Theranos, CEO Holmes, and Former President Balwani Charged with Fraud • Hacker News Board

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#371

Post by mv4 » Wed, Mar 14, 2018, 9:27 PM UTC

icantdrive55 wrote: post #301

nathanaldensr wrote: post #2

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…

Not in my opinion. I remember those interviews, with the black turtle necks. She was playing the part of genius, but looked full of it, especially with all the secrets. She is basically being fined $500,000. This is pocket change. I imagine so much money is hidden. This hidden money just might be the next fraud charge? "Bared from hiring as an officer, or director for 10 years." She will get hired on somewhere under…

I remember seeing one of her public appearances for the first time (when they were flying high and before there was any doubt), and she seemed incredibly fake to me.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#372

Post by kevin_thibedeau » Wed, Mar 14, 2018, 9:27 PM UTC

It still baffles me how this ever got started. How does a 19 year old sophomore dropout have sufficient expertise in microfluidics plus clinical testing to garner hundreds of millions in investment with pure vapor? Nevermind the learning curve of running the business and developing a real saleable product.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#373

Post by threatofrain » Wed, Mar 14, 2018, 9:29 PM UTC

danso wrote: post #304

daxorid wrote: post #191

Earlier quoted context omitted.

Correct. Further, even if I did believe that, I wouldn't wish it in practice: Criminality and psychopathy are tightly correlated, particularly with fraudsters. Psychopaths are excellent at faking remorse and other emotions that they do not actually feel. I would not want the punishment of a criminal dependent on their acting skills .

The judicial system makes calculations to mitigate punishment based on belief of whether someone will present a danger to society. This includes the sentencing decided by the court, and subsequent reviews by parole boards. You think it better to eliminate such leniencies and move toward mandatory sentencing and 3-strikes type of policies?

Your last sentence is certainly a stretch, that the removal of remorse as a consideration means the removal of recidivism prediction, and the rigid use of policies represented by 3-strikes.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#374

Post by sgt101 » Wed, Mar 14, 2018, 9:31 PM UTC

siruncledrew wrote: post #204

abalone wrote: post #158

Earlier quoted context omitted.

"Fake it til you make it" generally refers to acting like you believe in yourself even if you're filled with self-doubt. Not actual fraud.

Yea, I think people blow up the saying out of context from self-confidence to business. If I say, "We're confident we can develop the machine learning technology to deploy X, even though we are currently using human checking" that's a lot different than saying "We can currently do all these things with this machine learning technology we developed" despite the technology not existing yet. It's essentially someone sta…

Yup agree; the gap between "we're confident we can" and actually doing it is.... v.a.s.t....

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#375

Post by mikeyouse » Wed, Mar 14, 2018, 9:32 PM UTC

onecooldev24 wrote: post #331

mikeyouse wrote: post #242

Earlier quoted context omitted.

If you rob a bank and then go to a casino and bet it all on 'Black', you're not absolved of that original crime if Black hits and you pay back the bank. Shkreli lied to his investors (he claimed he had $55M under management when it never surpassed $6M), produced false financial statements, told prospective investors that his original investors had doubled their money (when they actually lost everything), raided the f…

What about the fact that Holmes actually lost money for investors and got no jail time. While martin lost no money but got 7 years of jail time. Where is the fairness? I am surprised by the stupidity I view on this forum, which is suppose to be frequented by people working in top tech.

Maybe cool it on the insults if your facts aren't right.

> What about the fact that Holmes actually lost money for investors and got no jail time. While martin lost no money but got 7 years of jail time.

A few things about this point.

1. Shkreli lost 100% of his original investors' money. He then lied to them all and told them that he doubled it. He then created fake financial statements that he used to raise new money, lying to new investors as well. He also embezzled his hedge fund's money to buy himself Picassos and Wu-Tang albums. After all of that, he undertook a very risky bet that paid off, at which time he paid back his original investors, again lying about what happened.

2. Holmes didn't "get no jail time" since the SEC can't arrest or convict people. They're a civil institution that can only apply civil remedies, like fines and management bans. The Department of Justice is also investigating Theranos and Holmes, it remains to be seen if they will issue criminal indictments. In any case, Holmes is cooperating and had agreed to settle.

3. Shkreli had the chance to settle, plead guilty, admit wrong-doing and avoid jail time. Instead he chose to have a jury trial, where 12 of his peers found him guilty of serious financial crimes that would result in 7 years in prison.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#376

Post by lotsofpulp » Wed, Mar 14, 2018, 9:32 PM UTC

jedberg wrote: post #354

Ice_cream_suit wrote: post #344

From the Financial Times: Here's the nuance of her formula: Commit fraud as an attractive, well-connected WASP woman who happened to be neighbors with well-connected VC Draper family. Tell a great story: Stanford drop-out who studied Chinese, afraid of needles, wants to help the world. Leverage Silicon Valley connections to pull in other really big fish, such as Kissinger, et al, who would be really, really embarrass…

> Works like a charm I dunno, I'd say it kinda failed here.

