9 ms·

Theranos Criminal Case Is Broader Than Publicly Disclosed, Prosecutors Say

104 points by propman 8y ago

samfisher83 8y ago
Why aren't Holmes and the other guy in jail. I mean there are people in jail for smoking pot and these guys did massive fraud and they are free. I hope they don't just give them some fine. Makes the judicial system look bad.
- wetpaws 8y ago
  Something something empowerment narrative
- tptacek 8y ago
  Pretty obviously because a pot charge is typically simple to adjudicate (you were arrested, you had pot, that's illegal) and white-collar investor and product fraud cases are not. The criminal case against Balwani and Holmes is complicated, and it will take time to resolve. (Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you).
  - throwaway2048 8y ago
    Yeah just for possessing it, such a major difference.
    - dmoy 8y ago
      Even still, relative to other prisoners, weed is pretty minor. You're talking like ~1% of the prison population. Arrest rates are way higher though.
    - tptacek 8y ago
      Relatively few people are in prison for pot at all, was I guess my point. But I'm not looking to litigate weed law, which is something that virtually everyone on HN directionally agrees about anyways.
  - anoncoward111 8y ago
    While you aren't wrong, I think the original commenter was trying to say "it shouldn't be this way". Pre-trial detention is a thing too, of course. They can afford bail, but many innocent people who literally did not do the crime they're accused of still sit in jail for months/years waiting for a trial.
    - tptacek 8y ago
      I'm not sure what "should" has to do with it! Complicated cases are complicated. Simple cases aren't. I think directionally most people on HN already agree with you about cash bail. I certainly believe it should be done away with.
  - adventured 8y ago
    For anyone curious about the numbers around what tptacek is saying (given the popularity of the myth that the US mass incarcerates pot smokers): https://i.imgur.com/whWAVs3.jpg https://i.imgur.com/whWAVs3.jpg The strong majority of all prisoners are in for violent crime and property crime. Public order offenses (which includes eg weapons and DUIs) are nearly as large as all drug offenses. There are about 60% as many people in state prisons for just burglary, as all drug offenses. In 2015, only 3.4% of people in state prisons were in for drug possesion of any type. Marijuana would be a small subset of that figure.
    - SEJeff 8y ago
      And what you will find by reading Thomas’s HN or twitter feed is that he’s often opinionated yet rarely wrong.
    - kleopullin 8y ago
      Well played. Now, what percentage of people were in local jails for drug possession? Pre- and post-conviction?
  - eganist 8y ago
    > Pretty obviously because— It's not. It might seem to be the case to you, me, and others with some understanding of the legal system in the United States, but when we consider the background knowledge of the legal system required to understand how cases are adjudicated, this is objectively quite generally not obvious. > (Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you). Compared to what? If Virginia is any indication of trends among non-decriminalized or non-legalized states, it's relatively high. (I'm nitpicking, of course: there's a substantial difference between jail and prison; I'm assuming your definition—innocently, mind you—does not distinguish between the two.) https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/news/wonk/wp/2017/10/31/heres-how-much-virginia-taxpayers-are-spending-to-jail-marijuana-users/ https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/n...
    - tptacek 8y ago
      Virginia should jail fewer weed users. I mean, it's going to legalize recreational marijuana within the next 10 years like everyone else; the ship has sailed. What are we arguing about? What's obvious is that a complicated white-collar fraud case is harder to prosecute than a trivial drug possession case. You don't need to know anything about the criminal justice system to grasp that.
      - deleted 8y ago
        [deleted]
  - DSingularity 8y ago
    I don’t know how I feel about this. At some point this just seems like BS, a rigged system where the crimes of the rich and white are “too complicated to prosecute” while the crimes of the poor and the minorities are so simple and easy. Please. One day this system will collapse on itself.
    - volkl48 8y ago
      The rich can afford expensive lawyers who require an airtight case to prosecute successfully. They also violate the law in much more convoluted schemes that require a lot of work to be able to piece together a case that a jury will understand and believe. The poor have a shitty public defender who advises them to plead guilty even if they aren't, and if they committed a crime it's likely something simple and straightforward to explain and prove.
      - HarryHirsch 8y ago
        It's worse than that. I'm currently waiting for my former landlord to return the security deposit. The law insists that it be returned within a certain time with an accounting, otherwise there are punitive damages; the punitive damages serve to encourage the landlord to be honest in his dealings. The clock has run out, but my lawyer advises against against asking for damages. Looking at the law, it should be a slam-dunk deal, but apparently the district judge is sufficiently corrupt not to be trusted. It's not my job to school the landlord to be honest, and since there are no consequences for bad behaviour they will be dishonest and will continue to cheat students and other out-of-towners out of what is rightfully theirs. That, friends, is the reality in the US: groups of the population have good reason to believe that the legal system is not working for them. Recently, a political TV program commented on the Brazilian election - on one side is a fascist, on the other a representative of party so corrupt that it's unelectable. The situation is approaching a civil war. In the US it's not quite as bad as in Brazil, but it's getting there.
        tptacek 8y ago
        I think your lawyer is not good at their job. It's likely if you took your landlord to court, it'd take 12-18 months (during which you'd do nothing and incur minimal expenses waiting on the court calendar), and then, before you got to trial, your landlord would offer to settle for 50%. The case itself, hit or miss, but 50% > 0%. My big lesson from taking landlords to court is that the security deposit is a negotiation.
