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US Files Criminal Charges Against Theranos's Elizabeth Holmes, Ramesh Balwani (wsj.com)

Posted by msmash on from the no-mercy dept.

John Carreyrou, reporting for WSJ: Federal prosecutors filed criminal charges against Theranos founder Elizabeth Holmes and the blood-testing company's former No. 2 executive, alleging that they defrauded investors out of hundreds of millions of dollars and also defrauded doctors and patients. The indictments of Ms. Holmes and Ramesh "Sunny" Balwani, Theranos's former president and chief operating officer who was also Ms. Holmes's boyfriend, are the culmination of a two-and-a-half-year investigation by the U.S. attorney's office in San Francisco, sparked by articles in The Wall Street Journal that raised questions about the company's technology and practices. Ms. Holmes, 34 years old, and Mr. Balwani, 53, were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud in an indictment handed up Thursday and unsealed Friday.

16 of 125 comments (clear)

  1. Re:"Boyfriend" by GrumpySteen · · Score: 3, Insightful

    Including the patients whose tests were sent to Theranos

  2. Actual Indictment by HockeyPuck · · Score: 4, Informative

    All the juicy details are in the indictment.

    1. Re:Actual Indictment by Raenex · · Score: 2

      They will have to pay, not engage in the industry or raising capital, and avoid prison time.

      Avoid prison time? Are you kidding me? Aside from the defrauding people out of billions, they recklessly endangered the lives and health of the people who relied on their tests. "Pharma Bro" got 7 years in prison, and he ended up making money for those that invested.

  3. Its About Time by careysub · · Score: 3, Insightful

    Many here (and elsewhere, in the Real World) noted the bizarre disconnect between the treatment of Martin Shkreli (who deserved what he got, and more) and Elizabeth Holmes who was running a far vaster scheme to defraud but mysteriously seemed to escape any real personal consequences. A lot of that had to do with they way she smartly spread money around, getting a lot of movers and shakers on the board so that they could have a cut of the pie, and intercede on her behalf.

    The news that she was getting funding for another scheme... err start-up... was flabbergasting. It is about time that her shenanigans caught up with her so that perhaps she will pay a real price, not just cough up (most of) her ill gotten gains.

    --
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    1. Re:Its About Time by quantaman · · Score: 4, Informative

      Many here (and elsewhere, in the Real World) noted the bizarre disconnect between the treatment of Martin Shkreli (who deserved what he got, and more) and Elizabeth Holmes who was running a far vaster scheme to defraud but mysteriously seemed to escape any real personal consequences.

      I'm not sure that's true. Investigations move slowly, Shkreli wasn't charged for hiking the price on the drug, he was charged for financial crimes several years earlier. Based on when the malfeasance was discovered I think the investigation into Holmes actually moved faster.

      As for the reputation, Holmes seems to have been an unusually successful con-artist. Shkreli actually seemed to delight in trolling the public.

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    2. Re:Its About Time by hey! · · Score: 4, Informative

      I'm not sure what the complaint here is. Holmes was indicted after a two year-long investigation of Theranos; it so happens the first hard information showing Theranos was fraudulent came out a little more than two years ago, so the investigation started pretty much as soon as it came to the attention of the prosecutor's office.

      Shkreli's company MSMB Capital Management was revealed to be Ponzi scheme in 2011, when it couldn't cover a naked short sale it fraudulently claimed it could, and it took four years to indict him for that, and it was at least two years before the US Atty even opened an investigation. During that time Shkreli started a second Ponzi scheme hoping to pay off the first, and that collapsed too.

      The only reason justice for Shkreli seemed swift was that he was in the public eye just before the indictment hammer fell for his dick-ish pharma moves, but that's not what they got him on. Holmes was indicted roughly twice as fast as Shkreli.

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  4. John Carreyrou by Jodka · · Score: 4, Informative

    "sparked by articles in The Wall Street Journal that raised questions about the company's technology and practices."

    Those articles were written by John Carreyrou who is interviewed about Theranos by Nick Gillespie in this video. The video also provides a lot of background information. I was already familiar with the story but still found the video fascinating.

