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SEC Charges Theranos, CEO Elizabeth Holmes With 'Massive Fraud' (engadget.com)

Posted by BeauHD on from the long-time-coming dept.

An anonymous reader quotes a report from Engadget: The SEC has charged Theranos, Elizabeth Holmes and Ramesh "Sunny" Balwani with fraud relating to the startup's fundraising activities. The company, as well as CEO Holmes and former president Balwani are said to have raised more than $700 million from investors through "an elaborate, years-long fraud." This involved making "false statements about the company's technology, business and financial performance." In a statement, the commission said that the company, and its two executives, misled investors about the capability of its blood testing technology. Theranos' big selling point was that its hardware could scan for a number of diseases with just a small drop of blood. Unfortunately, the company was never able to demonstrate that its system worked as well as its creators claimed.

The company and Elizabeth Holmes have already agreed to settle the charges leveled against them by the SEC. Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors. Balwani, on the other hand, is facing a federal court case in the Northern District of California where the SEC will litigate its claims against him. Worth noting: the court still has to approve the deals between Holmes and Theranos, and neither party has admitted any wrongdoing.

128 comments

  1. A good start. by olsmeister · · Score: 2

    So nice to see some accountability for these people. I also saw this today:
    https://www.justice.gov/usao-n...

    1. Re:A good start. by Dthief · · Score: 2

      what about the investors do some due diligence and not throw money at a worthless company. TBH I didnt RTFA but did they falsify data, or just make large false claims?

      --
      www.RacquetUp.org - Helping Detroit Youth
    2. Re:A good start. by Comrade+Ogilvy · · Score: 5, Informative

      In fact, Theranos had a big song and dance about being too awesome to cough up lab data or peer reviewed papers, as is normal in this business space. A lot of companies looked at Theranos and most of them refused to consider writing checks, for this very reason.

      The people who wrote the checks bought into the "visionary thing", and did not follow standard business practices in the pharma and diagnostics medical space. I feel no pity for them, even if I believe Holmes should face consequences.

    3. Re:A good start. by tripleevenfall · · Score: 2

      Well:

      Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors.

      She did lose billions when the fraud came to light, and will probably be sued into oblivion and never work in the industry again. That's about as heavy a set of consequences as you can put together outside of jail time.

    4. Re:A good start. by ShanghaiBill · · Score: 5, Informative

      what about the investors do some due diligence and not throw money at a worthless company.

      FOMO. If you don't jump on the opportunity, someone else will.

      TBH I didnt RTFA

      Then you missed the best part: They are going to make a movie about Theranos, with Jennifer Lawrence starring as Ms Holmes!

      did they falsify data, or just make large false claims?

      Mostly just lying, exaggerating, and hand-waving. Liz almost certainly started out believing the technology would work. Then schedules slipped, so she told a few fibs to buy time to fix the kinks. But then the schedule slipped some more, so she made the lies a little bigger. The it became clear that there were major problems, and she faced a choice: Either come clean and give up her status as a feted young billionaire on mission to save the world, or ... keep digging deeper. Given that choice, what would you do?

    5. Re:A good start. by Anonymous Coward · · Score: 5, Interesting

      She lost billions? She lost very little, personally: the billions were based on potential valuation and investor stakes and she didn't have enough knowledge to reputably work in the industry in the first place. From her perspective the only penalty here is the jail time she might be facing from SEC charges.

    6. Re:A good start. by Anonymous Coward · · Score: 0

      Failure is a humbling experience, one we don't readily embrace

    7. Re:A good start. by elrous0 · · Score: 5, Insightful

      If by "accountability" you mean that they'll have to pay a fine that's a fraction of the money they stole and not face any actual jail time, then yes. That'll teach potential future fraudsters!

      --
      SJW: Someone who has run out of real oppression, and has to fake it.
    8. Re:A good start. by lactose99 · · Score: 1

      They did suffer-- they lost money. Are you implying that Holmes SHOULDN'T be charged with fraud?

      --
      Fully licensed blockchain psychiatrist
    9. Re:A good start. by Actually,+I+do+RTFA · · Score: 2

      what about the investors do some due diligence and not throw money at a worthless company.

      While that's good, we still wanna punish those who commit fraud. See also why "why don't you just carry a gun and take Krav Maga" isn't a reason not to punish a mugger.

      --
      Your ad here. Ask me how!
    10. Re:A good start. by ShanghaiBill · · Score: 4, Insightful

      If by "accountability" you mean that they'll have to pay a fine that's a fraction of the money they stole

      They can't pay more because the money they stole is gone. They were charging $X for the blood tests, and then paying someone else $3X to actually run them. They made up the difference by burning up investor money.

      ... and not face any actual jail time, then yes.

      Jail/prison should only be used for violent people that are physically dangerous. For everyone else, there are more constructive punishments. For instance Ms Holmes could spend the next 10 years cleaning bedpans in a nursing home.

      America imprisons more than four times as many people per capita as China, Russia, and Iran, yet we have one of the world's highest recidivism rates. We need to stop looking at prison as the solution to every problem.

    11. Re:A good start. by Anonymous Coward · · Score: 0

      ... keep digging deeper.

      Well after 3 failures to get on-schedule it's time to think of an exit strategy: So many people think they can bulldoze/spend their way out (I'm guilty too) or depend on the sunken cost fallacy.

