She's going to get hit with a 200 million dollar judgement. But she doesn't have 200 million dollars. I assume, at that point, she can declare bankruptcy.
I guess if they won the criminal case they would have a much better chance of arguing to the bankruptcy court that it wasn't intentional fraud.
Either way she is broke and even if she has 50 lawyers in the civil case, she might still lose. So she's playing it smart.
I understand it would be probably unconstitutional to delay criminal proceedings until after the civil proceedings. But can't the judge in the civil proceedings do something to prevent all the money from being spent on her criminal defense?
It seems morally wrong that someone can commit fraud and then spend the money obtained via that fraud defending themselves against the state before having to settle up with the people who they defrauded.
This technically hasn't been proven yet, that's what the criminal trial is for. If you take away that assumption, then what would be your argument?
People are allowed to allocate their money however they want. You can say that she's committing another fraud, but that would be yet another case. Maybe there's an injunction that can be filed but I doubt there's enough precedent for it.
The argument is that the civil and criminal proceedings are considering largely similar statements of fact. The burden of proof is lower in the civil case, of course, but the facts under consideration are the same. Or course, slightly different exact statements are being considered but with a substantively similar underlying truth claim: theranos was a fraud. The real point is, it's hard to believe she would ever win the criminal proceedings and lose the civil proceedings.
To me, it would make sense for the courts to insist that the civil proceeding is resolved first when the criminal proceeding is considering largely the same statements of fact but with a higher burden of proof. Why? Because the people the criminal code is supposed to be protecting are largely the same people who are suing, and those folks would probably prefer getting some money back.
The problem is that this would probably violate the sixth amendment (as is mentioned in my initial post). So, again, constitutionally, I understand why. This just seems like a bug rather than a feature.
So, this isn't about "innocent until proven guilty". This is about "speedy trial". I think one possibility, moving forward, is the following workflow:
1. Federal prosecutors communicate intent to prosecute, and provide a list of victims purportedly effected
2. Any effected victims may file civil suits
2a. Judges/congress/state legislative bodies exempt commitments to defense funds for future possible criminal cases from bankruptcy
3. civil cases resolved
4. criminal charges filed and proceedings begin
We test the limits of every amendment that applies to non-corporate-executives, so why not the sixth in fraud proceedings against C suites as well?
What is a "future possible criminal case"? Why would there be another criminal case? And if there was, what does this court have to do with it?
You're still presuming she's guilty because there's no grounds for interfering with an innocent person's finances that may affect their ability to defend themselves in court or acting on a case based on the assumed outcome of a different one.
You have provided a very complex solution that would have to be applied to all cases to address a very rare scenario.
Prior to being convicted, she is innocent. Hard to use that as a justification to kneecap her ability to defend herself because you already believe she will eventually be found guilty.
I assume I got in a flamewar with the wrong person some years back or something.
Don't really care about internet points on VC-sponsored forums, but it'd be nice to get an answer to this question from someone who knows something about law, though, so thanks :)
But, it's best to be certain! To ensure my downvotes are truly deserved: my bet is on the temporarily embarrassed millionaires taking offense to the last sentence of my prior post ;-) (i.e., /s :) )
11 USC §1328 and 11 USC §523(a) lists several categories of debt that can't be discharged. (I'm not sure when only the subset listed under §1328 applies).
Criminal fines are definitely not erased by bankruptcy. Civil judgements owed to any government agency (including fines) are also definitely not erased. As is anything connected to willful injury (NB: I don't know the scope of 'injury' here, it may be limited to direct physical or other medical injury, or it could mean destruction of property and the like). And anything obtained by fraud isn't erased. Also things like alimony can't be discharged.
Would Holmes's debts incurred by the Theranos suits be dischargeable... I don't know.
Not legal advice: if you’re going bankrupt with flush 401ks, IRAs, and a luxury residence, Florida is not a bad state to do it in.
> Just this month, a federal judge in New York discharged more than $220,000 in student loans for a borrower. In her ruling, Chief Bankruptcy Judge Cecelia Morris criticized the fact that even many lawyers "believe it impossible to discharge student loans." She added, "This Court will not participate in perpetuating these myths."
Ruling: https://assets.documentcloud.org/documents/6660178/Rosenberg...
> One factor in considering whether the U.S. Trustee can prevail in a challenge to the debtor's Chapter 7 filing is whether the debtor can otherwise afford to repay some or all of his debts out of disposable income in the five year time frame provided by Chapter 13. If so, then the U.S. Trustee may succeed in preventing the debtor from receiving a discharge under Chapter 7, effectively forcing the debtor into Chapter 13. https://en.wikipedia.org/wiki/Chapter_7,_Title_11,_United_St...
You really don't want to give a Federal officer the power to decide you have too much disposable income for the next five years.
It depends.
In the Holmes case, the plaintiff, if they win, will probably argue that at least part of the settlement should be nondischargeable because Holmes committed fraud.
> Why wouldn't everyone file and wipe out their civil case debt then?
Because either:
1) the courts explicitly disallow it in the particular case; or,
2) the combination of non-exempt assets and continued access to credit is more valuable than the settlement amount (in this case, you would end up paying the entire amount during bankruptcy proceedings in any case anyways, and then have a black mark on your credit for no good reason).
Because bankruptcy involves losing your unsecured assets and adverse credit. The same reason not everyone declares assets to erase their dischargeable debts that aren't civil judgements.
As for physically attractive: lots of make up isn't, to me. She seems tall. I don't fancy blondes. Ie. also matter of taste.
And also, as mentioned below, she is obviously not super trustworthy!
Premarital assets of one spouse are not subject to the premarital debts of the other spouse. Period. For actions like this arising before the marriage but concluding after the marriage, the debt is premarital.
The same is true of one spouse's separate assets, such as an inheritance.
Marital debts can be subject to marital assets, regardless of whether you have a prenup or not, but even most community property states generally treat legal settlements as debt of the incurring spouse rather than as marital debt. And even the ones that don't will usually allocate that debt to the incurring spouse in the event of a divorce.
My point is that this is a very untrustworthy person who is currently being sued and will likely be sued again, marrying a person who is super wealthy. This is clearly a situation where an ironclad prenup is warranted.
As to the specific legal/financial implications: if she continues to lie about things in her civil or criminal trials, she could end up incurring further liabilities — during the marriage — that could put marital property at risk. Or she could defraud other people, again putting marital property at risk. It would be a good idea to cordon off as much as possible to keep it from being attachable by her current/future creditors.
But honestly, I have no idea why anyone would take issue with my original comment: The dude needed a prenup, he probably paid a lot, and it was probably worth it. Why pick nits?
And I say this as a (former) lawyer, who appreciates nuance and getting things right.