22 ms·

U.S. Files Criminal Charges Against Theranos’s Elizabeth Holmes, Ramesh Balwani

701 points by dcgudeman 8y ago

minimaxir 8y ago
DOJ indictment: https://www.justice.gov/usao-ndca/pr/theranos-founder-and-former-chief-operating-officer-charged-alleged-wire-fraud-schemes https://www.justice.gov/usao-ndca/pr/theranos-founder-and-fo...
- dralley 8y ago
  "The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to the indictment returned yesterday and unsealed today, the charges stem from allegations Holmes and Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. Both schemes involved efforts to promote Palo Alto, Calif.-based Theranos."
s2g 8y ago
Oh good. Glad the investigation finally got some charges.
tequila_shot 8y ago
if WSJ is behind a paywall: https://outline.com/dUwMC4 https://outline.com/dUwMC4
maxxxxx 8y ago
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. Does anyone know? Did Holmes have any insight that caused her and the investors to believe she could do the blood tests?
- zitterbewegung 8y ago
  After the company launched professionals in the medical testing said it was impossible. I believe it was even posted to HN. They stated it was impossible to get the results they would get from the amount of blood given.
  - maxxxxx 8y ago
    That can be OK if the company was started knowing that they had invented something new.
    - FireBeyond 8y ago
      Sure. And while certainly "possible", how likely is it that a 19yo college dropout (who wasn't studying medical sciences) was able to discover a technique that did so, after forty years of multiple multi-billion dollar companies researching the same (after all, the brave new world offered by her dream was hardly new or unpalatable to other players in her field). And her actions demonstrated she had done no such thing. Buying, hiding, deceiving around traditional venipuncture machines, etc. This is someone who "had a dream", had connections, and was determined and stubborn, in a bad way. Even now she, and one or two of investors, still believe she has been robbed and wronged, and that the world is worse off without Theranos.
    - vkou 8y ago
      The bar for inventing something new in medicine is not "Eh, if you squint, it sorta looks like it works, ship that shit."
  - minimaxir 8y ago
    For reference, here's the very first HN submission about Theranos in 2013: https://news.ycombinator.com/item?id=6349349 https://news.ycombinator.com/item?id=6349349
    - portman 8y ago
      Fascinating to read, thank you. “There are more soldiers in that board there than doctors” is one of the original comments!
Justin_K 8y ago
It's about time, what these two did is disgusting and shameful.
verylittlemeat 8y ago
So much for the conspiracy theory people were floating here about her being protected by her influential family and powerful connections.
- scottwernervt 8y ago
  We will have to wait and see what deal they make if pleading guilty.
  - cat199 8y ago
    And what cushy behind-the-scenes appointments they get after 'doing time' by playing golf at a minimum security resort for 6 months.
- macspoofing 8y ago
  That was a thing? I would think that making an enemy of a bunch of billionaires and political figures would have excerbated her downfall.
jaredhansen 8y ago
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. 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. 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". In which case, there'd be a civics lesson as well. Live by .gov, die by .gov. (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.) [1] e.g.https://www.bizjournals.com/sanjose/news/2018/03/14/theranos-board-mattis-kissinger-schultz-holmes.html https://www.bizjournals.com/sanjose/news/2018/03/14/theranos...
- JumpCrisscross 8y ago
  > 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 The response to evidence against a conspiracy theory is not to flip the conspiracy theory. If you defraud investors out of billions of dollars and lie to Medicare and Streisand effect the Wall Street Journal when it investigates you, you're going to get busted.
  - Chris_Chambers 8y ago
    The response to interesting speculation is not to use an impotent pejorative term to dismiss it followed by painfully boring 2D checkers-tier speculation.
  - zeth___ 8y ago
    The banking crisis says otherwise.
- minimaxir 8y ago
aphextron 8y ago
Between this and Manafort being sent to jail, what a wonderful day for the DOJ. God I love this country so much.
- pm90 8y ago
  The American Criminal Justice system rightly faces many criticisms, especially serious charges for being used against minorities. But yes, knowing that even the most powerful person in the country is not above the law and can and is prosecuted seriously, and that scammers like Holmes and Balwani are made to pay for their crimes.... this kind of thing is certainly what makes the US unique among nations.
  - jadedhacker 8y ago
    Let's not get carried away. Canada and many if not all of the nations of the EU have a similar capability. The US justice system sucks, let's not endow it with special "uniqueness". However, I am happy that corporate criminals are facing some penalties for their activities that could harm the public. EDIT: Also, just because after waiting years and years, we see one or two criminal executives go through the Justice system we shouldn't get too excited. Companies lie and cheat the public all day, that's how they get so rich. The system has to produce one or two examples of something approximating justice every now and again basically to forestall revolution. The poor go to jail, the rich play games. A handful of prosecutions at the top doesn't change that dynamic.
    - JumpCrisscross 8y ago
      > the US justice system sucks, let's not endow it with special "uniqueness" The rule of law, where elites fear the law and not a ruler, is in the minority today and across human history. I certainly think it’s something to celebrate.
  - abrichr 8y ago
    > this kind of thing is certainly what makes the US unique among nations. Here are a few other countries where powerful people have been arrested in recent history: - Saudi Arabia (https://www.cnn.com/2017/11/05/middleeast/saudi-arabia-anti-corruption-list/index.html https://www.cnn.com/2017/11/05/middleeast/saudi-arabia-anti-...) - Philippines (http://www.abc.net.au/news/2014-06-20/philippines-corruption/5539874 http://www.abc.net.au/news/2014-06-20/philippines-corruption...) - Argentina (https://www.nytimes.com/2018/01/08/world/americas/argentina-corruption.html https://www.nytimes.com/2018/01/08/world/americas/argentina-...) - China (http://www.scmp.com/week-asia/opinion/article/2144627/secret-arrests-and-hurried-trials-politicians-and-tycoons-belie http://www.scmp.com/week-asia/opinion/article/2144627/secret...) - Brazil (https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html https://www.nytimes.com/2017/07/12/world/americas/brazil-lul...) - Italy (https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html https://www.nytimes.com/2017/07/12/world/americas/brazil-lul...) - Australia (https://en.wikipedia.org/wiki/List_of_Australian_politicians_convicted_of_crimes https://en.wikipedia.org/wiki/List_of_Australian_politicians...) - Japan (https://www.japantimes.co.jp/news/2016/05/21/national/media-national/second-life-kakuei-tanaka/#.WyQyrVMvwWo https://www.japantimes.co.jp/news/2016/05/21/national/media-...)