    12. Re: A good start. by Anonymous Coward · · Score: 0

      That would be akin to slave labor... which in this case I wholeheartedly approve.

    13. Re:A good start. by DarkOx · · Score: 3, Insightful

      The SEC prosecuting her for fraud does not necessarily make the investors whole, remember.

      I don't feel much pity of the investors either; Theranos was asked many times to "show their work" and the answer always came back "trust us!" diligent savvy investors ( a whole lot them ) saw that and avoid the mess. Many even went as far as to write articles and advice letters warning other of Theranos stock.

      Then there were others who were either gullible greedy or both and bought into the lies; after all if what Theranos claimed was true they stood to make a lot of money. Now even if they can recapture of the residual value of Theranos even in excess of their personal holdings as a percentage of equity; they still stand to lose a lot of money.

      None of this changes they fact that Holmes made material false statements to induce behavior in others that was against their interests for her personal gain. That is FRAUD, and fraud is crime. I don't think we want a society where its okay to run around telling lies for the express purpose of duping other out of their property. I am not talking about opinions and highly selective statistics, or gross generalizations of the political kind either, I am talking about plainly demonstrable falsehoods.

      --
      Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
    14. Re: A good start. by Anonymous Coward · · Score: 0

      Bu bu but feminism...

    15. Re:A good start. by Anonymous Coward · · Score: 0

      The people who wrote the checks bought into the "visionary thing", and did not follow standard business practices in the pharma and diagnostics medical space.

      It's interesting. I've heard some discussion from the pharma/medical space people, and it seems that - generally speaking - investors with experience in the medical space didn't buy into Theranos. They knew enough to stay away. For the most part the investors weren't standard medical investors, but rather investors who came more from the "tech company" space. (e.g. people viewing Theranos as a Silicon Valley tech company which happened to do medical stuff, versus a medical device company.)

      These are the investors which buy into the "move fast and break things" model. In tech company land, you don't need to have a functional product: so long as something is cool and shiny enough, you'll get plenty of people to buy into it. It doesn't matter if it's a turd so long as it's a polished one, and you can run an unsustainable business model for a really long time so long as you can convince enough investors there's a pot of gold at the end of that rainbow (see Youtube, Uber, and all the other in-the-red "perpetual beta" companies). Get in early, and the "greater fool" will buy you out for wheelbarrows full of cash.

      In medical science, though, you run up hard against reality and regulatory compliance. "Move fast and break things" doesn't work too well when the things you're breaking are peoples' health. That medical device either works or it doesn't, and you really can't convince doctors and the FDA to give you perpetual beta status until you figure out how to make it work. Cancer doesn't care that you now have Twitter integration, and all the squircles in the world won't fix that.

    16. Re: A good start. by ShanghaiBill · · Score: 1

      That would be akin to slave labor...

      The 13th Amendment makes a specific exception for compelled labor as criminal punishment:

      Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.

    17. Re:A good start. by ClickOnThis · · Score: 2

      If by "accountability" you mean that they'll have to pay a fine that's a fraction of the money they stole

      They can't pay more because the money they stole is gone.

      Irrelevant. A defendant's ability to pay has (or should have) nothing to do with the amounts of judgements against them.

      ... and not face any actual jail time, then yes.

      Jail/prison should only be used for violent people that are physically dangerous. For everyone else, there are more constructive punishments.

      Prison is not just a place to keep dangerous people away from the rest of us. It is also a deterrent, for white-collar crimes as well as violent ones.

      Granted, many studies have shown that it is not the level of punishment, but the certainty of receiving it, that acts as a deterrent to crime. Nevertheless, you don't want white-collar criminals to think that they can just buy themselves out of trouble, as though it were the cost of doing business. Jail is a just punishment for all serious crimes.

      --
      If it weren't for deadlines, nothing would be late.
    18. Re: A good start. by Anonymous Coward · · Score: 0

      I agree that the US has way too many people inprisoned, but at least be fair. China and Russia probably kill a lot of the people we would throw in jail.

    19. Re: A good start. by Anonymous Coward · · Score: 0

      China does, like US, in Russia there is no capital punishment since mid-nineties.

    20. Re: A good start. by dj245 · · Score: 1

      Disappear to a nonextraditing country?

      --
      Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
    21. Re: A good start. by ShanghaiBill · · Score: 1

      China and Russia probably kill a lot of the people we would throw in jail.

      Russia has no de facto capital punishment. It has not been formally abolished, but no one has been judicially executed in more than 2 decades.

      China executes about 2000 people annually. Although that is far more than any other country, it is still a minuscule fraction of their prison population.

    22. Re:A good start. by rtb61 · · Score: 1, Flamebait

      Well, did she get thrown to the ground, brutally arrested and earn a long prison sentence like a three time shoplifter caught stealing $50 dollars worth of stuff. Oh I see, one rule for the poor and another rule for the rich, cheat $700 million earn a multimillion dollar wage and pay a minor fine, compared to earned income and the losses. Oh the suffering of having to give up millions of worthless shares, apparently plenty of money left to pay well connected lawyers (it's those connections that create purposeful corrupt bias in the legal system).

