of Shkrelli because they needed to distract people from the fact that cornering a drug market and hiking the prices is still perfectly legal and practiced by much larger companies.
- briandear 9y ago
  19 million shares of a company worth nothing?
AndyMcConachie 9y ago
It's a slap on the wrist compared to the crime.

daxorid 9y ago

> shouldn't these two simply be in prison right now? Compare and contrast with Shkreli sentencing. Some animals are more equal than others.

leggomylibro 9y ago
Well, Holmes and Balwani didn't actively and loudly antagonize most of the country. Most rich criminals know that when you scoff at the law, you should do it quietly.
- jessaustin 9y ago
  It also helps to have lots of family and friends who have given lots of money to lots of politicians. For nonviolent crime like this, the law really is different for different people.
- username223 9y ago
  Most poor criminals know that, too. Shkreli openly taunted the criminal justice system, and that doesn't end well for anyone.
charlesdm 9y ago
Some animals at least are likeable as people. Others are not.
hourislate 9y ago
Remember who was on the Board of Theranos. These upstanding Americans will never serve a day in Prison including Holmes and Balwani. Shkreli on the other hand was thrown in prison for raising the price of a drug, making money for his investors and offering a reward for one hair. Justice has been served. Junk away....
- matthewmacleod 9y ago
  Shkreli was actually thrown in jail for comprehensively defrauding investors.
  - deleted 9y ago
    [deleted]
  - hourislate 9y ago
    Yeah...hehehe....sure he was... And Elizabeth thought her technology actually worked. A honest mistake... Junk away....
aje403 9y ago
I'm not really sure that's fair. In fact, IANAL and have zero knowledge of law, but the two had seemingly nearly opposite intent of their crimes. Who knows what was going on in the girl's head, but it sounds more like a bunch of idiot investors gave a lot of money to a dreamer who wanted to make an impact and didn't know when to quit and fold her hand rather than an elaborate con. That gets taken into consideration before pitchforks come out. At a certain point you have to wonder why did a 21 year old get paid 700 million dollars on good faith to start a pharmaceutical company with little oversight? I remember reading about the board a few years ago and just looked it up again. Several generals, Henry Kissinger...huh? This is all seems pretty obvious in hindsight.
- alehul 9y ago
  > sounds more like a bunch of idiot investors gave a lot of money to a dreamer who wanted to make an impact and didn't know when to quit and fold her hand rather than an elaborate con Until you said 'her', I actually thought you were referring to Shkreli. He ran a hedge fund starting at 23, and when he lost a lot of the money, he made bigger bets and tried to earn the money back rather than admitting his losses. > I remember reading about the board a few years ago and just looked it up again. Several generals, Henry Kissinger...huh? Shkreli raised money from Steven Cohen's SAC Capital, the family of Fred Hassan (former CEO of Schering-Plough), and Brent Saunders, the current CEO of Allergan. Their stories, though they differ in industry, seem quite similar when compared in detail.
  - aje403 9y ago
    While I don't know either of them so it is an unfair judgment to make, I would guess there's a big difference in thoughts in the back of their head: "These idiots aren't getting their money back, wait for my next play..." "If I can hold them off for another year, we'll have a big breakthrough..." Making larger bets to cover for an hide losses is a very common story for traders on wall street. Buying an AIDS drug to price gouge is not. In contrast, it seems like Holmes had an earnest desire to improve medical tech. Again, I'm speculating, we'll see if this unfolds any further. Fun story to follow.

vasilipupkin 9y ago

SEC doesn't put people in prison, it can refer to Justice Department for prosecution. Whether it does or not, depends on the circumstances of the case. They prefer quick resolution rather than years of litigation.

georgeecollins 9y ago
Many people are in jail today because they can't post bail. You can discourage ever facing incarceration by being able to afford a good legal defense. You can be forced to accept incarceration without conviction because you are poor.
- TremendousJudge 9y ago
  "In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread" - Anatole France
  - georgeecollins 9y ago
    My mom was a judge, and I learned that saying because she had it posted in her chambers.
- mevile 9y ago
  I doubt Holmes can afford much of anything anymore.
  - wolf550e 9y ago
    Surely her family will pay for a lawyer to keep her out of prison.
  - anigbrowl 9y ago
    I'm pretty sure that I won't find her living in a tent any time soon.
enlightenedfool 9y ago

desireco42 9y ago

I wish we could do this to politicians, once caught in lie and fraud, bar them from taking any public office for 10 yrs :). I agree she got away lightly.

diggan 9y ago
Funny fact, in 2013, Italy actually banned Silvio Berlusconi from holding public office for 6 years. But, that doesn't stop him from participating and trying to win elections anyways...
- danmaz74 9y ago
  He's not participating personally: he can't be elected. But his party wasn't barred.
  - icebraining 9y ago
    Right, they find someone else to sign the paperwork.
cmurf 9y ago
Impeachment provides for this. At the federal level, you are bared from public office for life upon conviction. And it doesn't apply only to elected officials, but all public officials. Even some low person on the totem pole could be impeached, removed from their office, and bared from holding any public office ever again. Pardons do not apply to impeachment convictions. States vary in their impeachment proceedings and what burdens must be met.

georgeecollins 9y ago

If you are convicted for drug trafficking or plead guilty to it, any asset that you can't prove you received through other legal means is likely to be subject to seizure.

