Ugh Finally. More than just the financial fraud, these folks engaged in behavior that actively endangered the public. I hope this isn't the end of the government actions against them. Her public behavior was exceptionally bizarre and almost none of what's been revealed comes as any real surprise. For timeline purposes: Dec 24, 2017 - They get $100m lifeline investment https://www.wsj.com/articles/blood-testing-firm-t…
First, Kuddos to John Carreyrou from the WSJ for great investigative journalism.
I’m too tired of all these “fake it till you make it” lines of thought, and it is not only a YC issue, it is pervasive across the valley.
Cloning flappy birds, "uber" for pet grooming, etc I don't care. But when things get serious and your life and money is at stake, there is no room for BS "disruptors" with 20 hours of training on subjects such as insurance, medical care, banking, or your lifetime investments.
The list of "pseudo disruptors" is pretty long:
Remember Zenefits' Parker Conrad fraud: https://www.nytimes.com/2016/02/18/technology/zenefits-scand...
or that 3D printer for makeup:
https://techcrunch.com/2014/05/05/mink-is-a-3d-printer-for-m...
There are a lot of very comments here, at least that is reassuring. Folks get it.
If you are convicted for drug trafficking or plead guilty to it, any asset that you can't prove you received through other legal means is likely to be subject to seizure.
Isn't that also true without your if-clause?
The "is likely to be" part is not true in general.
Changing that "likely to be" into a "may be" would make the statement true(r) without the if-clause.
Also if the if-clause stated "suspected of" rather than "convicted of", then the "is likely to be" part
would be true in general.
Holmes isn't in trouble for hyping -- she's in trouble for lying in financial documents. Unless the uBeam pitch deck claims that they have earned $100M in revenue when they haven't or that they have accolades from Public companies when they don't, they're fine to say that they are going to change the world with wireless charging.
No, there isn't often a thin line. Most founders are not out there committing massive fraud. They may be doing a lot of marketing, and are probably promising things that still have to be built, but they're not out there lying that they have millions in revenue from contracts that don't exist, or falsifying demos.
Right. "We had $50 million in bookings this year" - Misleading because it seems like that should mean $50 million in revenue but all of the bookings were for 10 year contracts so it is really only $5 million in revenue, but it is not fraudulent because it isn't factually untrue. "We will be able to raise prices enough to be profitable" - Often optimistic to the point of delusion, but without a time machine it is not…
Every founder is optimistic to the point of delusion. It's a requisite.
Investors know how to deal with that. What they don't know how to do is deciding if "those complicated papers that use words you never even heard before say we can do X" is a lie or not.
I'll be very curious to see how and if her charges compare to Martin Shkreli who got the book thrown at him (7 years and $7.4m). Shkreli was a scapegoat mostly because of his public/social media persona, cockiness, and arrogance. Meanwhile the crooks that caused the financial meltdown have not been charged with anything. Bene vixit, qui bene latuit— "He lives well who conceals himself well."
I don't think he was a scapegoat per se, he did actually do illegal things. But I imagine that things would have gone a lot better for him if he had not jacked up the price of Daraprim to the extent he did. It seems that drew attention to his previous activities.
no, I am not. Attorneys at the SEC made this determination based on everything they had on Holmes. Calling their decision biased against poor people vs rich people, etc, political rather than legal, etc. without any evidence is bullshit.
> based on everything they had on Holmes ... and a decision on when it is worth it to pursue a case. Unless the chance at conviction is zero, there is some politically determined risk threshold involved. Not only is the decision on the threshold political, but the risk itself is determined by the resources at the defendant's disposal. I am not saying that their decision is necessarily biased against poor people, but…
Nah, the SEC rarely actually prosecutes someone (or more correctly works with DOJ to indict them and try them.) It is just how the SEC typically does business. They, (and other regulators, CTFC, SROs) take these little actions all the time in the financial industry. I think when see a case where they really try and nail someone then you look for the politics.
Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Du…
Settlement is probably best for investors because they immediately get control of the company and Holmes basically gets nothing. The job of the SEC is to protect investors so they are probably doing the right thing here.
True, and besides having lost money, their investors also continue to lose credibility, considering the poor if not complete lack of due diligence on their part, as long as this fiasco is in the spotlights.
I'll be very curious to see how and if her charges compare to Martin Shkreli who got the book thrown at him (7 years and $7.4m). Shkreli was a scapegoat mostly because of his public/social media persona, cockiness, and arrogance. Meanwhile the crooks that caused the financial meltdown have not been charged with anything. Bene vixit, qui bene latuit— "He lives well who conceals himself well."
Shkreli had an ongoing fraud and sec violations before Turing Pharma. Though it looks suspicious, his prosecution is coincidental with the Turing stuff and revolves around the truly atrocious management of his hedge fund.
Shkreli deserves what he got, but not because of his public bravado or raising the price of a drug, but because he actively embezzled money and created a Ponzi scheme.