      --
      Chaos - everything, everywhere, everywhen
    23. Re:A good start. by flatulus · · Score: 1

      "Kill a few people, they call you a murderer. Kill a million, and you're a conqueror. Go figure." (Cliffhanger movie quote)

      Different scenario but same principle.

    24. Re:A good start. by Anonymous Coward · · Score: 0

      She may have been wrong but I strongly doubt she would blatantly lie about it. If the investors couldn't verify her billion dollar claims then they never should have invested. They clearly were just looking for a quick, easy payoff.

    25. Re:A good start. by pnutjam · · Score: 1

      It just feels wrong to punish rich young people with so much of their lives ahead of them.

      Bullshit, bullshit and mover business as usual.

      --
      Cheap storage VM.
    26. Re:A good start. by Anonymous Coward · · Score: 0

      Spoken like a good american protestant. I must say though I was a bit disappointed. You didn't mention hard work once.

  2. Better late than never.... by ColdWetDog · · Score: 1

    Oh, now they tell us.

    --
    Faster! Faster! Faster would be better!
  3. just pay a fine by PopeRatzo · · Score: 4, Insightful

    Why does she get off with just paying a fine if she committed "massive fraud"? Shouldn't there be a little jail time involved, too? I'm not saying she's gotta do life, but maybe five years and then community service.

    People get harsher sentences for selling half a pound of weed.

    --
    You are welcome on my lawn.
    1. Re:just pay a fine by Train0987 · · Score: 5, Informative

      The SEC can only levy civil penalties (fines), not criminal (jail). The DOJ will have to get involved and charge her criminally before she sees jail.

    2. Re:just pay a fine by zlives · · Score: 4, Funny

      the DOJ... okay i can rest easy that this will happen now.

    3. Re:just pay a fine by Anonymous Coward · · Score: 1

      Prison is for the proletariat

      Oh sure, occasionally we'll send a member of the upper class to prison, but it's only when they have exposed the secrets of those around them. Stealing money from the bourgeoisie is not an offense, it's expected.

    4. Re:just pay a fine by Anonymous Coward · · Score: 0

      Why does she get off with just paying a fine if she committed "massive fraud"? Shouldn't there be a little jail time involved, too? I'm not saying she's gotta do life, but maybe five years and then community service.

      People get harsher sentences for selling half a pound of weed.

      It does say "Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock". Oh, so she does just pay a small fine and return $0.10 worth of stock.

    5. Re:just pay a fine by Anonymous Coward · · Score: 1

      the DOJ... okay i can rest easy that this will happen now.

      Going for the +5, Funny upmod, are we?

    6. Re:just pay a fine by PopeRatzo · · Score: 4, Insightful

      The DOJ will have to get involved and charge her criminally before she sees jail.

      So, what your saying is that it's only a matter of time before Elizabeth Holmes is named Secretary of Health and Human Services.

      --
      You are welcome on my lawn.
    7. Re:just pay a fine by Anonymous Coward · · Score: 0

      Pussy pass.

    8. Re:just pay a fine by Cederic · · Score: 1

      What if she doesn't pay the fine? Sells her shares, takes her millions and fucks off to Mexico?

      Legally she's in the clear?

    9. Re: just pay a fine by UnknowingFool · · Score: 4, Insightful

      Oh no no no. See the problem isn't that you can't defraud people and get away with leading to cushy government job. You can as long as you don't defraud rich people.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    10. Re:just pay a fine by Anonymous Coward · · Score: 0

      Most likely the DOJ will get involved...

    11. Re:just pay a fine by Applehu+Akbar · · Score: 1

      What if she doesn't pay the fine? Sells her shares, takes her millions and fucks off to Mexico?

      Mexico enforces its immigration laws, and doesn't let people like her in.

    12. Re: just pay a fine by lgw · · Score: 2

      Oh no no no. See the problem isn't that you can't defraud people and get away with leading to cushy government job. You can as long as you don't defraud rich people.

      Bernie Madoff made that mistake. He didn't just go to jail - he was attacked in jail (a low-security prison where you don't have many violent offenders) and beaten so badly he needed major reconstructive surgery on his face - he literally had his face beaten in. The moral of that story is pretty clear.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    13. Re: just pay a fine by Anonymous Coward · · Score: 0

      Both Bernie Madoff and Martin Shkreli defrauded rich people, and both were convicted.

    14. Re:just pay a fine by Anonymous Coward · · Score: 0

      Are you new to Earth? Justice is for the rich, and laws & punishment are for the poor. Besides, she probably wouldn't do very well in prison, and that seems to be a mitigating factor when you're wealthy.

    15. Re:just pay a fine by slew · · Score: 1

      What if she doesn't pay the fine? Sells her shares, takes her millions and fucks off to Mexico?

      Legally she's in the clear?

      Theranos is not a public traded company. Who would buy Theranos shares today? Especially from Ms Holmes?

      Of course she could simply *embezzle* the money from Theranos (they did raise $700M, so some of it has to be left), but I suspect there isn't much left...

    16. Re:just pay a fine by hey! · · Score: 2

      Small world phenomenon, I guess, but I have a friend who's a friend with Saudi Arabia's Prince Bandar bin Sultan Al Saud -- for 22 years Ambassador to the US under King Fahd.

      According to my friend, this was Prince Bandar's view on the difference between democracy and monarchy: in a democracy if you screw up the people vote you out; in a monarchy they drag you out of your palace and cut off your head.