  - stefan_ 8y ago
    Yeah, it's very difficult to win cases when you only use tools like raids or wiretaps against people unlikely to mount any sort of legal challenge.
- propman 8y ago
  They were arrested and out on a $500k bail. The same happens for those now in jail for smoking pot or dealing or whatever. The trial is now going on and the prosecution thinks it has a potentially far bigger case that can net more on charges. Holmes settled the civil case with the SEC I believe so she’s cleared there. She absolutely could be jailed for a long time, but the wheels of justice turn slowly.
  - deleted 8y ago
    [deleted]
  - felipelemos 8y ago
    It's too easy to get rich by fraud and use it to pay for you bail out. The wheels of justice turns slow if you have money.
    - matt4077 8y ago
      Incarceration is supposed to protect the upcoming trial, from the accused fleeing, tampering with evidence or witnesses. It is not a punitive measure. Innocent until proven guilty, etc. So while it's fair to criticise the disparate abilities to post bail, changing the system to incarcerate more rich accused would just be compounding injustice.
      - andrewaylett 8y ago
        On the other hand, in the UK: "Under s. 4 of the Bail Act 1976, on each occasion that a person is brought before a court accused of an offence, or remanded after conviction for enquiries or a report, he must be granted bail without condition, if none of the exceptions to bail apply." https://www.cps.gov.uk/legal-guidance/bail https://www.cps.gov.uk/legal-guidance/bail Charging an arm and a leg to receive bail doesn't seem like it's serving any useful purpose?
    - tptacek 8y ago
      Now you're getting some of the logic of civil asset forfeiture. (I don't support or not support it).
- avip 8y ago
  Maybe because they haven't been convicted yet.
- deleted 8y ago
  [deleted]
walrus01 8y ago
After seeing how few senior financial industry people went to prison for their work that directly caused the 2007-2009 economic crisis, I'm highly skeptical that justice will actually be served.
- rayiner 8y ago
  I'd love to hear which specific person did which specific thing that you believe "directly caused the 2007-2009 economic crisis." Identifying a "direct cause" of the 2007-2009 financial crisis, with certainty exceeding 90-95% (the "reasonable doubt" threshold) would be worthy of a Nobel Memorial Prize, in my estimation.
  - walrus01 8y ago
    a) the people who paid off the bond rating agencies to rate mortgage-backed securities full of junk mortgages as AAA. b) the senior executives at institutions like bear stearns who signed off on creating the mortgage backed securities and their known composition of shit mortgages. c) the senior executives at the rating agencies who knowingly rated shit bonds as AAA. d) senior executives at institutions like Countrywide which pumped the shit mortgages into the market.
    - rayiner 8y ago
      And you’re 95% certain that bond ratings are what caused the financial crisis?
      - walrus01 8y ago
        no, at a more fundamental level before the ratings agencies ever saw them, the composition of the mortgage-backed securities and their tranches. The number of no-documentation/no-income mortgages that were rolled together into securitized products by the clients of the ratings agencies.
      - paulsutter 8y ago
        So tell us then what it was? Good people doing solid work until they were hit by a random black swan event? That’s the official story and it’s absurd.
dmfdmf 8y ago
I am not a lawyer but can't/shouldn't the defense request a dismissal at this point if the prosecutor just admitted it is an on-going investigation? It seems a bit unfair to continue with the case while using the fact that it is an open investigation as a cover to collect more evidence against them. It is unfair because the lawyers for the defense are trying to defend against a moving target. NB: Not defending Holmes or Balwani but curious about the legal status of the case.
- tptacek 8y ago
  Don't superseding indictments happen all the time in criminal cases?
  - dmfdmf 8y ago
    I don't know, not a lawyer. It maybe normal procedure but seems a bit unfair.
    - tptacek 8y ago
      Why would that be unfair?
      - stevev 8y ago
        I believe you are guilty, but I don’t have any sufficient evidence(s) yet.
        tptacek 8y ago
        That's not how a superseding indictment works! A superseding indictment charges more (or different) crimes than the original indictment. The process for obtaining the indictments in the first place is the same.
        URSpider94 8y ago
        That’s kind of the point of the grand jury. It’s an investigative body. Grand juries are typically convened when investigations reach critical mass, and are then used to issue subpoenas for additional information, leading to an indictment, which then leaves to arrest and trial. Grand juries are often used for a single charge, but can also be used to supervise a lengthy investigation with multiple charges and multiple defendants (like the ones used by Robert Mueller in his investigations of Russian election interference).
readhn 8y ago
How many startup CEOs with "fake it until you make it" philosophy are sweating a bit more these days??
- kleopullin 8y ago
  How many of them sold fake blood tests to real patients? I think fraud is one thing, putting up a successful facade is not quite fraud.
  - readhn 8y ago
    FYI: these were not "fake blood tests"! They used central lab with conventional test equipment to consolidate and process patient samples (not their magic lab on the bench device) and issue the results. The problem was that their central lab(s) was run poorly (multiple violations) so the results were questioned. (Similar to lets say a bread factory making bread, then the inspector comes in and finds out that certain fridges used for yeast storage were out of spec by 5 degrees, no batch log files etc. and shuts down the factory. The bread that was produced at such factory was definitely not "fake"). I believe its a case of completely incompetent leadership that ultimately snowballed into MUCH bigger issues (what else to expect from a 19 year old girl with no experience running a company in one of the hardest/most complicated and most heavily regulated industries?)!
kleopullin 8y ago
What IP are they protecting? I think the problem is there was no IP. Ever.
chmaynard 8y ago
This Silicon Valley morality tale still has life! It's time for the WSJ to get John Carreyrou back on the story.