seibelj 8y ago
I wonder how Tim Draper will argue this is a conspiracy to take down "another great icon"[0] [0] http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-holmes/ http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-...
- elgenie 8y ago
  He's probably too busy now trying to split up California into pieces. http://www.latimes.com/politics/la-pol-ca-california-split-three-states-20180612-story.html http://www.latimes.com/politics/la-pol-ca-california-split-t...
  - maxxxxx 8y ago
    That guy is nuts. It scares me that with his money he has a lot of influence.
    - bredren 8y ago
      I realize the ongoing support of this founder looks pretty bad. But in all my interactions and work with Tim Draper, I've found him to be an ethical and good person. He is nuts in an amazing way, and of all the investors I have met in the valley, I can't think of any other one I'd entrust with his influence.
      - maxxxxx 8y ago
        He is good at tech and investing, no doubt. His political ideas are interesting but his money gives him way too much influence in other areas that aren't his main expertise. And supporting Holmes for that long and even now looks really bad and is very difficult to justify.
      - propman 8y ago
        That may be true, but if Holmes wasn’t stopped, thousands could have died...people trusted her to get accurate blood test results. What if some major medical ailment went undiscovered due to the poor accuracy of her machines? Holmes is a ruthless, despicable humnan being. Cheating people out of money is one thing. Cheating people of their health, denying when caught for years and years is on a complete another level. And what she did to the poor whistleblower? Almost ruined his life and went a few rings below murder to her chief scientist. Not to mention the mafia style shakedown of John C, the reporter who broke the story. If someone knows all that about a person, and still glowingly praises them, in my opinion they are NOT ethical and not a good person.
aphextron 8y ago
The indictment shows "No bail, arrest warrants issued" [0]. She'll be sitting in a prison cell by tomorrow morning. Wow. [0] https://www.justice.gov/file/1072521/download https://www.justice.gov/file/1072521/download
- mchannon 8y ago
  It does not show that. Being familiar with the process, it looks like they're out on supervised release. Non-custody. No point in putting a warrant out for someone when they're at the courthouse to be arraigned.
  - aphextron 8y ago
    I must be confused then. Why does the defendant section say “Warrant, no bail”?.
    - mchannon 8y ago
      Probably chalk it up to a very confusing and esoteric form. No bail could just mean they don't have to post bail to get out. "Warrant" could just mean they came in on a warrant vs. a summons. More important is the top of the form: "Defendant is NOT in custody".
riantogo 8y ago
For your Friday drive home here is the recent Jason Calacanis interview of the WSJ reporter who broke the story. Great listen. https://itunes.apple.com/us/podcast/this-week-in-startups-audio/id315114957?mt=2&i=1000413578016 https://itunes.apple.com/us/podcast/this-week-in-startups-au...
- victor9000 8y ago
  Same episode, but it doesn't require itunes: https://www.stitcher.com/podcast/this-week-in-startups-audio/e/54866804 https://www.stitcher.com/podcast/this-week-in-startups-audio...
balozi 8y ago
Wait, what?! Ramesh Balwani was Ms. Holmes's boyfriend? I don't recall seeing that covered anywhere else before.
- curuinor 8y ago
  It was in Carreyou's book
- dralley 8y ago
  It's been reported, although I don't think it was reported as a headline story or anything.
- segmondy 8y ago
  urghh
- whoisjuan 8y ago
  Really? Wow, that's a weird couple...
  - jessaustin 8y ago
    Sort of reminds one of James Wolfe and Ali Watkins...
  - gaius 8y ago
    I don’t want to excuse Holmes of her many crimes nor rob her of agency, but the circumstances in which they met do not reflect well on Balwani’s character.
- dboreham 8y ago
  Widely reported.
- sam1r 8y ago
  Has ANYONE been able to successfully dig up anything online related to Ramesh Balwani? Trying to read more on him...
ransom1538 8y ago
"The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud." 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. [1] https://www.criminaldefenselawyer.com/resources/wire-fraud.htm https://www.criminaldefenselawyer.com/resources/wire-fraud.h...
- JumpCrisscross 8y ago
  > WHY DO THIS They don't think they will get caught. For a live example, see HN's cryptocurrency threads. A common theme is talk about faking KYC or laundering money or how their scam is too small to garner federal attention.
  - woah 8y ago
    Where?
- mikec3010 8y ago
  I think that people can succumb to their egoes, similar to why some celebrities commit sexual crimes or are know for doing unthinkably rude actions. Something changes in people who acquire enough power and have the right combination of exceptional drive and sociopathy - which I think can incubate in an environment where they're in control over everyone and never told "no". It's the same mechanism in narcissistic people who hurt others and deny it and even turn it around and play the victim. Somehow they believe in a different version of reality. In Holmes' case I doubt she ever believed she was perpetrating a crime.
- tptacek 8y ago
  This is inaccurate in two ways. First, 20 years is the maximum guideline sentence available for wire fraud. The Federal Sentencing Guidelines has a points-like system (with points added for various attributes of the crime, like whether the accused took steps to conceal their crime, or crossed some dollar threshold) that heavily counts the prior criminal history of the accused. This is an egregious wire fraud case, but it's still a little unlikely that any one count will see the maximum sentence applied. More importantly, the norm in federal sentencing is for similar charges to group, and for the longest of those counts to set the sentence. It is not the norm to serve (here) each of the "nine counts" consecutively. Google [whale sushi sentence] for more details.
code777777 8y ago
> "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."
hulton 8y ago
Holmes is a charismatic delusional sociopath. Potent mix.
mchannon 8y ago