      My takeaway: if you don't vote, you'd better be willing to storm the palace. And increasingly our lives are governed by international, extra-governmental organizations: corporations.

      --
      Post may contain irony: discontinue use if experiencing mood swings, nausea or elevated blood pressure.
    17. Re:just pay a fine by lactose99 · · Score: 1, Troll

      Hell Trump will likely make this fraudster head of the FDA the way things are going.

      --
      Fully licensed blockchain psychiatrist
    18. Re:just pay a fine by Anonymous Coward · · Score: 0

      The DOJ will have to get involved and charge her criminally before she sees jail.

      So, what your saying is that it's only a matter of time before Elizabeth Holmes is named Secretary of State by Barack Obama.

      FTFY

    19. Re:just pay a fine by Anonymous Coward · · Score: 0

      The DOJ will have to get involved and charge her criminally before she sees jail.

      So, what your saying is that it's only a matter of time before Elizabeth Holmes is named Secretary of State by Barack Obama.

      FTFY

      Uhhh, perhaps you hadn't noticed, but Barack Obama is no longer President of the United States. Yes, it's true. Now we have this Orange Guy as our President. He keeps saying he's going to "Make America Great Again" but I'm not seeing any evidence of that yet. Quite the opposite, in fact. Go ahead and look it up for yourself, if you are interested.

    20. Re:just pay a fine by fredrated · · Score: 1

      Wake up Rip, it's 2018.

    21. Re: just pay a fine by Anonymous Coward · · Score: 0

      Bernie Madoff made that mistake. He didn't just go to jail - he was attacked in jail (a low-security prison where you don't have many violent offenders) and beaten so badly he needed major reconstructive surgery on his face - he literally had his face beaten in. The moral of that story is pretty clear.

      Are you making a joke? Madoff was not beaten in prison. Last I read, he was hailed as a hero in the prison for sticking it to "the man."

      In a minimum security prison, the other inmates are too much milksops to attempt a violent crime against another inmate. Even if they had the guts, they would be sent to a much nastier prison with far greater risk of being raped or physical beaten. Likewise, if Madoff were put into a nasty prison, the inmates there would probably celebrate him for screwing over the rich and powerful.

      Can you provide a citation to a credible source that says he was has been beaten and abused in prison?

    22. Re: just pay a fine by lgw · · Score: 1

      Can you provide a citation to a credible source that says he was has been beaten and abused in prison?

      Here you go.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    23. Re:just pay a fine by Pinky's+Brain · · Score: 1

      That entirely depends on whether her sugar daddies supported or opposed him. If they opposed him she can just drag it out till the next democratic administration comes in of course.

    24. Re:just pay a fine by Required+Snark · · Score: 0

      Elizabeth Holmes is the Betsy Devos of Big Pharma, so she would be a perfect fit in the Trump Administration.

      --
      Why is Snark Required?
    25. Re:just pay a fine by Anonymous Coward · · Score: 0

      The DOJ will have to get involved and charge her criminally before she sees jail.

      So, what your saying is that it's only a matter of time before Elizabeth Holmes is named Secretary of State by Barack Obama.

      FTFY

      Uhhh, perhaps you hadn't noticed, but Barack Obama is no longer President of the United States. Yes, it's true. Now we have this Orange Guy as our President. He keeps saying he's going to "Make America Great Again" but I'm not seeing any evidence of that yet. Quite the opposite, in fact. Go ahead and look it up for yourself, if you are interested.

      Whhooosh!

      Elementary school was the best decade of your life, wasn't it? I bet you were so proud to be the only kid able to drive to your sixth-grade class!

    26. Re: just pay a fine by Anonymous Coward · · Score: 0

      The Theranos supergirl did photoshots with Chelsea Clinton. You know, the daughter of first woman Presudent of the US. That's how Theranos got funding in the first place.

    27. Re: just pay a fine by bill_mcgonigle · · Score: 1

      Theranos was a front to build a DNA database of everybody on the sly. You don't just randomly get Henry Kissinger to come out of retirement to be on your Board because you have some cool lab equipment - Intelligence fingerprints are all over this thing.

      It's like when they funded Oracle to start up (look it up if you're dubious), except that venture worked. I believe they really did think that with that kind of money they really could achieve a technical breakthrough and one that would have real benefits for clinicians, patients, and the deep state.

      The coverups were almost certainly supposed to be temporary. When the tech fell through, the whole situation went sideways.

      Elizabeth had a real chance to make it big, it was a decent risk, and we can see here that she had guarantees of protection.

      The only real surprise is that $750M wasn't enough to make the R&D breakthrough to make the project a success. I would have presumed that was enough if I were calling the shots too.

      --
      My God, it's Full of Source!
      OUTSIDE_IP=$(dig +short my.ip @outsideip.net)
    28. Re:just pay a fine by Anonymous Coward · · Score: 0

      Well Hillary Clinton was almost President and wants to run again.
      And, of course, you'll support her - so I'm not sure what your point is PopeCrapso

  4. The reality of feminism by Serge_Tomiko · · Score: -1, Troll

    If this was a man, he would be doing hard time. Sure, a lot of men get away with this stuff, but this was egregious in the extreme.