104 points by propman 8y ago

Why aren't Holmes and the other guy in jail. I mean there are people in jail for smoking pot and these guys did massive fraud and they are free. I hope they don't just give them some fine. Makes the judicial system look bad.

wetpaws 8y ago
Something something empowerment narrative
tptacek 8y ago
Pretty obviously because a pot charge is typically simple to adjudicate (you were arrested, you had pot, that's illegal) and white-collar investor and product fraud cases are not. The criminal case against Balwani and Holmes is complicated, and it will take time to resolve. (Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you).
- throwaway2048 8y ago
  Yeah just for possessing it, such a major difference.
  - dmoy 8y ago
    Even still, relative to other prisoners, weed is pretty minor. You're talking like ~1% of the prison population. Arrest rates are way higher though.
  - tptacek 8y ago
    Relatively few people are in prison for pot at all, was I guess my point. But I'm not looking to litigate weed law, which is something that virtually everyone on HN directionally agrees about anyways.
- anoncoward111 8y ago
  While you aren't wrong, I think the original commenter was trying to say "it shouldn't be this way". Pre-trial detention is a thing too, of course. They can afford bail, but many innocent people who literally did not do the crime they're accused of still sit in jail for months/years waiting for a trial.
  - tptacek 8y ago
    I'm not sure what "should" has to do with it! Complicated cases are complicated. Simple cases aren't. I think directionally most people on HN already agree with you about cash bail. I certainly believe it should be done away with.
- adventured 8y ago
  For anyone curious about the numbers around what tptacek is saying (given the popularity of the myth that the US mass incarcerates pot smokers): https://i.imgur.com/whWAVs3.jpg https://i.imgur.com/whWAVs3.jpg The strong majority of all prisoners are in for violent crime and property crime. Public order offenses (which includes eg weapons and DUIs) are nearly as large as all drug offenses. There are about 60% as many people in state prisons for just burglary, as all drug offenses. In 2015, only 3.4% of people in state prisons were in for drug possesion of any type. Marijuana would be a small subset of that figure.
  - SEJeff 8y ago
    And what you will find by reading Thomas’s HN or twitter feed is that he’s often opinionated yet rarely wrong.
  - kleopullin 8y ago
    Well played. Now, what percentage of people were in local jails for drug possession? Pre- and post-conviction?
- eganist 8y ago
  > Pretty obviously because— It's not. It might seem to be the case to you, me, and others with some understanding of the legal system in the United States, but when we consider the background knowledge of the legal system required to understand how cases are adjudicated, this is objectively quite generally not obvious. > (Relatively few people are at this point in jail for smoking pot, for whatever that's worth to you). Compared to what? If Virginia is any indication of trends among non-decriminalized or non-legalized states, it's relatively high. (I'm nitpicking, of course: there's a substantial difference between jail and prison; I'm assuming your definition—innocently, mind you—does not distinguish between the two.) https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/news/wonk/wp/2017/10/31/heres-how-much-virginia-taxpayers-are-spending-to-jail-marijuana-users/ https://ww.google.com/amp/s/www.washingtonpost.com/amphtml/n...
  - tptacek 8y ago
    Virginia should jail fewer weed users. I mean, it's going to legalize recreational marijuana within the next 10 years like everyone else; the ship has sailed. What are we arguing about? What's obvious is that a complicated white-collar fraud case is harder to prosecute than a trivial drug possession case. You don't need to know anything about the criminal justice system to grasp that.
    - deleted 8y ago
      [deleted]
- DSingularity 8y ago
  I don’t know how I feel about this. At some point this just seems like BS, a rigged system where the crimes of the rich and white are “too complicated to prosecute” while the crimes of the poor and the minorities are so simple and easy. Please. One day this system will collapse on itself.