I have been in this exact place before. For the two of them, this day will be just about the worst of their lives. 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. 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. 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. 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. 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. 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.
- tptacek 8y ago
  Given the forfeiture terms at the end of the indictment, it looks like they'll both be zeroed out if found guilty (which seems like a near certainty), regardless of how long they're kept in custody.
- colordrops 8y ago
  Re: "putting my worst enemy through", I don't know, this doesn't sound as bad as growing up in a war zone or even the ghetto, or getting waterboarded. Sounds like bureaucratic hell, but that's not even close to how bad things can get.
apo 8y ago
Holmes is a master obfuscator: https://www.youtube.com/watch?v=eqYHwI87cDQ https://www.youtube.com/watch?v=eqYHwI87cDQ
Waterluvian 8y ago
Odds that she cries a lot and claims Balwani is the mastermind that manipulated poor naive innocent her? Edit: and I don't mean in a sexist way. I suspect she will be ruthless in getting off the hook.
blakeross 8y ago
Biannual reshare of a pilot I wrote for a TV parody of Theranos: http://www.blakeross.com/pricks.pdf http://www.blakeross.com/pricks.pdf :)
- mayank 8y ago
  Are you bummed that they didn't go with your screenplay for the big screen adaptation starring Jennifer Lawrence [1]? :) [1] https://www.imdb.com/title/tt5795144/ https://www.imdb.com/title/tt5795144/
  - blakeross 8y ago
    No, but I'm bummed they didn't steal the name "Pricks"!
    - akhilcacharya 8y ago
      I was thinking Unicorn Blood
Zhenya 8y ago
Paywall bypass: https://outline.com/dUwMC4 https://outline.com/dUwMC4
iosDrone 8y ago
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.
pchristensen 8y ago
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" (https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/152473165X https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/...). He was also recently on the podcast This Week in Startups to discuss Theranos: http://thisweekinstartups.com/john-carreyrou-bad-blood/ http://thisweekinstartups.com/john-carreyrou-bad-blood/ or https://www.youtube.com/watch?v=dWQYKVasMoY https://www.youtube.com/watch?v=dWQYKVasMoY ). 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.
- yeeeeeeeeee 8y ago
  Shoulda hit us with the affiliate link.
iscrewyou 8y ago
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.
anoncoward111 8y ago
So I mean like, fraud is definitely not a good thing, but COUNTLESS government contractors committed outright fraud and embezzlement during the Iraq War, and none of them were ever held accountable. One of them even made 8 billion USD completely disappear from the "Iraq Reconstruction Fund".
- atombender 8y ago
  How is this whataboutism relevant?
  - anoncoward111 8y ago
    Because many people smoke weed, but only some are jailed for it. THAT'S why whataboutism is important. Enforcement bias.
    - asdsa5325 8y ago
      Because not everyone who smokes is caught, and some plead guilty to get an easy sentence, laws differ based on location, and case circumstance is not always the same? This is how the system works.
      - anoncoward111 8y ago
        "The system" is logical and ethical, in your opinion? I'm trying to call into question here if "a crime" on paper is a crime worth enforcing. When the black man in New Orleans is thrown in jail for smoking weed, but the black/white/asian male in Iowa goes unprosecuted, how much of a crime is the crime really? You either need 100% prosecution or 0%. Murder is murder, fraud is fraud, isn't it?
- buvanshak 8y ago
  >but COUNTLESS government contractors committed outright fraud and embezzlement during the Iraq War, and none of them were ever held accountable. I don't know about your country, but here usually all the higher up's in the chain are on the payroll, so you are safe, even if shit hits the fan. That is one of the nice thing about stealing from government. Because you are not actually stealing from the government, but instead, you are just helping the government steal from the people, a part of which is rewarded to you.
eternalban 8y ago
What about all the MIC heavies on the board.
VirtualAirwaves 8y ago
What I wonder is: is there really a huge untapped market for blood testing?
tdurden 8y ago
Martin Shkreli is in prison now - he deserves it, though he was guilty of _far_ less then Elizabeth Holmes. 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.
- mikeryan 8y ago
  That’s an interesting read on what Shkreli did vs Holmes. At least Holmes “victims” AFAIK were mostly rich folks losing other people’s money they’re gambling with and should have known better. Shkreli fleeced normal folks just looking to get their day meds.
  - tdurden 8y ago
    Holmes fleeced normal folks too by knowingly giving them inaccurate test results, which in some cases could lead to death.
  - sosa2k 8y ago
    Shkreli's crimes had nothing to do with the drug prices. Unless you think the jury/judge was biased due to it.
  - the_narrator 8y ago
    > At least Holmes “victims” AFAIK were mostly rich folks why would that make it any better?
    - URSpider94 8y ago
      I think the argument is that stealing $1 million from a billionaire could be considered ethically less bad than stealing $10,000 from someone who is $50,000 in debt due to medical bills. The second theft will have much more impact on the victim than the first.
      - the_narrator 8y ago
        > The second theft will have much more impact on the victim than the first. That hardly makes it OK though, Are you saying that the first case doesn't deserve the same punishment as the second?
knolan 8y ago
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. 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. 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. There are many many similar stories just like this in this space. 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.
mhneu 8y ago
Excellent news for American society. “The Chickenshit Club” by Eisinger recently explained why the lack of criminal charges had emboldened white collar crime. Basically, individuals need to have the risk of criminal charges if they do something very egregious - they need to have skin in the game. 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. 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. https://news.ycombinator.com/item?id=17123315 https://news.ycombinator.com/item?id=17123315 Edit: book review here. It’s a really good book. https://mobile.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html https://mobile.nytimes.com/2017/07/05/books/review/the-chick...
- knuththetruth 8y ago