    1. Re:The reality of feminism by Train0987 · · Score: 1

      Not true. Pump-and-dump stock scams are a dime a dozen. There are probably 500 going on right now. The problem is the SEC does not have the manpower. They have maybe 300 lawyers on staff to monitor something like 25,000 publicly-traded stocks.

    2. Re:The reality of feminism by Comrade+Ogilvy · · Score: 3, Interesting

      In fact, it is very rare for executives to go to jail, no matter how egregious, no matter how much they knew.

      In this case, she is the "visionary" with no college degree and no world experience. Her lawyers can plausibly argue she was hands off and relied on experts for the important details.

      I am not suggesting she should not be punished -- I am for it. But her case is unusual in a number of respects. Worrying over specifics about gonads is premature.

    3. Re:The reality of feminism by Serge_Tomiko · · Score: 1

      $700MM is a huge number. Bernie Madoff was probably 10 to 20 times that.

    4. Re:The reality of feminism by Anonymous Coward · · Score: 0

      This is wrong, and dumb, and you are dumber for having said it

    5. Re:The reality of feminism by Anonymous Coward · · Score: 0

      What did she benefit from feminism, anyway? Some parroting of a narrative of "go-getter woman"? Subsequently falsified, or the stereotype recast to include fraud. Was this the thing that got her the big bux? Cos I'm sure the kind of public image she'd get with that narrative is lesser to those that're available with sheer dosh, along the lines of lazy journalism and/or friends in a small handful of (self-described) progressive media.

      Meh to that. To hear some of these MRA types say it, feminism was supposed to be an all-powerful, reality-bending exercise in coordinated horseshit. But it'll be a fun barb for when someone repeats the same narrative again: is she a fraudster, like wosserface back in the 2010s...

    6. Re:The reality of feminism by pnutjam · · Score: 1

      She's basically Jack Black's character from Envy, except not as successful.

      --
      Cheap storage VM.
    7. Re:The reality of feminism by Anonymous Coward · · Score: 0

      lul wut? 700MM is only about 25.5 inches. Not a huge number at all...

  5. Penalty is too small... by HockeyPuck · · Score: 2, Insightful

    She raised $700m from investors but is only penalized $500k? I wonder what her net-worth is now? Probably still paid her self a ton during her tenure....

    1. Re:Penalty is too small... by ClickOnThis · · Score: 5, Informative

      She raised $700m from investors but is only penalized $500k? I wonder what her net-worth is now? Probably still paid her self a ton during her tenure....

      It's in TFS, for crying out loud:

      Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors.

      --
      If it weren't for deadlines, nothing would be late.
    2. Re:Penalty is too small... by Jfetjunky · · Score: 5, Informative

      Wish I could mod you up..

      Forbes has downgraded her net worth from $4.5 billion to $0. This settlement basically ruins here. Probably prevents here from "failing upward" too, which is good.

    3. Re:Penalty is too small... by Jfetjunky · · Score: 1

      Also apparently I can't type "her"... FFS...

    4. Re:Penalty is too small... by Khashishi · · Score: 1

      Honestly, the investors bear some responsibility for buying into the venture. I know I'm blaming the victims of scams here, but caveat emptor.

    5. Re:Penalty is too small... by Anonymous Coward · · Score: 0

      That just says what she looses regarding stocks. It makes no mention regarding if she is sitting on a nest egg of cash or other investments and what happens to them if she is.

    6. Re:Penalty is too small... by Subm · · Score: 1

      > This settlement basically ruins her

      Is she in jail? If not, she doesn't sound ruined. Plenty of innocent, hard working people have less than zero net worths.

    7. Re:Penalty is too small... by AntronArgaiv · · Score: 1

      See, kids? See what happens when you drop out of college?

      Don't be like Elizabeth, who thought she was smarter than everyone else.
      Stay in school, get that degree. You might, just possibly, learn something along the way.
      (after all, that's kinda the point of the exercise)

    8. Re:Penalty is too small... by Anonymous Coward · · Score: 1

      How much bonus and salary did she take during her tenure? She probably took more than $500k. And her shares were worthless unless Theranos IPOd or was acquired.

    9. Re:Penalty is too small... by Anonymous Coward · · Score: 2, Informative

      She raised $700m from investors but is only penalized $500k? I wonder what her net-worth is now? Probably still paid her self a ton during her tenure....

      It's in TFS, for crying out loud:

      Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors.

      OK fuckwit, now how about you READ what the parent stated, which was asking about her salary was during her tenure, which has fuck all to do with any of her punishment other than a $500K fine, which is likely pocket change to her. The company was founded in 2004, and prior to this fraud discovery was valued at over 9 billion. Anything from a $10 to 100 million dollar annual salary for a CEO would not be outlandish, which would leave her with a significant amount of personal wealth that is NOT forfeit.

      In other words, when the dust settles, this "punishment" likely won't be one, and she'll buy her way out of jail.

    10. Re:Penalty is too small... by Anonymous Coward · · Score: 1

      Even though it's obvious to us that she was a scam you have to remember that even as her house of cards comes tumbling down around her she still has powerful voices protecting her who are all fully aware of her guilt. There has been no update to her wikipedia page, no mention of these events on the front page of CNN.
      When she was still LARPing as a businesswoman these same people made sure her scam was well advertised. She's on the cover of fortune and you're a feminist with a checkbook and it says that her for profit venture is going to produce all sorts of social good. So you cut her a check, no way she'd be on the cover of fortune talking about doing so much good for the world and positive this and that if she was just some blue blood silver spoon stanford dropout play acting the life she was raised to believe she was entitled to.

