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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

#461

Post by pg_bot »

yters wrote: post #358

Why is there such a culture of fake it till you make it in SV? If the tech is good, no need for faking. If the tech is bad, figure it out, don't fake it. Otherwise, if it doesn't work and it is faked, things will get really bad and at worst lives could be lost. It seems like there is a lot of stupid money around and a lot of scam artists trying to suck the supply dry.

It may be the case that Theranos could not "figure it out" as it may be impossible to do what they claim they could. In that case there is no reason for Theranos to exist as the real fix would be to do what existing labs already do (draw more blood) and they would not have any competitive advantage in their field.

The correct move is to always be honest with results and to pursue one of two strategies. Spend the rest of the money they have attempting to perfect a machine that is likely to never work, or return the rest of your investors money and close up shop.

The healthcare market does not tolerate fuck ups. If you are working in this space you have to be tough and competent. Things need to work as advertised or you will be sued out of existence.

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

#463

Post by shkkmo »

throwawayjava wrote: post #444
georgeecollins wrote: post #420

Earlier quoted context omitted.

Let me show why I believe what I said. I'm no expert, and I would like it if you could clarify my understanding of why you think seizure of assets is not likely. https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...

Yes, I know exactly what you were referring to. I think this sentence is accurate: If you are suspected of drug dealing, any asset that you can't prove you received through other legal means is likely to be subject to seizure. I think this sentence is accurate: any asset that you can't prove you received through other legal means MAY be subject to seizure. I think this one isn't accurate, though: any asset that you c…

> Maybe I'm just surrounded by extremely lucky people

I'm going to hazard that location, socio-economic status and skin color each could have more to do with it than luck.

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

#464

Post by mikeyouse »

rb808 wrote: post #452
mikeyouse wrote: post #375

Earlier quoted context omitted.

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 mon…

> 1. Shkreli lost 100% of his original investors' money. Source? I hadn't heard that. http://fortune.com/2017/08/05/why-martin-shkreli-is-guilty-w...

From the SEC's original complaint:

https://www.sec.gov/litigation/complaints/2015/comp-pr2015-2...

> 44. On March 2, 2011 , Shkreli stated in e-mails to MSMB investors that "MSMB returned +4.24% in February 2011 " and had "returned +41.71 % since inception on 11/1/2009." In fact, by the end of February 2011, MSMB had virtually no assets. MSMB had suffered over $7 million in losses in its account at Executing Broker as the result of its trading in Company A on February 1, 2011. Even setting aside the losses at Executing Broker, the net asset value of MSMB's prime brokerage account and the cash balance in its bank account amounted to only about $58,500.

> 45. Shkreli continued to send "performance estimates" until September 2012, when he informed the limited partners that through June 2012, MSMB had "returned +79.49% net of fees since inception on 11 /1/2009." At the end of June 2012, however, MSMB had no assets in its prime brokerage account or its bank account.

He lost 100% of his investors' money and was creating fake financial statements to lie to them about his massive losses.

Eventually, he used other people's money and huge gambles to recoup these losses. He also entered into fraudulent 'consulting agreements' with disgruntled investors from his hedge fund to make them whole using a different company's assets, essentially stealing from that company's shareholders.

All of this is incredibly illegal.

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

#465

Post by warmcat »

ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

Also, "fake it until you make it" might work for photo sharing apps and such but it should never be the case when human health is involved. Holmes and people around her were no other than quacks who promised the world to whoever they met.

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

#466

Post by ransom1538 »

ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

"For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your strategy both fraudulent "

Sigh. The SEC is concerned with lying about actual numbers. Not about future projections. What a terrible comment on a startup forum. "Fake it until you make it" it as about having confidence -- not about lying to investors. Please downvote this parent comment.

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

#467

Post by Clubber »

perl4ever wrote: post #406
eggpy wrote: post #400

Earlier quoted context omitted.

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…

It seems like a much larger fraud than Shkreli's, who got 7 years. Also, as someone pointed out, they didn't just deceive investors, they deceived the people who were getting blood tests and that seems much worse. So one might suspect there's some sort of privilege going on. Or maybe the story just isn't complete yet.

Politicians needed the prosecutors to make an example of Shkrelli because they needed to distract people from the fact that cornering a drug market and hiking the prices is still perfectly legal and practiced by much larger companies.

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

#468

Post by iliketosleep »

samfisher83 wrote: post #290
lxm wrote: post #74

Earlier quoted context omitted.

I interpreted it somewhat differently. The money paragraph seems to be > claimed that Theranos’ products were deployed by the U.S. Department of Defense on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100 million in revenue in 2014. In truth, Theranos’ technology was never deployed by the U.S. Department of Defense and generated a little more than $100,000 i…

How do you not go to jail for this? This isn't fake it until you make it. This is massive fraud. 100 mil vs 100,000 is off by a factor of 1000.

I agree, especially when you use the recent Shkreli case as a point of comparison. You have Shkreli who has been put away for 7 years for a hypothetical 10mil, yet Holmes commits "massive fraud", possibly losing 100's of millions of investors' money, and most likely gets away with a 600,000 fine and no jail time.

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

#469

Post by rb808 »

mikeyouse wrote: post #464
rb808 wrote: post #452

Earlier quoted context omitted.

> 1. Shkreli lost 100% of his original investors' money. Source? I hadn't heard that. http://fortune.com/2017/08/05/why-martin-shkreli-is-guilty-w...

From the SEC's original complaint: https://www.sec.gov/litigation/complaints/2015/comp-pr2015-2... > 44. On March 2, 2011 , Shkreli stated in e-mails to MSMB investors that "MSMB returned +4.24% in February 2011 " and had "returned +41.71 % since inception on 11/1/2009." In fact, by the end of February 2011, MSMB had virtually no assets. MSMB had suffered over $7 million in losses in its account at Executing Broker a…

Agreed its illegal and could have gone to zero. His investors could easily have lost all their money, but they didn't. Theranos investors did.

I guess its like Bernie Madoff's investors got most of their money back, but Citigroup investors lost 90%.

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

#470

Post by [deleted] »

brandmeyer wrote: post #448
ascendantlogic wrote: post #283

Earlier quoted context omitted.

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 Not joking, I have heard this pitch.

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