Elizabeth Holmes found guilty of fraud

Elizabeth Holmes, the founder and former CEO of Theranos, a blood testing start-up once valued at $9 billion, has been convicted of fraud. Jurors found her guilty of conspiracy to commit wire fraud against investors and 3 counts of substantive wire fraud. Holmes faces a maximum sentence of up to 20 years in prison. Source: United States Department of Justice.

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February 4, 2022 10:06 am

The Elizabeth Holmes trial has been a fascinating case. Various podcasts were produced on the back of this trial, examining the strategies of the prosecutors and defence. Why has it caught the attention of the public and media to such an extent. To answer that question, I have to look at myself. Why have I been caught up in the Theranos story? Was it because of a brilliant, young, once-in-a-lifetime entrepreneur who had all the potential in the world? Or was it because of the ruthless way she ran her company and flagrantly lied to the public? The reasons will undoubtedly be various. However what captured my attention the most was how she was able to get so many high profile figures on board.

To have this ability to charm and translate a vision, even though the vision was built on unscientific foundations and lies, was remarkable. Former Secretary of State George Shultz was a key figure in the US Government’s negotiations with the USSR during the Cuban Missile Crisis. But in the hands of Elizabeth Holmes, he was malleable putty who could be convinced at will.

The controversy is far from over. Elizabeth Holmes has been found guilty on 4 counts. The discussion now turns to sentencing. The maximum sentence is 20 years. Few think that she will serve the full 20. Some think she will get away with no prison time and can serve her sentence under some restricted freedoms, such as not being able to start another company. Others believe she will be put away for around 5 years not only for punishment of fraud but also to serve as a lesson to Silicon Valley. Be careful when you invest your millions. Do your research. And don’t be led by hype.

Irvin Blake
June 8, 2022 9:54 am

So Elizabeth Holmes has been found guilty of committing wire fraud and intent to commit wire fraud. Her sentence date is 26 September 2022. With bated breath the world will see if she gets sent to prison or walks away without time behind bars. Throughout all of this, there is a lingering question hovering in my mind. Elizabeth Holmes has been found guilty. What about the staff who worked at Theranos?

Theranos staff who contributed to gross malpractice and deception have been allowed to walk away without accountability. There is no way the cover up of Theranos’ non-existent technology was confined to Elizabeth, Sunny and a few others. More staff had to know of the technology’s inadequacy to do the job. In fact, they did. Tyler Shultz and Erika Cheung, despite being low-level staff, knew something wasn’t right. So why have so many staff been allowed to get away with it? They change their LinkedIn profiles to say they worked at a Biotech firm in their career history, while they contributed to the deception, harm and distress inaccurate test results caused patients.

Customer service reps were advised to tell customers that their results weren’t available. This was because the upper management of Theranos knew their results weren’t accurate. But don’t the customer service reps have any integrity? Just because they were told to lie to customers doesn’t mean they should have. Why are they exonerated from responsibility just because they were told to do something. Is that an acceptable excuse?

Now in NO WAY am I comparing Theranos staff to Nazis, but the concept is what I want to discuss. Why did the Nazis commit crimes against humanity? Is it really an acceptable excuse to say they were just following orders? Of course not. Regardless of orders one is given, one also knows the difference between right and wrong. You cannot excuse yourself of moral culpability just because a superior told you to do something.

Again I want to use the Nazi analogy to explain why Theranos staff’s lack of accountability doesn’t sit right with me. In post World War 2 Germany, to run a functioning government, there needed to be officials, bureaucrats and civil servants with government experience. Those that had government experience in post-war Germany had been working for the Nazi government. The result was a cadre of government officials who were Nazis or supported Nazism. They had contributed to crimes against humanity yet they weren’t held accountable and continued work government jobs post World War 2. Many post-war German security intelligence officials had actually been part of the SS! The hypocrisy of this is mind-blowing!

Now let’s apply this concept to Theranos (again NOT comparing Theranos employees to Nazis). There is a cadre of post-Theranos staff who were complicit in its deception but have walked away without any accountability. They work for other biotech / pharma companies and have continued to climb the corporate ladder despite having contributed to Theranos’ fraud. I don’t know what the solution is. Elizabeth Holmes as the ring leader surely must shoulder the brunt of the blame. However the Theranos empire at its peak of $9 billion wasn’t held up by one #GirlBoss poster child alone. Hundreds of staff were actively involved in its fraud and they walk away without even a slap on the wrist.

