"She faces a max of 65 years (3x20 + 1x5). And it's not at all clear she'll do less than 20."
Apparently the sentences will not necessarily be served concurrently.
> It is unusual for tech executives to face criminal changes when their startups collapse under the weight of unrealized promises.
That's because it's not illegal to over promise about your future results. It is illegal to lie about simple facts regarding the present state of your business to attract funding.
I'm so sick of so many press outlets framing this as just "fake it til you make it" gone wrong, "a page from the Silicon Valley playbook", or that it's just an over hyped company take to extremes.
No, Theranos was outright, egregious fraud, and most startups that "collapse under the weight of unrealized promises" are not committing fraud.
Most startups don't get the traction and publicity that Theranos got, however. I wouldn't be surprised if a lot of founders would go to similar lengths given the chance; they just happen to have someone apply some reality check on them before things get out of hand.
She was going to great lenghts, saying her machine was already ready to production, and able to do acurate blood tests, when she knew it was impossible, and was using regular blood tests to fake results.
Theranos was unique in both the scale of the fraud and how non-investors were potentially harmed. Most of these are just founders who knowingly or unknowingly get in over their head and then basically walk away after having lied about the state of things.
I’ve heard a bunch of stories from VC friends, but the one I was the most involved with directly was probably 10 years ago. My mom mentioned to me that she had been chatting with some senior local government official who mentioned they had a startup datacenter provider taking over a nearby abandoned office complex and converting it to a green datacenter, bringing hundreds of jobs to the area - had I heard of them?
I had not, and after some digging determined that the company had claimed to have a bunch of unique technology, and leveraged that to get preferential terms from the local government - free rent, no property or payroll taxes, and other cash- and non-cash concessions. They had also raised millions from private investors by saying they had active datacenters with customers and they needed money to expand.
Except none of it was true. They had no customers, no datacenters, no employees other than the three founders and one of their daughters. They had made commitments in three different locations over the past three years to build a datacenter while simultaneously raising money by saying they ALREADY had active datacenters and customers.
I shared this with my mom, who shared it with local government, who hand waved it away as nonsense. But nothing ever happened at any of these sites, and after they ran through the money they filed for bankruptcy with revenue of $0 and assets of ~$12k. Their biggest investor took control of their land lease from the local government. Some investors complained online about being lied to, and the local government quietly swept it under the rug. I spoke with a local business reporter who basically shrugged and said, “yup, you’re right, but no one wants to talk about it”.
That would be refreshing! I might pitch to them.
I saw tons of teardowns of their machine saying how over-engineered it was for something that squeezes a bag of precut fruits and veggies.
That's the definition of over-engineering: https://en.m.wikipedia.org/wiki/Overengineering
> Holmes' sentencing date has not yet been set. But she faces the maximum penalty of 20 years behind bars, though legal experts say she will likely face a lesser punishment.
That is, he wasn't arguing that she will serve the max of 65, just that the max is much higher than what NPR reported.
Now, it's possible that the court wouldn't agree with that analysis and find slightly fewer points, or that it would agree but would make a downward departure, but...
https://www.popehat.com/2013/02/05/crime-whale-sushi-sentenc...
For another, because the guidelines are pretty specific in this case --- that 2B1.1 crimes are charged according to --- well, here's the wording from the guidelines: "the applicable base offense level is determined by the count of conviction that provides the highest statutory maximum term of imprisonment.". So "3x20" seems off the table.
"They run concurrently except to the extent necessary to serve the full sentence the judge selects."
When he said it's not clear she'll do less than 20, I don't think he meant she might get more than 20, just that she might get 20.
On the flip side, given the huge sums involved, it's not easy to make the numbers make sense served consecutively.
Here's an article about grouping:
https://www.josephabramslaw.com/understanding-grouping-rules...
7 (Base offense)
+24 ($140MM in damages)
+2 (10+ victims)
+2 (Sophisticated means)
+4 (Leading role)
+2 (Abuse of public trust)
+2 (Obstructed investigations)
Consecutive vs. concurrent isn't the issue here; doing a $140MM wire fraud puts you on the hook for an insane sentence.
So this is a case where the whale sushi sentence is... theoretically possible?! Wow.
https://mitchellepner.substack.com/p/elizabeth-holmes-found-...
I'm curious where you got that understanding. Would you mind sharing?
Especially since that could put the khibosh on my retirement plans (commit a serious, but non-violent federal crime and receive a lengthy -- hopefully the rest of my life -- sentence at a minimum security "Club Fed"[0] facility).
