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

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

#391

Earlier quoted context omitted.

My interpretation is that most startups don't deal with life-or-death lines of work, whereas Theranos does. There's no room for "creative" business practices there. The government will take note at some point and come chasing.

Yes, if you want to lie about some drone-based burrito delivery service you're probably not gonna draw the same ire as life-saving medical equipment. Although if you swindle investors for over $700 million in either case I imagine the SEC will be knocking at your door eventually.

> drone-based burrito delivery service

Well, I'm sold!

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

#392

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…

>Declare anyone against you as against women in business. ie Sophia Amoruso, who ran her company into bankruptcy and immediately jumped into running a media company and having a Netflix show about women in business

Your timeline is off. The show was ordered several months before the company went bankrupt.

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

#393
post #309

Earlier quoted context omitted.

> it's a short and murky step ... to outright fraud. Staying vigilant against the normalization of deviance[1] is difficult even in ideal situations. Choosing to normalize deviance as a business strategy is practically guaranteed to rapidly accelerate deviations from acceptable behavior. In any system - including every business - resilience and safety means fixing small problems before they grow into bigger, more dam…

You've hit the nail on the head with "normalization of deviance". First you shade the truth slightly. You're uncomfortable at first, but the line seems to work, so you try it again. You use it another 10 times and you start to believe it. And then you shade the truth a little more. After the hundredth pitch, you're a fabulist, and you barely noticed.

Well, TBF, if you are doing something genuinely new, it can be hard to figure out what's real and what's not. It can be hard to figure out what are meaningful metrics and what aren't.

I was sympathetic to the Theranos side of things until I learned they actually submitted fraudulent test data. That was the point where it became clear to me they were not confused as to where to draw some line. They were being willfully deceptive. Deception like that doesn't grow out of confusion. It grows out of clarity that you are selling BS.

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

#394

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…

I liked the bit where they tried to use the "women in tech are oppressed" narrative to cover her ass:

> Tim Draper, the founding partner of Draper Associates and Draper Fisher Jurvetson, appeared on television on Tuesday—not for the first time—to defend Holmes and Theranos. In an interview on Closing Bell, the world’s most loyal V.C. said Holmes has been “totally attacked,” and that she is “a great example of maybe why the women are so frustrated.”

Same narrative that was invoked in defense of Ellen Pao in her game of thrones with billionaires.

There are people who are fighting for a noble cause, and then there are parasites that use it for their selfish gain.

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

#395
post #299

Earlier quoted context omitted.

On showing remorse: it's a bit ridiculous to think of this, since showing remorse does not mean you actually feel remorse. But it might mean you are intelligent enough to realise you need to show remorse to get off the hook.

Martin Shkreli was extremely intelligent, and the court recognized that. He continued to not show remorse (I think it's arguable that he did a bit more than simply not show remorse), why shouldn't the court believe that he truly is not remorseful?

He was not remorseful. He probably should have acted like he was remorseful if he wanted to get off the hook. He was also disrespectful of the court, I guess.

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

#396

Earlier quoted context omitted.

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

I'd say it worked fantastically. For the sake of timing lets compare Shkreli and Holmes. She committed a much larger fraud and lost people huge amounts of money. She is spending exactly zero days in prison. She is getting a $500,000 fine - which Theranos is probably paying for - and a slap in the wrist[1]. Meanwhile Shkreli - who's "victims" lost zero money - is going to spend 7 years in jail and has lost at least $1…

> She committed a much larger fraud and lost people huge amounts of money. She is spending exactly zero days in prison. She is getting a $500,000 fine - which Theranos is probably paying for - and a slap in the wrist[1].

1. Holmes is not out of the hot water yet. DOJ could still press charges and seek jail time.

2. What makes you think Theranos is paying her fine?

3. Holmes also loses 18.9 million (probably worthless) shares.

> Meanwhile Shkreli - who's "victims" lost zero money - is going to spend 7 years in jail and has lost at least $10 million because the government decided to take it over.

1. "no one was hurt" is never a valid legal defense. Not if you break into a company's networks. Not if you break into someone's house. Not if you sell drugs. And not if you commit fraud. In the case of fraud laws, the reason for this is actually obvious and rational: deterrence. No one ever thinks they're going to lose it all. If we only punished fraud that didn't work out in the end, the law would not have its intended deterrent effect.

However, "no one was hurt" can act as a mitigating factor in sentencing! However...

2. Character and remorse also matter in sentencing. As does settling. Who knows how much lighter Shkreli's sentence could've been if he settled. Or at least managed to just go home and shut up during sentencing.

Some of these observations might be troubling (e.g., being punished for exercising your right to a trial; going to jail for an extra year because you're an asshole in public) but they aren't gender issues.

> I would love to see people complaining about gender gaps addressing the huge gender gap in our justice system, because cases like this are a slap in the face.

This is a real problem [1]. But if you want to push the dial on this, maybe find someone other than Shkreli as your victim figure? (Also, the best way of closing this gap is probably less time for men, not more time for women.)

[1] https://www.law.umich.edu/newsandinfo/features/Pages/starr_g...

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

#397

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…

I liked the bit where they tried to use the "women in tech are oppressed" narrative to cover her ass: > Tim Draper, the founding partner of Draper Associates and Draper Fisher Jurvetson, appeared on television on Tuesday—not for the first time—to defend Holmes and Theranos. In an interview on Closing Bell, the world’s most loyal V.C. said Holmes has been “totally attacked,” and that she is “a great example of maybe w…

It's not too surprising. As soon as any kind of principle, good or bad, starts to have some kind of power when it's invoked, bad actors will swarm around it to use it for their own ends.

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

#398

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…

I liked the bit where they tried to use the "women in tech are oppressed" narrative to cover her ass: > Tim Draper, the founding partner of Draper Associates and Draper Fisher Jurvetson, appeared on television on Tuesday—not for the first time—to defend Holmes and Theranos. In an interview on Closing Bell, the world’s most loyal V.C. said Holmes has been “totally attacked,” and that she is “a great example of maybe w…

I can think of a political example, too.

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

#399

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…

Wait... How did he have his life destroyed? It just says that he hasn't talked to his grandfather in awhile...

He went on to start a biotech company (that seems to be doing alright) and was a Forbes 30 under 30 in 2017...

I don't see how his life was destroyed...

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

#400

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…

Well, according to Forbes, Holmes is worth _nothing_[0], so $500,000 is probably fairly painful. Plus, relinquishing ~19 million shares regardless of their value has to hurt. Also she no longer has the majority of votes in her own company. And as a CEO who can't be an officer of a public company for 10 years, yeah that probably really hurts too. Not to mention her name is effectively toxic pretty much forever now. So she's not going to jail, but those penalties certainly look painful to me.

[0] https://www.forbes.com/sites/matthewherper/2016/06/01/from-4...

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