    11. Re:Penalty is too small... by Dog-Cow · · Score: 1

      You typed "her" just fine. It's just that your fingers kept going.

    12. Re:Penalty is too small... by Anonymous Coward · · Score: 0

      So she pays a bribe and gives back the money and can run the same scam in 10 years?

      Where are the handcuffs?

    13. Re:Penalty is too small... by Jfetjunky · · Score: 1

      Hahaha, right you are. Thanks for the laugh.

    14. Re:Penalty is too small... by Anonymous Coward · · Score: 0

      Mod Parent up.

    15. Re:Penalty is too small... by Anonymous Coward · · Score: 0

      Hey. Click on This. Please work on your reading comprehension "for crying out loud."

      While the regurgitation you bolded does indeed speak to the question asked, it is in no way an actual answer to the question.

      For example. Holmes could have borrowed against her shares and invested in other companies.
      For example Holmes probably diod pay herself while in charge so how much of that has she kept?

      The question was ndot answered at all in the blurb so settle the hell down and COMPREHEND.

  6. Jail? Noooooo by Anonymous Coward · · Score: 0

    That's for serious offenders, not massive fraud.

    captcha: angriest

  7. She should have done what Musk did by Anonymous Coward · · Score: -1

    Have a publicist create a cult of personality around her and then she could have defrauded her investors right in front of them and they would have been happy to do so.

    Whenever Musk issues shit bonds or something, all his stupid worshippers hand over their money. And then she could have given herself an obscene compensation package and they would have applauded her for doing so.

    And she could have had her company buy another failing company and her worshippers would have praised her on her business genius.

    1. Re: She should have done what Musk did by backslashdot · · Score: 1

      Yo, Muskâ(TM)s stuff works. Maybe delayed by double his estimate, but it works.

    2. Re:She should have done what Musk did by barc0001 · · Score: 4, Insightful

      Um, you missed the bit where all of Musk's stuff actually WORKS, like electric cars actually being out on the road and rockets that actually launch payloads and land again.

      The Theranos majik blood tricorder never worked. Hence the fraud.

      But we get it, you hate Elon Musk.

    3. Re:She should have done what Musk did by Anonymous Coward · · Score: -1

      Found the musk fan

    4. Re:She should have done what Musk did by Anonymous Coward · · Score: 0

      The capitalist pig investors should have at least tried to verify her claims.

      The investors gambled on her success and loss. Instead of taking responsibility for their loss, they've chosen to blame anyone but themselves.

      They were obviously looking for a quick return on their monetary investment.

      Blood testing isn't very valuable anyhow. Proper breeding and eugenics are the right way to improve genetics, not trying to fix broken people.

  8. The female Steve Jobs by Anonymous Coward · · Score: 0

    Beautiful, young, dressed in black (or white hospital smock), unsmiling, with a Stanford degree and a whole bunch of endorsements from SV types. Talks about the intersection between biology, technology and consumerism. A perfect setup.

    1. Re:The female Steve Jobs by Hussman32 · · Score: 1

      She doesn't have a Stanford degree, she finished one year.

      --
      "Who are you?" "No one of consequence." "I must know." "Get used to disappointment."
    2. Re:The female Steve Jobs by Cederic · · Score: 2

      Ah, she went full SV then; you don't get the credibility if you actually complete your degree.

  9. Shoplifting is bad by Anonymous Coward · · Score: 0

    Steal a loaf of bread and you in jail for up to a year on a misdemeanor charge and canâ(TM)t ever get a decent job thanks to background checks.

    But if you swindle $700 million, pay a small fine, write a book, work as an industry consultant, live large.

  10. At least she did not smoke a joint. by houghi · · Score: 1

    That would result in much more. I wonder what rich person she pissed of that they even went after her.

    --
    Don't fight for your country, if your country does not fight for you.
  11. bbbut the black turtleneck... by RightwingNutjob · · Score: 4, Funny

    and the performing a chemistry...

    I am shocked that someone who wears a black turtleneck and outputs not-quite-sensible technobabble could be guilty of defrauding people of money. It just can't happen, I tells ya!

    1. Re:bbbut the black turtleneck... by Opportunist · · Score: 1

      The world just ain't the same since we lost our Jobs...

      --
      We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
    2. Re:bbbut the black turtleneck... by meta-monkey · · Score: 1

      But anybody who said her claims seemed fishy and this was all a PR smokescreen was a misogynist who just can't handle the idea of strong independent wymynz CEOs.

      --
      We don't have a state-run media we have a media-run state.
    3. Re:bbbut the black turtleneck... by Anonymous Coward · · Score: 0

      Who said that? You? You've got one hell of a chip on your shoulder. I'd suggest sitting back and reflecting on all the things that have brought you to this point in life. Maybe you can figure out why women don't like you, but as a starting point, I'd stop using the term "wymynz".

    4. Re:bbbut the black turtleneck... by Anonymous Coward · · Score: 0

      faggot.