Free housing, food, health care and clothes with no tax liability for the rest of my life? It makes me want to to massively defraud some congress-critters once I turn 70 or so.
Assuming I could be assured of conviction, I'd even hold on to the stolen money so it could be returned to the victims.
Yes, I'm being somewhat facetious. But decent assisted living facilities run from USD6-12k/month and once I've spent all my money, it's off to a Medicaid facility that isn't much better than minimum security prisons anyway.
This way, I can give my money to those I care about and not have to worry about spending down my life savings to ~USD2,000 in order to qualify for crappy accommodations at a facility that accepts Medicaid patients.
Just sayin'.
[0] https://www.washingtonpost.com/news/reliable-source/wp/2015/...
Shitty housing, unhealthy, often poorly prepared food, and frequently inadequate health care... when it isn't denied outright.
Being a prisoner in the USA, especially an elderly one, is terrible and shouldn't be joked about.
But being elderly and relying solely on Medicaid also sucks.
Agreed, but most US citizens who have worked at least a few years during their lives will get Medicare, too, which is significantly better.
If war is politics by other means, I suppose a prison riot is democracy by other means.
As a vertebrate, I take umbrage with that characterization.
I think in theory escape risk is a part of it, too, and people with extremely long sentences are presumed to have rather more motivation to escape.
Elizabeth seems the sort of person most capable of executing a plan whereby she pulls off a prison break through enlisting the aid of a bunch of other prisoners who're promised freedom themselves, but in her plan are actually there as decoys to be killed. It seems analogous to stuff she's already happily done. She is potentially a risk even to other prisoners if she carries on as she has done. I don't buy that she's not a risk to others.
I’m not talking about just Holmes here, but about prisons in general. It’s not supposed to be fun, but neither is it meant to support a collective revenge fantasy.
Note that that is a big except, when you have lots of points, which big $ frauds get you quickly.
She's not convicted of actually, physically harming anyone, esp. patients (which doesn't mean she didn't -- but she wasn't found guilty of that); she's convicted of lying to investors.
That's obviously bad, and should carry some form of punishment. Maybe 5 years? But life?? That's insane.
[0] I read John Carreyrou's book when it came out.
Experts have warned from the beginning that Theranos made unrealistic to impossible announcements. Anyone investing at that scale without consulting experts IMO does not deserve protection from the law.
If Theranos is one thing, it is a real life example of why group dynamics and investing don't mix, and why the best thing to come out of r/wallstreetbets is the saying "do your own DD".
Wirecard did the same with accounting statements from the Philippines, and EY accepted them without verifying that the statements are correct at the bank offices, they didn't even cross check if the billions of dollars could even be on the books of the Philippine banking system, and now EY is in hot waters.
If I were an investor and were presented with claims of validation of a technology that is hotly contested, the very first thing I'd do is call up or otherwise contact the issuer and verify the authenticity of that claim. It's like ten minutes to find out the contact information of Pfizer's Investor Relations team and compose a letter - investors who are unwilling to commit at least this little bit of verification deserve to be relieved of their money and office.
You bring up good points (although I think I disagree with your conclusion that people ‘deserve’ to be defrauded). There seems to be active collusion at times between oversight and the companies being audited. This isn’t the first time EY has been accused of this and we see it with credit ratings agencies too.
I think I come to a different conclusion because we all outsource our quality assurance on a daily basis. Did you review the airworthiness certificate of the last plane you flew on? If not, do you “deserve” to crash because you outsourced to the FAA without verifying it yourself?
I’d say the blame should fall to the third party auditors who failed the system, not necessarily to those who trusted them.
Am I a normal airline passenger/pilot or did I sign up as a test pilot for experimental / new / freshly repaired aircraft?
The latter get higher pay simply because that risk is part of their job, and to my knowledge test pilots have the option to refuse jobs they deem to be too dangerous. Same is for investors, with the difference that human lives can irrevocably be lost whereas money is only a virtual thing.
The system breaks down when the third party is corrupted or incompetent in terms mitigating that risk. If we're going to say investors/airline passengers 'deserve' an outcome regardless of the role of a third party verifier, I'd probably say there's no reason for an SEC, FAA, audits, or even journalists for that matter. We've largely said as a society those organizations play an important oversight role in mitigating risk.
