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

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

#401

Post by AcerbicZero » Wed, Mar 14, 2018, 10:27 PM UTC

joering2 wrote: post #332

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…

Pharma Bro was just sentenced to 7 years in jail for misrepresenting facts to investors, despite said investors did not lose any money but actually made some [1] Here Holmes not only doctored power point presentations to baloon numbers to investors, but put thousands of lives in danger (if some were lost, we will eventually find out) by providing wrong results for tests to many patients that lives relied on it, and s…

Yeah, he was kind of a douche, but it's pretty obvious he only got slammed with that kind of time because he didn't play the game right.

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

#402

Post by 2YwaZHXV » Wed, Mar 14, 2018, 10:29 PM UTC

mbesto wrote: post #125

Aside from everything else rightfully pointed out in this thread - the other interesting bit is that it's likely that their investment in commercial real estate will net a pretty massive return. I can't think of many places in the Bay that are better for a large office that can hold 100's of employees. For reference, the HQ they built in PA: https://www.google.com/maps/place/1701+Page+Mill+Rd,+Palo+Al...

They didn't actually build it. Stanford owned the land and building (and built most of it) while Theranos paid for internal improvements. Stanford also recently sold the property (maybe a year or so ago) and 1701 is available for lease now.

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

#403

Post by fwdpropaganda » Wed, Mar 14, 2018, 10:33 PM UTC

nradov wrote: post #174

fwdpropaganda wrote: post #137

Earlier quoted context omitted.

That's extremely interesting, thanks for sharing. Think about the decision that he had to make in 2016. He had to choose between admiting his mistake and doubling down. The downside of admitting his mistake is that he's guaranteed to get negative points; the upside is that it will minimise futures downsides. By dubling down, he's guaranteed to reduce his negative points in 2016 but exposes himself to magnified upside…

Those kind of decisions are made on a purely emotional, reactive basis without going through the rational game theory analysis you laid out. Most wealthy investors are no more rational than the rest of us.

What do you mean, "than the rest of us". That's how I think, so I have no reason to believe that other people can't do the same.

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

#404

Post by danso » Wed, Mar 14, 2018, 10:37 PM UTC

pinewurst wrote: post #342

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…

I had a similar thought when this story appeared this morning. https://www.wsj.com/articles/theranos-whistleblower-shook-th...

As snapshotted by archive.is http://archive.is/wO4B0

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

#405

Post by kristianov » Wed, Mar 14, 2018, 10:39 PM UTC

eggpy wrote: post #400

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…

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…

Her family is rich and connected. I don't see the punishment is too harsh without her going to jail.

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

#406

Post by perl4ever » Wed, Mar 14, 2018, 10:40 PM UTC

eggpy wrote: post #400

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…

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.

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

#407

Post by blakeross » Wed, Mar 14, 2018, 10:42 PM UTC

Kliment wrote: post #170

Unfortunately pricks.com, by Blake Ross, is no longer online. However, the CDN that hosted it is still up so here is the direct link - it's a script for a comedy show based on theranos, and painfully close to reality https://web.archive.org/web/20160604083644/http://static1.sq...

Hah good memory! I guess I'll resurrect it for the trial :)

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

#408

Post by danso » Wed, Mar 14, 2018, 10:46 PM UTC

ravitation wrote: post #399

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…

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...

It's probably more accurate to say that, at the time he became a whistleblower, he had reasonable idea to believe that it could wreck his life. From the WSJ article:

http://archive.is/wO4B0#selection-955.0-958.0

> He says he was told by his parents that Ms. Holmes called the elder Mr. Shultz in the summer of 2015 to complain that their son was being unreasonable. Tyler Shultz says he also got a tip that private investigators were watching him.

> In a conversation in his parents’ kitchen, they pleaded with him to agree to whatever Theranos wanted, he says. Even though his heart sank when they discussed selling their house to cover the costs of defending him against a potential Theranos lawsuit, Mr. Shultz didn’t make a deal with the company.

> His parents said in a statement: “Tyler has acted exactly like the man we raised him to be, and we are extraordinarily proud of him.”

"His parents said in a statement" -- I remember when reading this story when it was originally published (2016) thinking how odd it was that his parents didn't agree to be interviewed in person. Or at least were worried about speaking out of turn at that point in time.

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

#409

Post by mathattack » Wed, Mar 14, 2018, 10:50 PM UTC

spaceflunky wrote: post #325

mathattack wrote: post #212

Earlier quoted context omitted.

This will wipe her out, and likely kill her career. Remember, this is just the SEC. The pain they inflict is commensurate to investor pain. The government still should go after them for endangering people’s lives. There should be long jail terms for that.

>This will wipe her out Will it though? Surely Holmes still has a few million stashed away somewhere that she can live comfortably off of? This settlement isn't going to leave her destitute. Either that or I'm sure she set up some clever offshore accounting structure that has $10M stashed in the cook islands or some shit. As soon as you get some cash, I think "rich person 101" is you set up some complicated structure…

I should be more precise... This wipes out her Theranos stock. Who knows what she paid herself. Her VC was a family friend, so I suspect she has family money, and may stand to inherit Palo Alto real estate.

The big difference is for all the time invested, her current stock is worth zero.

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

#410

Post by perl4ever » Wed, Mar 14, 2018, 10:51 PM UTC

throwawayjava wrote: post #396

tenpies wrote: post #360

Earlier quoted context omitted.

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…

Saying it's "obvious and rational" that we want to deter people from committing fraud is not a good defense of those involved with Theranos. I say this, not as someone who will ever invest in private companies, but as someone who occasionally gets blood tests.

I think it's extremely misguided to regard fairness to criminals or defending them as victims as the goal here - the important thing is, as you seem to sort of agree, to deter bad actors and encourage good ones.