    Additionally, Carreyrou has a new book out about Theranos, Bad Blood: Secrets and Lies in a Silicon Valley Startup. Have not read that, but it gets 5/5 stars with currently 257 customer reviews at Amazon.

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    1. Re:John Carreyrou by BigDukeSix · · Score: 5, Informative

      I've read the book. The details are so much worse than anything you have read in the news articles about Theranos.

      Theranos never developed *anything*. Their automated super-high-tech lab system was a commercially available 3-axis glue dispenser that they stuck pipettes onto. I tried to imagine what it must have been like as a new hire, getting fed the "change the world" crap and signing on with the company, and then seeing the cover opened on that kludge for the first time.

      But of course almost no one saw the working innards of the machine, because Balwani the too old boyfriend created a compartmentalized, CIA like structure where no one was allowed to talk to each other. The engineers building the system's microfluidics weren't allowed to talk to the biochemists who were working on the tests. How could that possibly work?

      And then anyone who questioned the plan or the message got fired. So many people got fired; whole teams got fired. People went on demos and saw them fail! Any mention of failure? Fired.

      IMO, the one person most responsible for this whole debacle who has not yet been held to account is Channing Robertson, who was a senior engineering faculty at Stanford and upon whose bona fides this whole thing started. He may not be legally responsible, but he's the adult in the room who first bought the hype, and he HAD TO have known that the whole damn thing was vaporware. "Fake it til you make it" is not okay in medicine.

  5. Holmes a criminal? Who knew! by quonset · · Score: 2

    Anyone who didn't see she was ripping people off, from the beginning, deserves what they got. From day one she never showed how her system was supposed to work, never submitted any evidence to the FDA to show it worked, and never allowed anyone to try and reproduce her work. If those aren't alarm bells, you're deaf.

    1. Re:Holmes a criminal? Who knew! by moehoward · · Score: 3, Interesting

      I do tend to agree.... to an extent.

      Yes, the stupid investors and idiots like Kissinger, Schultz, Boies, and Foege were complicit by lack of due diligence. For god's sake... Foege???? CDC director could not do basic science in his head to see this was a fraud???? Un-freak-ing believable. Boies??? Really? So, I don't see why these dudes are not indicted as well. They are not THAT stupid, but that seems to be exactly their stance. "I was too dumb to know it was a scam." Really....

      On the investor's part. Yeah. Due diligence is part of the process. For them to get even a dollar from me as an investor, they would have to take a drop of blood from me and run 25 tests right in front of me on their Mystery Machine(tm). Any investor who didn't do so deserves to provide me with every dime they own. Suckers.

      --
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  6. Move fast and break things by sphealey · · Score: 2

    1. Move fast
    2. Break things
    3. Ignore laws
    4. Beg for forgiveness not permission
    5. ???
    6. Go to prison

    Any words of wisdom for Uber HQ employees?

  7. Holmes kept her head down by rsilvergun · · Score: 2

    Shkreli riled up the poors. There was a real danger he was going to become a rallying cry that lead to government regulation of drug prices or, worse, single payer health care. And he just would not stop. He wasn't punished for doing anything illegal. He was punished for raising the cackles of the working class. I almost think he was doing it on purpose. Poe's law. I mean, somebody _had_ to have told him that if he'd just shut up they'd let him off easy.

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  8. Re:"Boyfriend" by iMadeGhostzilla · · Score: 2, Funny

    That I can comprehend, to her the patients were abstract, she probably never saw any. But as a woman, to give her youth and her looks to an unattractive, unremarkable looking man so she can get her scheme going... there is something profoundly sad about that.

  9. Re:Why did this take so long by sdinfoserv · · Score: 2

    Reagan raised taxes 11 times when it became clear that trickle down (aka voodoo) economics didn't work. The difference today the Oligarchy truly doesn't want anything to "trickle down", they want to keep every last drop for themselves...

  10. Re:Trump pardon in 3,2,1... by sdinfoserv · · Score: 2

    she doesn't have any money left. There's no value in pardoning her.

  11. Re:"Boyfriend" by iMadeGhostzilla · · Score: 2

    It works across the board. Socrates said, "It is a shame for a man to grow old without seeing the beauty and strength of which his body is capable.”

    This is a tech board but it doesn't mean we shouldn't discuss human nature, and that's impossible without speculation.