I can't recall last time a C-level company executive get into trouble for using deceptive tactics, every S&P500 company does this to some extent. When they get caught, in majority of cases it is a gentle slap on the wrist or given more of a timeout and reallocation of their position. Also unfortunately using public money and delivering a bad product is not a criminal offense, more like being sloppy at what you do. With big lawyers involved she might get sometime in a fancy hotel like prison or some restrictions on trading stock or fundraising.

> According to the indictment, the defendants also allegedly made numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects. For example, the defendants represented to investors that Theranos conducted its patients’ tests using Theranos-manufactured analyzers; when, in truth, Holmes and Balwani knew that Theranos purchased and used for patient testing third party, commercially-available analyzers. The defendants also represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015; when, in truth, the defendants knew Theranos would generate only negligible or modest revues in 2014 and 2015. https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-a...

If that's not fraud, what is?

Interestingly Holmes' father was a VP at Enron: https://www.forbes.com/sites/petercohan/2019/02/17/4-startli...

Maybe it's time for a new SOX moment.

The point I am trying to make is way things work in US, most likely C-levels and high level officials of companies get away with it. I am sure there are cases when folks got into trouble. Apple had Antennagate for one of the iphones and even with a class-action lawsuit people got like $15 reimbursement. For these huge companies in most of the time amount of fines are more like margin of error in accounting spreadsheet.

These are not remotely comparable.

One is a company that built a product with a design flaw effecting only one aspect of the product (cell radio) that was only triggered under certain circumstances (placing you fingers in certain positions). A civil lawsuit against the company caused the company to issue a fix (free bumper case which insulated the antenna) that retroactively fixed all products that shipped with the flaw.

The other is a medical device company that sold a product that didn’t work, giving incorrect results that directly informed how people treated or even detected health problems. People inside the company knew this and lied anyway, repeatedly, and then those people induced and conspired with others to hide their fraud. Those specific people are now facing criminal charges.

Antennagate and a big fraudulent startup in the medical (!) industry are quite different scale things.

> Also unfortunately using public money and delivering a bad product is not a criminal offense, more like being sloppy at what you do.

They lied to FDA auditors in what sounds like a criminal conspiracy to defraud investors, business partners, and the patients whose blood tests were processed there.

Here's a fun one: a telecom CEO (named Elizabeth, too) was forging customer signatures - signatures of people she had known and worked with in many cases - to show to investors.

And she took money from friends and employees, and told them they were getting shares in the company. In reality she used the money to pay off her lifestyle expenses.

To be fair, she probably intended to make good on the investments once the company was wildly successful.

The amazing thing is, the company had hired a new CEO and is actually still operating. Last I heard.

https://www.bloomberg.com/news/features/2019-10-08/quintilli...

She didn't just "using public money and delivering a bad product". She lied to investors and regulators. That is called fraud and it is definitely a criminal offense. Her defense rests on proving she did not do it knowingly or with the intention to defraud. Nevertheless, yes she could get away with it. And yes, this being the United States race and class is involved but more so class in this case.

I think you could have just stopped at rich. Money helps anyone going through the US Justice system, regardless of color.

The data backs it up [1]. Sentencing disparities based on race in the United States are undeniable.

[1]: https://www.aclu.org/sites/default/files/assets/141027_iachr...

There's always someone that has to make sure no one is being unfair to white people

So based on your provided data, white people are incarcerated more than latino and “other”.

R Kelly did some horrific things and it took 20 years to stop him. Money helps regardless of color. https://www.bbc.com/news/entertainment-arts-40635526

>That rich white people

Balwani isn't white. He seems just as culpable as Elizabeth.

Why do you think it's apparent that this case in particular will reaffirm that rich white people "are pretty immune from harsh punishment in the criminal justice system"? I mean I don't argue that the wealthy often escape justice, but why would you think the Theranos case is evidence of that? It's literally at trial right now, which is a very, very bad scenario for Holmes. The vast majority of cases (including ones with a guilty plea) don't go to trial.

Hold your outrage, the show's not over yet.

I kinda disagree. Sure, she was not honest to investors. But who cares? these investors are billionaires trying to make a quick buck. The faulty equipment in actual pharmacies is problematic, but I can actually see how prototypes out in the wild is a good thing.

Not being honest to investors is one thing. Knowingly peddling faulty lab results to consumers making important medical decisions based on the results and unaware that they were pawns in this game is quite different.

This is what makes the Theranos case qualitatively different from (say) WeWork, and why she's facing criminal charges. You buy office space from WeWork, you get exactly what you pay for, even if there were insane shenanigans going on in investorland. You buy a lab test from Theranos, you're getting essentially fake results and risking your health on it.

What I'm struggling with is how this is criminal.

Like, there are rapid COVID tests out there. They're marketed as accurate. Yet everyone knows they're not foolproof. If I got a positive rapid test, the first thing I'd do is go get a PCR test.

With these Theranos lab tests, it's honestly (to me) a similar thing. If I'm a startup trying to make a cheap HIV test, and I know it's not perfect, it's wrong sometimes, does that make me a criminal for wanting to get real-world users to use my product? Isn't it more of a regulatory oversight if people are making medical decisions based on new and imperfect tech?

Depends strongly on how your represent the accuracy of your test to those using it. If you are up front about the level of accuracy it should be fine.

But my limited understanding of this case is that the Edison machine was so inaccurate as to be near useless. So if customers had been informed about how bad it was, they would not have chosen to use it.

>Sure, she was not honest to investors.

... or the businesses that purchased the machines, and every average person who got tested with those machines and put their faith in the results, all because she was dishonest.

This is the healthcare industry we're speaking of - it's not just investors at stake here, it's everyone's health that she put at stake for the sake of getting herself rich.

Edit: Regarding prototypes in the wild; given that this is healthcare, I don't mind prototypes being used as long as the unknown accuracy of the devices is clearly communicated before they are used, and everyone getting a test understands that they're part of a clinical trial. This was absolutely not the case.

I agree that the prototypes in the wild was done improperly. If it's a prototype used for data gathering with a big "these are prototypes!" waiver, then that's one thing. I'm not sure how they were positioned in the stores they were placed in, if they were marketed as a 100% accuracy miracle box or an up-and-coming technology that still has to have kinks worked out. In either case I'm struggling that this is jail time criminal; I think at best it's a civil issue.

We'll have to agree to disagree here. To me, with the level of fraud she engaged in in every area of her company, and the fact that that fraud impacted the healthcare decisions of individuals who used that test, that is a criminal issue.

She was fucking around with the actual health of people for her own financial gain.

Well there are stories of people who made actual medical decisions from the faulty machines she produced.

I'm guessing everyone who made medical decisions based on her faulty machines cares a great deal.

How can you have so little empathy for the everyday people caught up in this

The faulty equipment in actual pharmacies is problematic, but I can actually see how prototypes out in the wild is a good thing.