As far as I've read, it only failed because of a whistleblower. Overall, she was able to waste quite a few resources, as well as steal taxpayer money, without any real consequences (so far). I would bet she's probably better off having done what she did than if she had followed the rules.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#377

Post by lghh » Wed, Mar 14, 2018, 9:32 PM UTC

vl wrote: post #200

Waterluvian wrote: post #25

Is Holmes still rich after this? I can't tell just how much of her wealth she's being forced to return in form of shares.

>Is Holmes still rich after this? But why it matters at all? Penalty should be proportional to the deed, not to the person's finances.

> But why it matters at all? Penalty should be proportional to the deed, not to the person's finances.

I would argue the opposite, why do you think this is the case?

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#378

Post by dnautics » Wed, Mar 14, 2018, 9:35 PM UTC

ericd wrote: post #326

Noughmad wrote: post #286

Earlier quoted context omitted.

SV/tech/USA is so great, anyone can make it big. You just have to be smart and work hard. Oh, and be family friends with billionaires. Yeah, that's all.

That's one way to get funding, but it's certainly not the only way, there are lots of counterexamples. As one obvious counterexample, one of the founding principles of YC is providing an open application process to provide people who don't have any personal connections access to the SV network. Larry and Sergey weren't well connected when they started, either, afaik, as most PhD students aren't. If you're doing somet…

I think incorrect (or even correct, but rare) narratives are dangerous. Especially when they're the feel-good type that people tell to make themselves feel better about the way the world works. (meritocracy, egalitarianism, etc)

Anecdata, but: I left academic hard science because I realized it was too difficult to get ahead; moved to the bay since I can code and it was a way to create a runway and find myself, and pitch companies. Got a contract coding gig, because a professor on the board of my roommate's company was impressed that I had independently implemented his prototype as a personal side project. Applied to 10+ startups for "real programming jobs", including through triplebyte, rejected by all, finally got hired by a roommate's friend (on reputation only) whose company needed asses in seats for an investor meeting.

Meanwhile, I'd been pitching 3 biotech ideas and one tech idea (I had written verilog for a hardware prototype of a deep learning chip) and got no bites on any of my pitches.

Finally, a friend offered me a VP product position (because he needed someone he could trust) which I was about to jump ship for, and then my current CEO counter-offered by agreeing to put his personal money as a lead in one of the biotech startups I'd pitched (that was somewhat meritocratic because he has seen how I operate as a coder in the company and was impressed, and I think he figures, probably correctly that if I'm that good a coder then my biotech skills are even better because that's what I'm formally trained in)

Since getting here, I haven't once advanced through pure merit, and have always advanced through connections.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#379

Post by rajacombinator » Wed, Mar 14, 2018, 9:36 PM UTC

Balgair wrote: post #280

His name is Tyler Shultz. He is the main reason we know know what Theranos was doing. He had his life destroyed, he knew it would happen, what Theranos would do to him, and he did the right thing all the same. Tyler Shultz is a hero. Never let someone tell you that you don't matter. Try hard to do what is right. We need more people like him, be one of them too. Be like Tyler Shultz. https://www.vanityfair.com/news/20…

Kudos to Tyler. (Maybe...) However, we'll never know what Theranos was really doing because people are too dumb to read beyond the headlines, and no one can gain from telling the truth.

Shame too, because the real story is much more interesting, as always. The company's board was a who's who of old power of the milind-complex/illuminati ascended from on low. People such as Riley Bechtel, William Perry, James Mattis, Sam Nunn, Bill Frist, David Boies. They even took George Shultz and Henry Kissinger out of cryostasis for this one. None of these people had any medical or biotech background.

I suspect Theranos was an elaborate money laundering plot for illicit war profits from the start. (Perhaps from whatever region of the world the mysterious 'Sunny' Balwani hails from?) Holmes made a great cover story slash scapegoat to distract attention from the real players.

And I'm sorry but the Tyler Shultz story doesn't pass the smell test either. Grandson of uber old power family who joins the company in some sort of new hire capacity for 8 months brings multi billion dollar company to its knees and causes embarrassing blowup for half of Washington, DC? Would you do this and disgrace your famous grandfather?

Maybe getting caught was part of their plan. Depending on the investor structure it sure would be a convenient way to vaporize one side of the books with no questions asked.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#380

Post by kmc059000 » Wed, Mar 14, 2018, 9:37 PM UTC

shaki-dora wrote: post #363

Ice_cream_suit wrote: post #344

From the Financial Times: Here's the nuance of her formula: Commit fraud as an attractive, well-connected WASP woman who happened to be neighbors with well-connected VC Draper family. Tell a great story: Stanford drop-out who studied Chinese, afraid of needles, wants to help the world. Leverage Silicon Valley connections to pull in other really big fish, such as Kissinger, et al, who would be really, really embarrass…

Be a man: “what a scammer” Be a woman: “this woman used her gender to scam”

Relevant XKCD https://xkcd.com/385/