In all sincerity: does Theranos have anything left?

This isn't 23andMe where a viable product got caught up in legal fights over reporting. As I understood it, the fraudulent component here was "everything at all worthwhile about the product". Are they just a shell at this point, trying to use the team and leftover money as a basis for a new project? Do they have some existing offering which isn't totally valueless? What's happening here?

The only thing that comes to mind is the sunk costs fallacy. Although it's hard to imagine Theranos ever becoming a success (and certainly, I won't be rooting for it), it might be harder for those who poured millions into the company to let go. That's my guess anyway.

Why stop operating when you can continue until bankruptcy and beyond? Serious question...if there's no reputation left to lose and everyone is still getting paid, what incentive do they have to stop?

If you're an investor, do you want to get some pennies back on the dollar, or do you want to get 0 pennies back on the dollar? If they liquidate they can take that cash and pay out something, at least to some class of investors.

I would imagine writing the whole thing off as a loss is better from a tax perspective.

I don't think it'd ever be better because you're always writing off the loss, the difference is the size of the loss. It's better to, e.g., get 10K back out of 100K investment and claim a 90K loss, versus getting back 0K with a 100K loss claimed. You're only getting back your taxes from that 10K difference in losses, versus getting the 10K back. The delta would always be there.

Please excuse my ignorance, but I don't understand this.

Scenario 1: I have $100 in gains this year. I owe $30 in taxes. I am left with $70. (Say $100 is 30% bracket)

Scenario 2: I have $100 in gains this year. I write off a $10 loss. (Say $90 is 25% bracket). I owe $22.5 in taxes. I am left with $67.5.

Is it the case that writing off the loss is better, if you can be bumped so far down the brackets that (gains - loss)(1-lower_tax_rate) > (gains) (1 - higher_tax_rate)?

No, it's continuous with no edge effects like this because only income within a bracket is taxed at that bracket.

I thought your comment was true 6 months ago and said something similar. I don't think anyone can answer your question until we see the HN post with the title: "Theranos closes" and we read about the postmortem if one will exist.

> In all sincerity: does Theranos have anything left?

As I understand it, Holmes controls an outright majority of the voting rights, so the question is does Holmes have anything left to gain from Theranos operating.

>Do they have some existing offering which isn't totally valueless

There's a lot of patents, via Holmes. Someone in the last Theranos thread also pointed out that whatever hardware does exist may have licensing value for other developers. The owners may be planning to part it out.

They're a zombie, but having a large cash reserve in one spot is capital, and capital keeps a business running, hunting for brains. Maybe they should reinvent themselves as a hedge fund.

No one would put money into a hedge fund run by holmes. Would you trust her with your money?

She stinks of fraud already. If she told me the fund was doing great, I would get suspicious that she was turning into the next bernie madoff.

You would think so, but:

https://en.wikipedia.org/wiki/John_Meriwether

"A year after LTCM's collapse, in 1999, Meriwether founded JWM Partners LLC. (...) Meriwether opened his third hedge fund venture, named JM Advisors Management, also based in Greenwich, Connecticut, in 2010."

Meriwether blows up and is not a fraud. But then there's this guy:

https://www.wsj.com/articles/jon-corzine-considers-launching...

Though in all fairness I don't know whether he pulled that one off.

I don't think equating LTCM with fraud is exactly right. They used an incredibly risky strategy and had their leverage blow up in a black swan event. A failure, but not fraud.

No you're right, it's fundamentally wrong to compare Meriwether with Corzine. But my kneejerk response was to the "entrust your money".

A black swan event caused by the phenomena that previously uncorrelated financial indicators temporarily become correlated under stress.

A few months after they blew up, their portfolio was profitable again.

"Though in all fairness I don't know whether he pulled that one off."

He didn't. In fact, that was his 2nd attempt at raising a fund.. he tried in 2012 right after mf. And he's currently working on his third attempt to raise a fund. http://www.zerohedge.com/news/2017-05-18/corzine-tries-launc...

If anything, that's a pretty good example of my point.. no one wants to give their money to a fraud.

My question is why isn't Elizabeth Holmes in prison? She is a disgrace.

And I was a huge fan of hers (I thought she would be a good role model for my daughter) before her crimes came to light.