  Yeah, it was crazy to me that Lazlo Bock not only came out with a book about Google’s “hiring culture,” but even started his own HR company AFTER being involved with Google’s wage fixing scandal. Absolutely shameless.
- lord_ring_11 8y ago
  Amen. The risk reward is crazily skewed towards breaking law. Most relying on ethics and social pressure.
- delbel 8y ago
  I was hoping the bankers can still be charged under the Patriot act, there is a provision for something to the effet threat to cause financial risk or damage if I remember. Paulson made a direct threat of financial doom if there was no bailout to President Bush. I think there is a way we can declare them enemy combatants and send them to gitmo for their trial. Sorry for typos, typing with a bad finger the last few days.
  - 8y ago
intopieces 8y ago
Non-Paywall Link: https://archive.fo/Sd8AC https://archive.fo/Sd8AC
jason_slack 8y ago
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... Actually this has enough info for most people: https://en.wikipedia.org/wiki/Elizabeth_Holmes https://en.wikipedia.org/wiki/Elizabeth_Holmes
- hawkice 8y ago
  Steve Jobs definitely wasn't engaged in criminal fraud, so the prosecutor will definitely be trying to demonstrate she wasn't "the next Steve Jobs". Given what we know we should hear that prosecutors' argument.
  - jason_slack 8y ago
    Why the down vote, she is referred to as the next Steve Jobs: https://mashable.com/2018/03/14/elizabeth-holmes-theranos-sec-fraud/ https://mashable.com/2018/03/14/elizabeth-holmes-theranos-se...
    - hawkice 8y ago
      Because being popular doesn't make you above the law. The comment is at best irrelevant, at worse morally noxious.
      - jason_slack 8y ago
        But I asked why is she considered that way. I’m not saying she is special but why do people say she is the next Jobs.
        gaius 8y ago
        but why do people say she is the next Jobs Because she put considerable effort into fostering that impression, even dressing like Jobs in the same trademark black turtleneck sweaters he always wore. All part of the con.
dibstern 8y ago
People were defending Theranos on HN... surely must have been an investor or an insider. Surely no one else would be so daft.
golemiprague 8y ago
I wonder how much of it is due to the fact she is a woman? The politicians who supported and financed this company were desperate for a successful female founder to justify their political theories. It looks to me like there is some correlation between the failure of this company and the failure of Hillary to win the election but I can't put my finger on what exactly it is.
bitmapbrother 8y ago
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. https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-founder-elizabeth-holmes-was-bullied-into-submission.html https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-fou...
75dvtwin 8y ago
Theranos / Holmes, also demonstrated how superficial, almost down to malpractice current so called journalism is. Complete lack of analysis, expertise in the fields they are covering, and clear initial non-biased position. Instead, we get this flood propaganda + sensationalism garbage from these so called 'reputable' news sources. And, as a consequence, con-artists, career politicians, and 'celebrities' -- leverage this legalized malpractice for their purposes. 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'. 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.
- JumpCrisscross 8y ago
  > Theranos / Holmes, also demonstrated how superficial, almost down to malpractice current so called journalism is Theranos was exposed by a Wall Street Journal reporter investigating and exposing the fraud. He was threatened multiple times and never budged. This is a story of journalistic excellence.
  - paulddraper 8y ago
    Most of all, this is an inditement of several SV VCs. They should know nearly as much as anyone.
  - zaidf 8y ago
    They were exposed after they raised almost a billion dollars from sales and investments, often on the basis of glowing media. The book is filled with anecdotes abt how the positive media was leveraged by Holmes and often cited by internal champions at Safeway and Walgreens to counter the skeptical voices in the room (“come on, they’re in Forbes, they can’t be a scam!”)
  - eric-hu 8y ago
    I think that reporter did good work, but isn't this like pointing to a hackathon bug fix that saves a company as engineering excellence? The parent is seemingly saying that quality journalism would have better scrutiny to not allow the situation to get this far in the first place.
sonnyblarney 8y ago
"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 ...
- techsin101 8y ago
  Was thinking the same thing
godelmachine 8y ago
Behind a paywall. Would anyone kindly help me with a link that's free?
deleted 8y ago
[deleted]
thelastidiot 8y ago
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.
kennxfl 8y ago
It's people like Tim Draper that encouraged the fraud. From a totally logical point of view: 1. How do you invest millions in technology you cannot even look at even in year 10? 2. How do you defend a CEO in public by attacking credible journalists and not even once question the actual concerns in the company? 3. A medical company run by a first year drop-out and one without a single licensed doctor on the board? C'mon. Even Steve Jobs did not get that leeway.
forthispurpose 8y ago
Anyone can weigh in how much can they possibly get?
bumblebritches5 8y ago
Good, she was initially given a pussy pass for massive fraud.
pappaSsmurf 8y ago
>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. edit: sometimes you are brought to justice b/c you conned the wrong people...
- techsin101 8y ago
  You're saying there is no hope for my Kickstarter campaign investment
resentfuljoe 8y ago
http://www.paulgraham.com/founders.html http://www.paulgraham.com/founders.html 4. Naughtiness 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. 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.
- dmix 8y ago
  > hacked in the sense of beating the system, not breaking into computers.
- dcposch 8y ago
  PG is absolutely correct in my experience. The best founders are Chaotic Good on the alignment chart. > Morally, they care about getting the big questions right, but not about observing proprieties. Holmes does not match that description at all. Lying to investors, lying to the FDA, secretly using your competitors' tech to mask the fact that your core product does not work. She did not care about getting the big questions right.
techsin101 8y ago
Serious question were they both in sexual relationship... Because I feel the old Indian guy took over her... And influenced her to continue lies
- techsin101 8y ago
  yes they were.. found it https://www.wsj.com/articles/theranos-inc-s-partners-in-blood-1526662047 https://www.wsj.com/articles/theranos-inc-s-partners-in-bloo...