  12. Googly eyes by Anonymous Coward · · Score: 0

    They should charge her with having googly eyes too

  13. Bull shit... by Anonymous Coward · · Score: 0

    Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors. ...
    Worth noting: the court still has to approve the deals between Holmes and Theranos, and neither party has admitted any wrongdoing.

    I consider this a legal fiction.

    See, if I've done nothing wrong, I'm not giving you $750 million.

    The only way you sell your stock and give someone else the first three quarters of a billion fucking dollars is if you know you did it, everyone else knows you did it, but for bullshit legal reasons you're still getting to pretend you didn't do it.

    CEOs are crooks. CEOs of startups are full on con-artists, which these guys clearly were.

    This kind of shit really needs to be made into a felony so these assholes spend time in actual prison. Not rich white people's prison. The same prison everyone else goes to.

    If I steal a candy bar, I don't get to hand back the candy bar and not admit wrong doing. My dumb cracker ass goes to real, honest-to-goodness prison.

  14. Wikipedia article need updating! by Anonymous Coward · · Score: 0

    Why hasn't her wikipedia been updated? It still says she's a visionary and businesswoman who is simply having a small misunderstanding with government.

    Of course we all know why.

  15. Bernie Madoff by Anonymous Coward · · Score: 0

    . . .needs roommates.

  16. Today's CNN headlines: by Anonymous Coward · · Score: 1

    Small selection of other newsworthy events on CNN's homepage:

    TV reporter's viral eye roll causes trouble
    Stranded American mother of eight issues urgent plea to President Trump
    Top MLB star won't even make $1 million this year
    Uber exec: White men need to 'make noise' about diversity

    CRTL+F Holmes : 0 results?
    CRTL+F Theranos : 0 results?

    1. Re:Today's CNN headlines: by Anonymous Coward · · Score: 1

      +1

      Liberal medial at its finest.

    2. Re:Today's CNN headlines: by suman28 · · Score: 1

      Do the same thing on Fox News and you get the same result. What's your point?

    3. Re: Today's CNN headlines: by Anonymous Coward · · Score: 0

      The media as a whole is covering that up.

    4. Re:Today's CNN headlines: by Anonymous Coward · · Score: 0

      Maybe he doesn't watch Fox because it's garbage.
      Well, both are.

    5. Re:Today's CNN headlines: by Anonymous Coward · · Score: 0

      Me again, she's finally on CNN but she's just "startup founder" far from the limelight they gave her as a feminist icon.
      This isn't on Fox news because it's way too complicated for their audience, plus they try not to have too many stories about hot blondes because viewers get confused and think that the anchor is getting arrested.

      My point is let's make fun of the media until they make some effort to do their jobs like it's important. Sorry that I happen to sound like a right wing nut today but I'm not going to pretend our news outlets aren't shit.

  17. schadenfreude by supernova87a · · Score: 5, Insightful

    Again, I will just state that the reason we (maybe secretly) take so much satisfaction / schadenfreude at this story is that someone who was so hyped and the darling of Silicon Valley got so much funding and attention. While others who toil away on good ideas, without nearly so many connections and silver spoons, struggle to even get 1 minute of air time with the kind of funders and backers that she got.

    Separately, I hope that they absolutely nail and jail Sunny Balwani, who threatened and intimidated whistleblowing employees with their careers for exposing the massive fraud that Theranos was.

    Finally, we should be thankful that the SEC and agencies like DHHS and CMMS actually still have some teeth and reputability to follow through on issues like this and have not been totally gutted. Imagine 100 years ago when hucksters like this were touting every fake medicine under the sun and people were actually grateful for public-serving regulation. The order from CMMS to Theranos actually essentially said, "You are in immediate jeopardy of violating the law and must provide proof that you're reversing the harm caused by your inaccurate / fraudulent medical test results. Simply closing your lab will not remove this jeopardy." Thank god for rules.

    1. Re:schadenfreude by lgw · · Score: 2

      Imagine 100 years ago when hucksters like this were touting every fake medicine under the sun and people were actually grateful for public-serving regulation.

      You might be surprised. During prohibition, fake "medicines" that were mostly alcohol were the common thing hucksters were selling. Everyone knew the deal, but the snake oil hucksterism kept it legal (or legal enough the the buyers didn't get arrested). Yup, a whole culture of hucksters caused by over-regulation.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    2. Re:schadenfreude by Anonymous Coward · · Score: 0

      You're right. Fake medicine wasn't dealt with by the creation of the FDA and we should just deregulate everything. In your case regulations are probably the only thing keeping you from becoming a fabulously wealthy billionaire who lives forever as a brain in an armored robotic jar.

      PS I love your 2009 journal entry on the climate change fraud..I wish someone had considered that the earth's temperature is changing all the time and we don't know what will happen if it gets colder or warmer. Wow deep thoughts!! Good reading my man! I took your post down to my local university and used it to induce seizures in so many triggered libtard "PhDont's" (That's PhD get it?!)

    3. Re:schadenfreude by lgw · · Score: 1

      You're right. Fake medicine wasn't dealt with by the creation of the FDA and we should just deregulate everything

      Fallacy of the false dilemma. Our choices are not restricted to "unlimited regulation" and "no regulation". Obviously, both extremes are stupid choices.