SilasX 9y ago
Isn't that also true without your if-clause?
- throwawayjava 9y ago
  The "is likely to be" part is not true in general. Changing that "likely to be" into a "may be" would make the statement true(r) without the if-clause. Also if the if-clause stated "suspected of" rather than "convicted of", then the "is likely to be" part would be true in general.
  - georgeecollins 9y ago
    Let me show why I believe what I said. I'm no expert, and I would like it if you could clarify my understanding of why you think seizure of assets is not likely. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United_States https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
    - debacle 9y ago
      The civil forfeiture epidemic is more localized.
    - throwawayjava 9y ago
      Yes, I know exactly what you were referring to. I think this sentence is accurate: If you are suspected of drug dealing, any asset that you can't prove you received through other legal means is likely to be subject to seizure. I think this sentence is accurate: any asset that you can't prove you received through other legal means MAY be subject to seizure. I think this one isn't accurate, though: any asset that you can't prove you received through other legal means is likely to be subject to seizure. Maybe I'm just surrounded by extremely lucky people, but none of the people around me (all of whom aren't partaking in illegal behavior / have never been suspected of illegal behavior) have had the police show up and randomly take their stuff.

briandear 9y ago

So she can’t be a director of a public company? Other than Yahoo, who would even consider hiring her? This “punishment” doesn’t seem like one. She should be in jail.

hluska 9y ago
I don't know if I agree with you. Personally, I can't imagine the humiliation of carrying this around with me...
- mikepurvis 9y ago
  Lots of people currently in prison would happily choose "carrying around humiliation" as an alternative, I expect.
- BinaryIdiot 9y ago
  Everyone loves a comeback story, though. In a few years she'll take the circuit of podcasts / news outlets. "I thought we could do it. It started with a single, tiny lie and then it snowballed. I get out of control. I took some time off and now I'm starting my own company. We will be the most transparent company in the world and we're innovating X!" Something along those lines. It's not a life or career ender IMO.
  - gaius 9y ago
    Even Tonya Harding is the subject of a flattering movie now
- fiblye 9y ago
  She got to live a few years as a billionaire. She could easily get a normal, non-executive job like 99% of Americans after this. I think most people would take a lifetime of "humiliation" if they got to live an unreasonably extravagant life for a while then return to an upper middle class lifestyle, occasionally having news articles written about them until it all fades away completely after 5-10 years. A sentence of "humiliation" would only make scams like Theranos a more appealing idea to many people. And frankly, if someone could go so deep with a scam like Theranos, I don't think they/Holmes have much of a sense of shame to begin with. They'll justify their fraud to the very end.

saas_co_de 9y ago

Settlement is probably best for investors because they immediately get control of the company and Holmes basically gets nothing. The job of the SEC is to protect investors so they are probably doing the right thing here.

gjem97 9y ago
Yeah, I don't think she gets nothing. She was paid a salary for many years, I would't be surprised if it was a pretty hefty one. There were probably other perks, too (wasn't she known to fly private for business trips?). It looks like she simply relinquished some equity that probably wasn't worth very much anyway. This settlement doesn't look like much of a deterrent to future would-be fraudsters.
Nanite 9y ago
True, and besides having lost money, their investors also continue to lose credibility, considering the poor if not complete lack of due diligence on their part, as long as this fiasco is in the spotlights.

mathattack 9y ago

This will wipe her out, and likely kill her career. Remember, this is just the SEC. The pain they inflict is commensurate to investor pain. The government still should go after them for endangering people’s lives. There should be long jail terms for that.

Kalium 9y ago
> The government still should go after them for endangering people’s lives. There should be long jail terms for that. But the SEC won't, because that's not what they do. And this is, I think, as it should be.
- mathattack 9y ago
  Exactly - separate group.
spaceflunky 9y ago
>This will wipe her out Will it though? Surely Holmes still has a few million stashed away somewhere that she can live comfortably off of? This settlement isn't going to leave her destitute. Either that or I'm sure she set up some clever offshore accounting structure that has $10M stashed in the cook islands or some shit. As soon as you get some cash, I think "rich person 101" is you set up some complicated structure to hide rainy day money for this very reason. I would venture to guess she took home at least $50MM in all those rounds of investment (maybe more? i have no idea how that works.), I doubt she blew it all or was stupid enough to leave it in plain sight.
- ericd 9y ago
  Did she take money off the table? Not everyone does/can, even when they raise a lot.
  - spaceflunky 9y ago
    I often wonder about this. I know founders that have instantly taken $100k off the table on a $1M angel investment. but such is silicon valley life i suppose?