701 points by dcgudeman 8y ago

DOJ indictment: https://www.justice.gov/usao-ndca/pr/theranos-founder-and-former-chief-operating-officer-charged-alleged-wire-fraud-schemes https://www.justice.gov/usao-ndca/pr/theranos-founder-and-fo...

dralley 8y ago
"The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. According to the indictment returned yesterday and unsealed today, the charges stem from allegations Holmes and Balwani engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. Both schemes involved efforts to promote Palo Alto, Calif.-based Theranos."

s2g 8y ago

Oh good. Glad the investigation finally got some charges.

tequila_shot 8y ago

if WSJ is behind a paywall: https://outline.com/dUwMC4 https://outline.com/dUwMC4

maxxxxx 8y ago

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. Does anyone know? Did Holmes have any insight that caused her and the investors to believe she could do the blood tests?

zitterbewegung 8y ago
After the company launched professionals in the medical testing said it was impossible. I believe it was even posted to HN. They stated it was impossible to get the results they would get from the amount of blood given.
- maxxxxx 8y ago
  That can be OK if the company was started knowing that they had invented something new.
  - FireBeyond 8y ago
    Sure. And while certainly "possible", how likely is it that a 19yo college dropout (who wasn't studying medical sciences) was able to discover a technique that did so, after forty years of multiple multi-billion dollar companies researching the same (after all, the brave new world offered by her dream was hardly new or unpalatable to other players in her field). And her actions demonstrated she had done no such thing. Buying, hiding, deceiving around traditional venipuncture machines, etc. This is someone who "had a dream", had connections, and was determined and stubborn, in a bad way. Even now she, and one or two of investors, still believe she has been robbed and wronged, and that the world is worse off without Theranos.
  - vkou 8y ago
    The bar for inventing something new in medicine is not "Eh, if you squint, it sorta looks like it works, ship that shit."
- minimaxir 8y ago
  For reference, here's the very first HN submission about Theranos in 2013: https://news.ycombinator.com/item?id=6349349 https://news.ycombinator.com/item?id=6349349
  - portman 8y ago
    Fascinating to read, thank you. “There are more soldiers in that board there than doctors” is one of the original comments!

Justin_K 8y ago

It's about time, what these two did is disgusting and shameful.

verylittlemeat 8y ago

So much for the conspiracy theory people were floating here about her being protected by her influential family and powerful connections.

scottwernervt 8y ago
We will have to wait and see what deal they make if pleading guilty.
- cat199 8y ago
  And what cushy behind-the-scenes appointments they get after 'doing time' by playing golf at a minimum security resort for 6 months.
macspoofing 8y ago
That was a thing? I would think that making an enemy of a bunch of billionaires and political figures would have excerbated her downfall.

jaredhansen 8y ago

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. 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. 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". In which case, there'd be a civics lesson as well. Live by .gov, die by .gov. (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.) [1] e.g.https://www.bizjournals.com/sanjose/news/2018/03/14/theranos-board-mattis-kissinger-schultz-holmes.html https://www.bizjournals.com/sanjose/news/2018/03/14/theranos...

JumpCrisscross 8y ago
> 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 The response to evidence against a conspiracy theory is not to flip the conspiracy theory. If you defraud investors out of billions of dollars and lie to Medicare and Streisand effect the Wall Street Journal when it investigates you, you're going to get busted.
- Chris_Chambers 8y ago
  The response to interesting speculation is not to use an impotent pejorative term to dismiss it followed by painfully boring 2D checkers-tier speculation.
- zeth___ 8y ago
  The banking crisis says otherwise.
minimaxir 8y ago

aphextron 8y ago

Between this and Manafort being sent to jail, what a wonderful day for the DOJ. God I love this country so much.

pm90 8y ago
The American Criminal Justice system rightly faces many criticisms, especially serious charges for being used against minorities. But yes, knowing that even the most powerful person in the country is not above the law and can and is prosecuted seriously, and that scammers like Holmes and Balwani are made to pay for their crimes.... this kind of thing is certainly what makes the US unique among nations.
- jadedhacker 8y ago
  Let's not get carried away. Canada and many if not all of the nations of the EU have a similar capability. The US justice system sucks, let's not endow it with special "uniqueness". However, I am happy that corporate criminals are facing some penalties for their activities that could harm the public. EDIT: Also, just because after waiting years and years, we see one or two criminal executives go through the Justice system we shouldn't get too excited. Companies lie and cheat the public all day, that's how they get so rich. The system has to produce one or two examples of something approximating justice every now and again basically to forestall revolution. The poor go to jail, the rich play games. A handful of prosecutions at the top doesn't change that dynamic.
  - JumpCrisscross 8y ago
    > the US justice system sucks, let's not endow it with special "uniqueness" The rule of law, where elites fear the law and not a ruler, is in the minority today and across human history. I certainly think it’s something to celebrate.
- abrichr 8y ago
  > this kind of thing is certainly what makes the US unique among nations. Here are a few other countries where powerful people have been arrested in recent history: - Saudi Arabia (https://www.cnn.com/2017/11/05/middleeast/saudi-arabia-anti-corruption-list/index.html https://www.cnn.com/2017/11/05/middleeast/saudi-arabia-anti-...) - Philippines (http://www.abc.net.au/news/2014-06-20/philippines-corruption/5539874 http://www.abc.net.au/news/2014-06-20/philippines-corruption...) - Argentina (https://www.nytimes.com/2018/01/08/world/americas/argentina-corruption.html https://www.nytimes.com/2018/01/08/world/americas/argentina-...) - China (http://www.scmp.com/week-asia/opinion/article/2144627/secret-arrests-and-hurried-trials-politicians-and-tycoons-belie http://www.scmp.com/week-asia/opinion/article/2144627/secret...) - Brazil (https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html https://www.nytimes.com/2017/07/12/world/americas/brazil-lul...) - Italy (https://www.nytimes.com/2017/07/12/world/americas/brazil-lula-da-silva-corruption.html https://www.nytimes.com/2017/07/12/world/americas/brazil-lul...) - Australia (https://en.wikipedia.org/wiki/List_of_Australian_politicians_convicted_of_crimes https://en.wikipedia.org/wiki/List_of_Australian_politicians...) - Japan (https://www.japantimes.co.jp/news/2016/05/21/national/media-national/second-life-kakuei-tanaka/#.WyQyrVMvwWo https://www.japantimes.co.jp/news/2016/05/21/national/media-...)