Jenna T
February 10, 2022 5:04 pm

In following this case, it was very interesting to understand the “why” behind the prosecution and defense strategies. Facts are facts at the end of the day, but the jurors are human beings capable of being influenced by emotions such as sympathy and anger. The prosecution presented witnesses and bundles of evidence that made Elizabeth Holmes out to be this deceptive, cunning, ruthless CEO that didn’t care about anything other than her own success.

On the contrary, the defense used an unexpected strategy to make the jury feel sorry for Holmes. They tried to portray her as a young woman with a dream to change the world. Another bombshell announcement was her accusation against her former partner and former Chief Operating Officer of Theranos, Sunny Balwani. Holmes claimed she had been a victim of Balwani’s physical and psychological abuse, which he has denied.

The strategy to gain sympathy from the jury by claiming Holmes was in an abusive relationship was very cunning. Without a doubt there would have been individual jurors who felt sympathy for Holmes, especially given her uncanny talent to convince others. However the prosecution was on the ball. They provided evidence in the form of text messages and emails between Holmes and Balwani that showed Holmes was very much headstrong and in charge. In some text message exchanges, Balwani even tried to restrain Holmes from what appeared to be her own naivety, explaining to her how important it was to get the technology right and not to feel like the company had succeeded just because she was rubbing shoulders with Bill Clinton and other Joe Biden.

The prosecution also attacked the ‘abusive relationship’ strategy by marking a line in the sand. An abusive relationship, if it was true, was regrettable. However the prosecution reminded jurors that the charge against Holmes was one of fraud. Some analysts have called this a brilliant move by the prosecution because it negated any sympathy the jury might have felt for Holmes. You can be in an abusive relationship and sympathy can exist for such a state, but it doesn’t exonerate you from lying to investors and patients about the capabilities of your health technology.

Parag Khanna
July 31, 2022 9:46 am

A big issue I have with the Theranos trial circus is the Hollywoodization that has accompanied it. Hollywood licks its lips when Silicon Valley scandals to the tune of billions breaks. Podcasts, films, talk show appearances, series… They’re all for the taking. I don’t have a problem with this per se. Analysis and storytelling has been around forever. My problem is how the Hollywoodization of these events create sympathy for criminals.

If we look at Downfall, one of the best World War 2 films in my humble opinion, a major criticism of the film was the humanisation of Hitler. We all recognize him as the monster who instigated a devastating World War and genocide. Yet the film portrayed him in a ‘human’ light – vulnerable, tolerant toward his secretary (at the beginning of the movie), emotional. Could viewers of the film have left theatres feeling sympathy for him? If so, that is an inexcusable consequence of Hollywood-izing a very dangerous and evil character.

Pain and Gain is a film starring Mark Wahlberg and Dwayne Johnson. It is based on a true story in which a personal trainer and his accomplices kidnap a rich businessman with the hope of extorting money. The film has hints of comedy and you immediately identify with the A-list actors. Here’s the problem. A very real attempted murder took place. But this is trivialised and the viewer develops sympathy for the gang.

When the movie was released in 2013, the Los Angeles Times interviewed Marc Schiller, the kidnap victim. He explained that it would be a difficult watch for him as the few trailers he had seen didn’t accurately portray reality. He also didn’t like how the movie trivialized a very serious incident: “It’s supposed to be comical, but I fail to see anything funny in being tortured for a month. They tried to kill me. Being blown up in a car and run over is not fun.”

So what impact does The Inventor or The Dropout have on viewers? It is quite possible the Hollywoodization of the Theranos saga leaves people feeling sorry for Elizabeth Holmes. She wasn’t this ruthless monster who lied to investors and didn’t care about the concerns of patients. Instead she was a brilliant, precocious, female entrepreneur who was manipulated and wanted her technology to work so bad that she was willing to do whatever it took. This latter portrayal is quite worrying given the abundance of evidence that Holmes steered the ship and ran Theranos like a brutal dictatorship. The Hollywoodization of the Theranos saga has created many jobs, generated tons of revenue and entertained millions. But at what cost?

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