  - volkl48 8y ago
    The rich can afford expensive lawyers who require an airtight case to prosecute successfully. They also violate the law in much more convoluted schemes that require a lot of work to be able to piece together a case that a jury will understand and believe. The poor have a shitty public defender who advises them to plead guilty even if they aren't, and if they committed a crime it's likely something simple and straightforward to explain and prove.
    - HarryHirsch 8y ago
      It's worse than that. I'm currently waiting for my former landlord to return the security deposit. The law insists that it be returned within a certain time with an accounting, otherwise there are punitive damages; the punitive damages serve to encourage the landlord to be honest in his dealings. The clock has run out, but my lawyer advises against against asking for damages. Looking at the law, it should be a slam-dunk deal, but apparently the district judge is sufficiently corrupt not to be trusted. It's not my job to school the landlord to be honest, and since there are no consequences for bad behaviour they will be dishonest and will continue to cheat students and other out-of-towners out of what is rightfully theirs. That, friends, is the reality in the US: groups of the population have good reason to believe that the legal system is not working for them. Recently, a political TV program commented on the Brazilian election - on one side is a fascist, on the other a representative of party so corrupt that it's unelectable. The situation is approaching a civil war. In the US it's not quite as bad as in Brazil, but it's getting there.
      - tptacek 8y ago
        I think your lawyer is not good at their job. It's likely if you took your landlord to court, it'd take 12-18 months (during which you'd do nothing and incur minimal expenses waiting on the court calendar), and then, before you got to trial, your landlord would offer to settle for 50%. The case itself, hit or miss, but 50% > 0%. My big lesson from taking landlords to court is that the security deposit is a negotiation.
- stefan_ 8y ago
  Yeah, it's very difficult to win cases when you only use tools like raids or wiretaps against people unlikely to mount any sort of legal challenge.
propman 8y ago
They were arrested and out on a $500k bail. The same happens for those now in jail for smoking pot or dealing or whatever. The trial is now going on and the prosecution thinks it has a potentially far bigger case that can net more on charges. Holmes settled the civil case with the SEC I believe so she’s cleared there. She absolutely could be jailed for a long time, but the wheels of justice turn slowly.
- deleted 8y ago
  [deleted]
- felipelemos 8y ago
  It's too easy to get rich by fraud and use it to pay for you bail out. The wheels of justice turns slow if you have money.
  - matt4077 8y ago
    Incarceration is supposed to protect the upcoming trial, from the accused fleeing, tampering with evidence or witnesses. It is not a punitive measure. Innocent until proven guilty, etc. So while it's fair to criticise the disparate abilities to post bail, changing the system to incarcerate more rich accused would just be compounding injustice.
    - andrewaylett 8y ago
      On the other hand, in the UK: "Under s. 4 of the Bail Act 1976, on each occasion that a person is brought before a court accused of an offence, or remanded after conviction for enquiries or a report, he must be granted bail without condition, if none of the exceptions to bail apply." https://www.cps.gov.uk/legal-guidance/bail https://www.cps.gov.uk/legal-guidance/bail Charging an arm and a leg to receive bail doesn't seem like it's serving any useful purpose?
  - tptacek 8y ago
    Now you're getting some of the logic of civil asset forfeiture. (I don't support or not support it).
avip 8y ago
Maybe because they haven't been convicted yet.
deleted 8y ago
[deleted]

walrus01 8y ago

After seeing how few senior financial industry people went to prison for their work that directly caused the 2007-2009 economic crisis, I'm highly skeptical that justice will actually be served.