seibelj 8y ago

I wonder how Tim Draper will argue this is a conspiracy to take down "another great icon"[0] [0] http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-holmes/ http://fortune.com/2018/05/11/tim-draper-theranos-elizabeth-...

elgenie 8y ago
He's probably too busy now trying to split up California into pieces. http://www.latimes.com/politics/la-pol-ca-california-split-three-states-20180612-story.html http://www.latimes.com/politics/la-pol-ca-california-split-t...
- maxxxxx 8y ago
  That guy is nuts. It scares me that with his money he has a lot of influence.
  - bredren 8y ago
    I realize the ongoing support of this founder looks pretty bad. But in all my interactions and work with Tim Draper, I've found him to be an ethical and good person. He is nuts in an amazing way, and of all the investors I have met in the valley, I can't think of any other one I'd entrust with his influence.
    - maxxxxx 8y ago
      He is good at tech and investing, no doubt. His political ideas are interesting but his money gives him way too much influence in other areas that aren't his main expertise. And supporting Holmes for that long and even now looks really bad and is very difficult to justify.
    - propman 8y ago
      That may be true, but if Holmes wasn’t stopped, thousands could have died...people trusted her to get accurate blood test results. What if some major medical ailment went undiscovered due to the poor accuracy of her machines? Holmes is a ruthless, despicable humnan being. Cheating people out of money is one thing. Cheating people of their health, denying when caught for years and years is on a complete another level. And what she did to the poor whistleblower? Almost ruined his life and went a few rings below murder to her chief scientist. Not to mention the mafia style shakedown of John C, the reporter who broke the story. If someone knows all that about a person, and still glowingly praises them, in my opinion they are NOT ethical and not a good person.

aphextron 8y ago

The indictment shows "No bail, arrest warrants issued" [0]. She'll be sitting in a prison cell by tomorrow morning. Wow. [0] https://www.justice.gov/file/1072521/download https://www.justice.gov/file/1072521/download

mchannon 8y ago
It does not show that. Being familiar with the process, it looks like they're out on supervised release. Non-custody. No point in putting a warrant out for someone when they're at the courthouse to be arraigned.
- aphextron 8y ago
  I must be confused then. Why does the defendant section say “Warrant, no bail”?.
  - mchannon 8y ago
    Probably chalk it up to a very confusing and esoteric form. No bail could just mean they don't have to post bail to get out. "Warrant" could just mean they came in on a warrant vs. a summons. More important is the top of the form: "Defendant is NOT in custody".

riantogo 8y ago

For your Friday drive home here is the recent Jason Calacanis interview of the WSJ reporter who broke the story. Great listen. https://itunes.apple.com/us/podcast/this-week-in-startups-audio/id315114957?mt=2&i=1000413578016 https://itunes.apple.com/us/podcast/this-week-in-startups-au...

victor9000 8y ago
Same episode, but it doesn't require itunes: https://www.stitcher.com/podcast/this-week-in-startups-audio/e/54866804 https://www.stitcher.com/podcast/this-week-in-startups-audio...

balozi 8y ago

Wait, what?! Ramesh Balwani was Ms. Holmes's boyfriend? I don't recall seeing that covered anywhere else before.

curuinor 8y ago
It was in Carreyou's book
dralley 8y ago
It's been reported, although I don't think it was reported as a headline story or anything.
segmondy 8y ago
urghh
whoisjuan 8y ago
Really? Wow, that's a weird couple...
- jessaustin 8y ago
  Sort of reminds one of James Wolfe and Ali Watkins...
- gaius 8y ago
  I don’t want to excuse Holmes of her many crimes nor rob her of agency, but the circumstances in which they met do not reflect well on Balwani’s character.
dboreham 8y ago
Widely reported.
sam1r 8y ago
Has ANYONE been able to successfully dig up anything online related to Ramesh Balwani? Trying to read more on him...

ransom1538 8y ago

"The defendants are charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud." 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. [1] https://www.criminaldefenselawyer.com/resources/wire-fraud.htm https://www.criminaldefenselawyer.com/resources/wire-fraud.h...

JumpCrisscross 8y ago
> WHY DO THIS They don't think they will get caught. For a live example, see HN's cryptocurrency threads. A common theme is talk about faking KYC or laundering money or how their scam is too small to garner federal attention.
- woah 8y ago
  Where?
mikec3010 8y ago
I think that people can succumb to their egoes, similar to why some celebrities commit sexual crimes or are know for doing unthinkably rude actions. Something changes in people who acquire enough power and have the right combination of exceptional drive and sociopathy - which I think can incubate in an environment where they're in control over everyone and never told "no". It's the same mechanism in narcissistic people who hurt others and deny it and even turn it around and play the victim. Somehow they believe in a different version of reality. In Holmes' case I doubt she ever believed she was perpetrating a crime.
tptacek 8y ago
This is inaccurate in two ways. First, 20 years is the maximum guideline sentence available for wire fraud. The Federal Sentencing Guidelines has a points-like system (with points added for various attributes of the crime, like whether the accused took steps to conceal their crime, or crossed some dollar threshold) that heavily counts the prior criminal history of the accused. This is an egregious wire fraud case, but it's still a little unlikely that any one count will see the maximum sentence applied. More importantly, the norm in federal sentencing is for similar charges to group, and for the longest of those counts to set the sentence. It is not the norm to serve (here) each of the "nine counts" consecutively. Google [whale sushi sentence] for more details.