icantdrive55 9y ago

Not in my opinion. I remember those interviews, with the black turtle necks. She was playing the part of genius, but looked full of it, especially with all the secrets. She is basically being fined $500,000. This is pocket change. I imagine so much money is hidden. This hidden money just might be the next fraud charge? "Bared from hiring as an officer, or director for 10 years." She will get hired on somewhere under Something of Something, even though she's a complete fraud? She didn't even finish her degree? Hell--most people don't know anything about blood testing. In a few months, the victim will be on stage somewhere. "If a was a ---, I wouldn't be treated this way!" She got off very light. She's pretty enough to be scooped up by a Valley Boy. We have not heard the end of her. She will be fine. I can't imagine any retirement money went into the company, so I really don't care about the 1 percenter's who lost some pocket change. The only thing I'm glad about is no one is going to sport the black turtle neck, for awhile at least--that look belongs to Steve anyways. Any maybe, when the genius card is thrown around, people might do a little homework? She did enter the market, with the right look, pedigree, though. The Lookers were looking for the next Zuck. Oh well, and the band plays on. (I have a feeling under Trump's reign, the SEC, federal courts will go very easy on these types. So--if your planning on doing something fraudulent, white, and have family money; go to work.)

jbellis 9y ago
Fined $500k AND she returns 19M shares. Unclear if that's "effectively all of it" without doing more homework.
mv4 9y ago
I remember seeing one of her public appearances for the first time (when they were flying high and before there was any doubt), and she seemed incredibly fake to me.

joering2 9y ago

Pharma Bro was just sentenced to 7 years in jail for misrepresenting facts to investors, despite said investors did not lose any money but actually made some [1] Here Holmes not only doctored power point presentations to baloon numbers to investors, but put thousands of lives in danger (if some were lost, we will eventually find out) by providing wrong results for tests to many patients that lives relied on it, and she gets jail-free card and slap on the wrist. [1] https://www.cnbc.com/2018/03/09/pharma-bro-martin-shkreli-sentenced-to-7-years-in-prison.html https://www.cnbc.com/2018/03/09/pharma-bro-martin-shkreli-se...

AcerbicZero 9y ago
Yeah, he was kind of a douche, but it's pretty obvious he only got slammed with that kind of time because he didn't play the game right.
danso 9y ago
Shkreli received 7 years in prison because he was found guilty by a jury for securities fraud. What you refer to as "Here Holmes..." was were SEC civil charges. A criminal investigation was opened in mid-2016 and, as far as we all know, is still underway: https://www.npr.org/2016/04/19/474868428/innovative-blood-testing-company-theranos-under-criminal-investigation https://www.npr.org/2016/04/19/474868428/innovative-blood-te...

kqr2 9y ago

Most likely she also has Directors and Officer's Liability Insurance: https://en.wikipedia.org/wiki/Directors_and_officers_liability_insurance https://en.wikipedia.org/wiki/Directors_and_officers_liabili... As part of the settlement, there was no actual admission of wrongdoing or fraud, so it's quite possible that the insurance would pay the fine.

sk5t 9y ago
Maybe, maybe, if the insurer had the option to direct any defense, but it's still mighty hard to insure against willful acts.

eggpy 9y ago

Well, according to Forbes, Holmes is worth _nothing_[0], so $500,000 is probably fairly painful. Plus, relinquishing ~19 million shares regardless of their value has to hurt. Also she no longer has the majority of votes in her own company. And as a CEO who can't be an officer of a public company for 10 years, yeah that probably really hurts too. Not to mention her name is effectively toxic pretty much forever now. So she's not going to jail, but those penalties certainly look painful to me. [0] https://www.forbes.com/sites/matthewherper/2016/06/01/from-4-5-billion-to-nothing-forbes-revises-estimated-net-worth-of-theranos-founder-elizabeth-holmes/#56ac4b833633 https://www.forbes.com/sites/matthewherper/2016/06/01/from-4...

kristianov 9y ago
Her family is rich and connected. I don't see the punishment is too harsh without her going to jail.
perl4ever 9y ago
It seems like a much larger fraud than Shkreli's, who got 7 years. Also, as someone pointed out, they didn't just deceive investors, they deceived the people who were getting blood tests and that seems much worse. So one might suspect there's some sort of privilege going on. Or maybe the story just isn't complete yet.
- Clubber 9y ago
  Politicians needed the prosecutors to make an example of Shkrelli because they needed to distract people from the fact that cornering a drug market and hiking the prices is still perfectly legal and practiced by much larger companies.
briandear 9y ago
19 million shares of a company worth nothing?

AndyMcConachie 9y ago

It's a slap on the wrist compared to the crime.