rayiner 8y ago
I'd love to hear which specific person did which specific thing that you believe "directly caused the 2007-2009 economic crisis." Identifying a "direct cause" of the 2007-2009 financial crisis, with certainty exceeding 90-95% (the "reasonable doubt" threshold) would be worthy of a Nobel Memorial Prize, in my estimation.
- walrus01 8y ago
  a) the people who paid off the bond rating agencies to rate mortgage-backed securities full of junk mortgages as AAA. b) the senior executives at institutions like bear stearns who signed off on creating the mortgage backed securities and their known composition of shit mortgages. c) the senior executives at the rating agencies who knowingly rated shit bonds as AAA. d) senior executives at institutions like Countrywide which pumped the shit mortgages into the market.
  - rayiner 8y ago
    And you’re 95% certain that bond ratings are what caused the financial crisis?
    - walrus01 8y ago
      no, at a more fundamental level before the ratings agencies ever saw them, the composition of the mortgage-backed securities and their tranches. The number of no-documentation/no-income mortgages that were rolled together into securitized products by the clients of the ratings agencies.
    - paulsutter 8y ago
      So tell us then what it was? Good people doing solid work until they were hit by a random black swan event? That’s the official story and it’s absurd.

dmfdmf 8y ago

I am not a lawyer but can't/shouldn't the defense request a dismissal at this point if the prosecutor just admitted it is an on-going investigation? It seems a bit unfair to continue with the case while using the fact that it is an open investigation as a cover to collect more evidence against them. It is unfair because the lawyers for the defense are trying to defend against a moving target. NB: Not defending Holmes or Balwani but curious about the legal status of the case.

tptacek 8y ago
Don't superseding indictments happen all the time in criminal cases?
- dmfdmf 8y ago
  I don't know, not a lawyer. It maybe normal procedure but seems a bit unfair.
  - tptacek 8y ago
    Why would that be unfair?
    - stevev 8y ago
      I believe you are guilty, but I don’t have any sufficient evidence(s) yet.
      - tptacek 8y ago
        That's not how a superseding indictment works! A superseding indictment charges more (or different) crimes than the original indictment. The process for obtaining the indictments in the first place is the same.
      - URSpider94 8y ago
        That’s kind of the point of the grand jury. It’s an investigative body. Grand juries are typically convened when investigations reach critical mass, and are then used to issue subpoenas for additional information, leading to an indictment, which then leaves to arrest and trial. Grand juries are often used for a single charge, but can also be used to supervise a lengthy investigation with multiple charges and multiple defendants (like the ones used by Robert Mueller in his investigations of Russian election interference).

readhn 8y ago

How many startup CEOs with "fake it until you make it" philosophy are sweating a bit more these days??

kleopullin 8y ago
How many of them sold fake blood tests to real patients? I think fraud is one thing, putting up a successful facade is not quite fraud.
- readhn 8y ago
  FYI: these were not "fake blood tests"! They used central lab with conventional test equipment to consolidate and process patient samples (not their magic lab on the bench device) and issue the results. The problem was that their central lab(s) was run poorly (multiple violations) so the results were questioned. (Similar to lets say a bread factory making bread, then the inspector comes in and finds out that certain fridges used for yeast storage were out of spec by 5 degrees, no batch log files etc. and shuts down the factory. The bread that was produced at such factory was definitely not "fake"). I believe its a case of completely incompetent leadership that ultimately snowballed into MUCH bigger issues (what else to expect from a 19 year old girl with no experience running a company in one of the hardest/most complicated and most heavily regulated industries?)!

kleopullin 8y ago

What IP are they protecting? I think the problem is there was no IP. Ever.

chmaynard 8y ago

This Silicon Valley morality tale still has life! It's time for the WSJ to get John Carreyrou back on the story.