code777777 8y ago

> "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."

hulton 8y ago

Holmes is a charismatic delusional sociopath. Potent mix.

mchannon 8y ago

I have been in this exact place before. For the two of them, this day will be just about the worst of their lives. 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. 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. 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. 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. 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. 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.

tptacek 8y ago
Given the forfeiture terms at the end of the indictment, it looks like they'll both be zeroed out if found guilty (which seems like a near certainty), regardless of how long they're kept in custody.
colordrops 8y ago
Re: "putting my worst enemy through", I don't know, this doesn't sound as bad as growing up in a war zone or even the ghetto, or getting waterboarded. Sounds like bureaucratic hell, but that's not even close to how bad things can get.

apo 8y ago

Holmes is a master obfuscator: https://www.youtube.com/watch?v=eqYHwI87cDQ https://www.youtube.com/watch?v=eqYHwI87cDQ

Waterluvian 8y ago

Odds that she cries a lot and claims Balwani is the mastermind that manipulated poor naive innocent her? Edit: and I don't mean in a sexist way. I suspect she will be ruthless in getting off the hook.

blakeross 8y ago

Biannual reshare of a pilot I wrote for a TV parody of Theranos: http://www.blakeross.com/pricks.pdf http://www.blakeross.com/pricks.pdf :)

mayank 8y ago
Are you bummed that they didn't go with your screenplay for the big screen adaptation starring Jennifer Lawrence [1]? :) [1] https://www.imdb.com/title/tt5795144/ https://www.imdb.com/title/tt5795144/
- blakeross 8y ago
  No, but I'm bummed they didn't steal the name "Pricks"!
  - akhilcacharya 8y ago
    I was thinking Unicorn Blood

Zhenya 8y ago

Paywall bypass: https://outline.com/dUwMC4 https://outline.com/dUwMC4

iosDrone 8y ago

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.

pchristensen 8y ago

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" (https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/152473165X https://www.amazon.com/Bad-Blood-Secrets-Silicon-Startup/dp/...). He was also recently on the podcast This Week in Startups to discuss Theranos: http://thisweekinstartups.com/john-carreyrou-bad-blood/ http://thisweekinstartups.com/john-carreyrou-bad-blood/ or https://www.youtube.com/watch?v=dWQYKVasMoY https://www.youtube.com/watch?v=dWQYKVasMoY ). 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.

yeeeeeeeeee 8y ago
Shoulda hit us with the affiliate link.

iscrewyou 8y ago

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.

anoncoward111 8y ago

So I mean like, fraud is definitely not a good thing, but COUNTLESS government contractors committed outright fraud and embezzlement during the Iraq War, and none of them were ever held accountable. One of them even made 8 billion USD completely disappear from the "Iraq Reconstruction Fund".

atombender 8y ago
How is this whataboutism relevant?
- anoncoward111 8y ago
  Because many people smoke weed, but only some are jailed for it. THAT'S why whataboutism is important. Enforcement bias.
  - asdsa5325 8y ago
    Because not everyone who smokes is caught, and some plead guilty to get an easy sentence, laws differ based on location, and case circumstance is not always the same? This is how the system works.
    - anoncoward111 8y ago
      "The system" is logical and ethical, in your opinion? I'm trying to call into question here if "a crime" on paper is a crime worth enforcing. When the black man in New Orleans is thrown in jail for smoking weed, but the black/white/asian male in Iowa goes unprosecuted, how much of a crime is the crime really? You either need 100% prosecution or 0%. Murder is murder, fraud is fraud, isn't it?
buvanshak 8y ago
>but COUNTLESS government contractors committed outright fraud and embezzlement during the Iraq War, and none of them were ever held accountable. I don't know about your country, but here usually all the higher up's in the chain are on the payroll, so you are safe, even if shit hits the fan. That is one of the nice thing about stealing from government. Because you are not actually stealing from the government, but instead, you are just helping the government steal from the people, a part of which is rewarded to you.

eternalban 8y ago

What about all the MIC heavies on the board.

VirtualAirwaves 8y ago

What I wonder is: is there really a huge untapped market for blood testing?

tdurden 8y ago

Martin Shkreli is in prison now - he deserves it, though he was guilty of _far_ less then Elizabeth Holmes. 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.

mikeryan 8y ago
That’s an interesting read on what Shkreli did vs Holmes. At least Holmes “victims” AFAIK were mostly rich folks losing other people’s money they’re gambling with and should have known better. Shkreli fleeced normal folks just looking to get their day meds.
- tdurden 8y ago
  Holmes fleeced normal folks too by knowingly giving them inaccurate test results, which in some cases could lead to death.
- sosa2k 8y ago
  Shkreli's crimes had nothing to do with the drug prices. Unless you think the jury/judge was biased due to it.
- the_narrator 8y ago
  > At least Holmes “victims” AFAIK were mostly rich folks why would that make it any better?
  - URSpider94 8y ago
    I think the argument is that stealing $1 million from a billionaire could be considered ethically less bad than stealing $10,000 from someone who is $50,000 in debt due to medical bills. The second theft will have much more impact on the victim than the first.
    - the_narrator 8y ago
      > The second theft will have much more impact on the victim than the first. That hardly makes it OK though, Are you saying that the first case doesn't deserve the same punishment as the second?

knolan 8y ago

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. 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. 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. There are many many similar stories just like this in this space. 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.

mhneu 8y ago

Excellent news for American society. “The Chickenshit Club” by Eisinger recently explained why the lack of criminal charges had emboldened white collar crime. Basically, individuals need to have the risk of criminal charges if they do something very egregious - they need to have skin in the game. 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. 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. https://news.ycombinator.com/item?id=17123315 https://news.ycombinator.com/item?id=17123315 Edit: book review here. It’s a really good book. https://mobile.nytimes.com/2017/07/05/books/review/the-chickenshit-club-jesse-eisinger-.html https://mobile.nytimes.com/2017/07/05/books/review/the-chick...