In case you were in a coma 2008-2009, the US justice system likes to settle with corporations, but almost never actually tries to convict white collar criminals. Here is a whole book subtitled "Why the justice department fails to prosecute executives."

https://www.amazon.com/dp/B06XBZFQR2/ref=dp-kindle-redirect?...

It is very well reviewed.

Well, the book didn't get out of the first sentence for me.

> each a realm unto itself, run by a US Attorney who is almost untouchable by headquarters in faraway DC.

In fact, each US Attorney can be fired at will by the President. At will and not for cause. The Fed Chair can be fired but only for cause.

This leads to US Attorneys living in a very political world. They are politically appointed (Chris Christie), Senatorially confirmed (Jeff Sessions USAG) and politically removed (George W Bush). So defendants who are politically connected are not going to get prosecuted and that's that.

When was GWB a US Attorney? Or are you referring to this[0]?

[0]https://en.wikipedia.org/wiki/Dismissal_of_U.S._attorneys_co...

I've got a friend that puts much stock in the interviews that CEOs give on the financial TV networks. He keeps insisting that the CEOs on these shows rarely lie, because they would otherwise go to jail or otherwise get sued by their investors.

I'm not so sure...

Which crimes?

I suspect that the lawsuit thought process from Walgreen's was, "We can get a huge judgement that will put you into bankruptcy where we fight everyone else for the scraps, or we settle for something more modest and leave you with just enough money to shut down."

Indeed, why isn't the entire board, and upper management in jail?

Have you looked at their board? It's basically the ultra-elite. How would you even go after James Mattis? It's kind of sad but a brilliant illustration of how much money can protect you. Theranos the company will fail but Theranos the people will be fine, except for the whistleblower that is.

All we have to do is elect people who don't care about that crap.

We have. And the sewer/swamp is being drained as we speak. It's a slow process, but it's happening regardless of how you feel emotionally.

Mattis resigned from the board in 2016.

He joined in 2013.. this story broke in oct 2015 in the wsj. And he resigned in December (along with other boards he was on) to join the trump admin.

So there's an open question about when he knew about this fraud. But clearly he didn't have a problem staying on even after it became public knowledge.

And there's also this:

In 2012, for instance, Holmes began talking to the Department of Defense about using Theranos’s technology on the battlefield in Afghanistan. But specialists at the D.O.D. soon uncovered that the technology wasn’t entirely accurate, and that it had not been vetted by the Food and Drug Administration. When the department notified the F.D.A. that something was amiss, according to The Washington Post, Holmes contacted Marine general James Mattis, who had initiated the pilot program. He immediately e-mailed his colleagues about moving the project forward. Mattis was later added to the company board when he retired from the service. (Mattis says he never tried to interfere with the F.D.A. but rather was “interested in rapidly having the company’s technologies tested legally and ethically.”)

https://www.vanityfair.com/news/2016/09/elizabeth-holmes-the...

So he was told by the DOD that it didn't work after he initiated a pilot program for Theranos.. and continued to push it internally.

Didn't they lie to the board about how/whether the tests worked? Doesn't get upper management off the hook, but I don't actually know how responsible boards are when they're being mislead.

Why would the board be in jail? They are the ones who invested and may be losing money. Who did they defraud?

Prison isn't a random card you can play to threaten people who you don't like, unless you want to go back to the USSR.

The Board of Directors is charged with overseeing the conduct of the business.

Whilst I've only held board memberships in Australia I expect it's a concept that translates somewhat to other countries.

Board members can be held personally responsible for the misconduct of a company (criminally as well as civilly).

because the board is stacked with billionaires, former senators and secretaries of state.

too big to jail

>> On April 21, 2017, the Wall Street Journal reported that an investor had alleged that Theranos Inc. had misled company directors about its practices concerning laboratory testing. According to a lawsuit filed by the investor, Theranos had used a shell company to secretly buy lab equipment to run fake demonstrations with.

The company lied to its own board of directors and investors. I don't think they are the ones who need to be jailed.

  >> *billionaires, former senators and secretaries of state*

Those people are all gone from the board now.

dig deep.. see also the board and Ian Gibbons suicide..

The whole thing smacks of an outright fraud to skim funds from obamacare and elsewhere via pharmacy blood testing fees..

"outright fraud to skim funds from obamacare"

You just described the business model of about 1/8th of all companies operating in the US healthcare business...

Maybe if they have patents which become extremely relevant.