      The FDA was created more than 100 years ago (1906). The prohibition-era snake oil hucksterism wasn't about that. It was a sneak around the prohibition regulations (1920-33), not around the FDA. Prohibition was the over-regulation that caused much harm, including snake-oil cures that were actually toxic, consumed by people just looking for moonshine.

      --
      Socialism: a lie told by totalitarians and believed by fools.
  18. fuck the sec by Anonymous Coward · · Score: 0

    The SEC is full of Democrat party shill people. Whole agency must be disbanded for true freedom to return to this country.

  19. Shkreli Did Less by NicknameUnavailable · · Score: 4, Interesting

    And got nearly a decade, all his assets taken, no chance of profit, etc - and he had already paid everyone back (plus he gave away the meds to anyone who couldn't afford them for the original "scandal" that made him famous.) Holmes and her entire family should be executed if held to a similar standard.

    1. Re:Shkreli Did Less by ausekilis · · Score: 4, Insightful

      Not only did he do less, he arguably had less of an impact. With him, people lost money. With Holmes - if people believed the test results - it *could* have been fatal. People use those tests to determine various levels of things and figure out medications and such.

      I don't recall hearing about any deaths from Theranos results, but if there were you'd bet your ass she'd be spending some years at Club Fed.

    2. Re:Shkreli Did Less by NicknameUnavailable · · Score: 2

      With him, people lost money.

      That's not even the case, he borrowed from one of his companies to pay off debt (with interest) to investors of another (then paid it back.) All of his investors actually made money (which they begrudgingly had to testify to while wanting him behind bars, being insurance company buddies,) but that's the most they could get him on.

      With Holmes - if people believed the test results - it *could* have been fatal.

      People did believe the test results, it's just really hard to pin health issues on bad diagnostics (about a dozen actually did file suit and failed due to health complications before it was known to be 100% bullshit.)

    3. Re:Shkreli Did Less by icejai · · Score: 2

      The big difference?

      Shkreli - Offered a cash award to anybody who could get a piece of Hillary Clinton's hair.
      Holmes - Holmes has access to deep political connections in Washington. Just look at Theranos' board members.

    4. Re:Shkreli Did Less by Anonymous Coward · · Score: 0

      I can forgive the Feds... if they put that Wu-Tang album up for free uncompressed download.

  20. Took long enough by smooth+wombat · · Score: 1

    Every time this fraudster was mentioned on here I kept asking why anyone believed her, why anyone kept giving her money and why she wasn't in jail.

    It was obvious from the beginning this was nothing but a scam. She never showed her results, never allowed anyone to replicate her results, and never submitted her blood test to the FDA for testing.

    If those aren't red flags, nothing is.

    --
    We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
    1. Re:Took long enough by Actually,+I+do+RTFA · · Score: 1

      In fairness, Uber was run just as opaquely and with as little regard for regulatory agencies. And I would have loved to have invested in Uber.

      --
      Your ad here. Ask me how!
    2. Re:Took long enough by Anonymous Coward · · Score: 0

      good thing your opinion matters so much I guess

    3. Re:Took long enough by smooth+wombat · · Score: 1

      Uber at least had something physical. They are a taxi service so they had employees and vehicles to show for the money.

      Theranos had nothing. They weren't even using their own product.

      Fraud from beginning to end.

      --
      We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
    4. Re:Took long enough by Actually,+I+do+RTFA · · Score: 1

      Oh, certainly you're right. But it's not clear that it was as easy to see Uber had something physical and Theranos wads using other people's equipment in 2008 (or whenever). It's easy to imagine a crackdown on Uber that made that company worthless and seems easy to imagine there could be some super machines that made Teranos real.

      I'm not defending Theranos. I'm saying it kinda makes sense that investors got conned.

      And yes, Theranos was more of scam that WorldCom or Enron.... hell, you can make the case it was more of a scam than Madoff!

      --
      Your ad here. Ask me how!
  21. Because... misogyny by Anonymous Coward · · Score: 0

    Those white men wanting to keep a woman down.

  22. Equality all the way. by Qbertino · · Score: 1

    Looks like some progress on the equality front - now we got large-type women frauds too. ... I'm not even joking.

    --
    We suffer more in our imagination than in reality. - Seneca
  23. ...neither party has admitted any wrongdoing. by Anonymous Coward · · Score: 0

    Sure. Of Course. It just business as usual i.e. doing wrong, i.e. bottom line, i.e. extreme self interest without any regard to anybody or anything but your own profit.
    Fucking splendid.

  24. They can't lose by Anonymous Coward · · Score: 0

    Liar is Jew talk for I'm too lazy to verify your claims

  25. The check writers did no such thing by rsilvergun · · Score: 1

    she's the God daughter or something of somebody wealthy. She's just a well connected moderately attractive little rich girl being allowed to waste friends & family's money. Ordinarily that by itself would just be annoying, but by all accounts her company ran phony blood tests that caused real harm. I'm with other's on this thread: Criminal Negligence FTW.

    --
    Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
  26. Wunderkind? by Anonymous Coward · · Score: 0

    The part that annoys me int he article was where it described her as a "Steve Jobs wannabe wunderkind". WTF with the wunderkind crap? Steven Hawkings, God rest his soul, was a wunderkind. These a-holes in Silicon valley are not. What was the last original idea that any of these so called tech titans in Silicon Valley came up with? Most are like Gates or Zuckerberg who the took someone else's idea and called it their own.