knuththetruth 8y ago
Yeah, it was crazy to me that Lazlo Bock not only came out with a book about Google’s “hiring culture,” but even started his own HR company AFTER being involved with Google’s wage fixing scandal. Absolutely shameless.
lord_ring_11 8y ago
Amen. The risk reward is crazily skewed towards breaking law. Most relying on ethics and social pressure.
delbel 8y ago
I was hoping the bankers can still be charged under the Patriot act, there is a provision for something to the effet threat to cause financial risk or damage if I remember. Paulson made a direct threat of financial doom if there was no bailout to President Bush. I think there is a way we can declare them enemy combatants and send them to gitmo for their trial. Sorry for typos, typing with a bad finger the last few days.
- 8y ago

intopieces 8y ago

Non-Paywall Link: https://archive.fo/Sd8AC https://archive.fo/Sd8AC

jason_slack 8y ago

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... Actually this has enough info for most people: https://en.wikipedia.org/wiki/Elizabeth_Holmes https://en.wikipedia.org/wiki/Elizabeth_Holmes

hawkice 8y ago
Steve Jobs definitely wasn't engaged in criminal fraud, so the prosecutor will definitely be trying to demonstrate she wasn't "the next Steve Jobs". Given what we know we should hear that prosecutors' argument.
- jason_slack 8y ago
  Why the down vote, she is referred to as the next Steve Jobs: https://mashable.com/2018/03/14/elizabeth-holmes-theranos-sec-fraud/ https://mashable.com/2018/03/14/elizabeth-holmes-theranos-se...
  - hawkice 8y ago
    Because being popular doesn't make you above the law. The comment is at best irrelevant, at worse morally noxious.
    - jason_slack 8y ago
      But I asked why is she considered that way. I’m not saying she is special but why do people say she is the next Jobs.
      - gaius 8y ago
        but why do people say she is the next Jobs Because she put considerable effort into fostering that impression, even dressing like Jobs in the same trademark black turtleneck sweaters he always wore. All part of the con.

dibstern 8y ago

People were defending Theranos on HN... surely must have been an investor or an insider. Surely no one else would be so daft.

golemiprague 8y ago

I wonder how much of it is due to the fact she is a woman? The politicians who supported and financed this company were desperate for a successful female founder to justify their political theories. It looks to me like there is some correlation between the failure of this company and the failure of Hillary to win the election but I can't put my finger on what exactly it is.

bitmapbrother 8y ago

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. https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-founder-elizabeth-holmes-was-bullied-into-submission.html https://www.cnbc.com/video/2018/05/10/vc-draper-theranos-fou...

75dvtwin 8y ago

Theranos / Holmes, also demonstrated how superficial, almost down to malpractice current so called journalism is. Complete lack of analysis, expertise in the fields they are covering, and clear initial non-biased position. Instead, we get this flood propaganda + sensationalism garbage from these so called 'reputable' news sources. And, as a consequence, con-artists, career politicians, and 'celebrities' -- leverage this legalized malpractice for their purposes. 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'. 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.

JumpCrisscross 8y ago
> Theranos / Holmes, also demonstrated how superficial, almost down to malpractice current so called journalism is Theranos was exposed by a Wall Street Journal reporter investigating and exposing the fraud. He was threatened multiple times and never budged. This is a story of journalistic excellence.
- paulddraper 8y ago
  Most of all, this is an inditement of several SV VCs. They should know nearly as much as anyone.
- zaidf 8y ago
  They were exposed after they raised almost a billion dollars from sales and investments, often on the basis of glowing media. The book is filled with anecdotes abt how the positive media was leveraged by Holmes and often cited by internal champions at Safeway and Walgreens to counter the skeptical voices in the room (“come on, they’re in Forbes, they can’t be a scam!”)
- eric-hu 8y ago
  I think that reporter did good work, but isn't this like pointing to a hackathon bug fix that saves a company as engineering excellence? The parent is seemingly saying that quality journalism would have better scrutiny to not allow the situation to get this far in the first place.

sonnyblarney 8y ago

"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 ...

techsin101 8y ago
Was thinking the same thing

godelmachine 8y ago

Behind a paywall. Would anyone kindly help me with a link that's free?

deleted 8y ago

[deleted]

thelastidiot 8y ago

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.

kennxfl 8y ago

It's people like Tim Draper that encouraged the fraud. From a totally logical point of view: 1. How do you invest millions in technology you cannot even look at even in year 10? 2. How do you defend a CEO in public by attacking credible journalists and not even once question the actual concerns in the company? 3. A medical company run by a first year drop-out and one without a single licensed doctor on the board? C'mon. Even Steve Jobs did not get that leeway.

forthispurpose 8y ago

Anyone can weigh in how much can they possibly get?

bumblebritches5 8y ago

Good, she was initially given a pussy pass for massive fraud.

pappaSsmurf 8y ago

>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. edit: sometimes you are brought to justice b/c you conned the wrong people...

techsin101 8y ago
You're saying there is no hope for my Kickstarter campaign investment

resentfuljoe 8y ago

http://www.paulgraham.com/founders.html http://www.paulgraham.com/founders.html 4. Naughtiness 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. 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.

dmix 8y ago
> hacked in the sense of beating the system, not breaking into computers.
dcposch 8y ago
PG is absolutely correct in my experience. The best founders are Chaotic Good on the alignment chart. > Morally, they care about getting the big questions right, but not about observing proprieties. Holmes does not match that description at all. Lying to investors, lying to the FDA, secretly using your competitors' tech to mask the fact that your core product does not work. She did not care about getting the big questions right.

techsin101 8y ago

Serious question were they both in sexual relationship... Because I feel the old Indian guy took over her... And influenced her to continue lies

techsin101 8y ago
yes they were.. found it https://www.wsj.com/articles/theranos-inc-s-partners-in-blood-1526662047 https://www.wsj.com/articles/theranos-inc-s-partners-in-bloo...