Your everyday normal "retail" investor should be protected by the law and regulatory agencies, e.g. requirement that companies offered to trade their stocks for unqualified investors need to follow SEC guidelines on accounting and business best practices, that insider and politicians' deals are regulated/reported, that environmental, consumer protection and labor laws are followed and that such companies are audited for compliance. For investment vehicles (e.g. funds, stock options that are not part of "employee stock" programs), that the risk of major or complete loss is limited (=investments done by these with the assets of normal investors should follow the same rules, and that investments into assets requiring accreditation do not exceed 20% of the assets under management of the investment vehicle). Obviously, that also limits the return of investment aka the pricing of risk.
Accredited investors / investment vehicles allowed to invest in high-risk assets however? The accreditation should represent an exchange: you get the potential to higher return of investment unlocked, but as a price for that you have to:
1. prove you can stomach significant losses (=you have to own your residence and can only invest 80% of your net worth into investments requiring accreditation)
2. spread investments so that no single or related (e.g. by majority ownership) high-risk investment exceeds more than 20% of your total portfolio. Exceptions can be made for holding companies, SPACs and similar investment vehicles, provided that their investors follow the same exposure limit.
3. prove you/your staff are actually qualified to make qualified decisions: professional education (e.g. a university degree in economics, finance and related subjects or training provided as part of employment at a bank or other financial institution) and the time to adequately review the companies you invest (=someone who works 60 hours a week in a non-finance related job should not be assumed to have enough free time and mental capacity to review and follow-up documents)
4. waive your right to protection by regulatory agencies and the judicial system to a degree that reasonably expectable efforts (such as calling up certification issuers to verify authenticity of a certificate) have to be undertaken.
5. agree to be held fully liable for your loss and the loss of your clients if you violate the rules or act negligently.
That way, the assets of the majority of the population are protected against loss of their investments, actual professionals now have a monetary incentive to responsibly invest their assets, and auditors have the incentive to actually do their job (and if they do not do that on their own, their liability insurance will make them do!).
A case could also be made for an intermediate class of investor to allow people not meeting the criteria to invest a limited portion of their assets (e.g. cap at 20% of net worth excluding primary residence, require a minimum net worth of 200k $) into high-risk investment.
We do the same with other high-stakes jobs (doctors, pilots) and organizations (see e.g. how cyber-security insurances force companies to introduce IT security measures as part of providing insurance coverage) - why don't we do the same with the finance industry? There have been more than enough high-profile cases now, some of which actually caused global crisis events.
ETA: Additionally, "margin trading" should be banned or at least strictly regulated for all investors. The amounts one can see in the "Loss Porn" section of r/wallstreetbets are simply inconceivable. No one should be able to YOLO their retirement funds into Gamestop ffs, and no one should feel forced to off themselves because their bank showed them a 730k US-$ margin call [1].
[1]: https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-y...
Regarding the margin call type investments, I would add it’s not to just prevent endangering oneself but protects society as a whole. As a layman looking at past economic bubbles, it seems the one corollary is excessive speculation coupled with excessive leverage.
As long as the economy, the financial, employment and housing markets behave somewhat reasonable, even extreme leverage is not a problem... but in sudden uncontrolled crashes, that amount of collective leverage explodes backwards and everyone has a problem.
I'm actually not sure if it is possible to regulate margin at all to a resilience degree that stands up to market depressions, given that debt and leverage are essential to the working of any economic system (including all the various forms of socialism!) in a scarcity-based world itself.
As if sending her to prison for 5-10 years wouldn't be enough? Who will give her money or believe anything she does afterwards? She's done for no matter what. 65+ years is just to be cruel and enjoyment of the cruelty.
Even if it is the health sector where harm can easily be done, punishments shouldn't be based on hypotheticals.
I’m an American. As a society, we believe in the deterrent value of punishment (which is proven not to work). We also see prison as a place to put dangerous people in order to protect society. We see only the risk of letting dangerous people out of prison, not any potential benefit. If we have to lock up 1 innocent person to be sure that 9 dangerous people gets locked up, those numbers work for us. It’s a kind of tunnel vision focused on the worst offenders and ignoring the many non-violent or rehabilitated offenders.
So, it’s just this very one-sided view, very risk averse and without much empathy or grace toward the offender.
Do you genuinely believe that high-IQ white collar criminals are exactly the type of person unable to do even the most basic risk-reward analysis?
According to this fact sheet, "the certainty of being caught is a vastly more powerful deterrent than punishment". Elizabeth Holmes and Bernie Madoff probably didn't think they would be caught.
https://www.ojp.gov/pdffiles1/nij/247350.pdf
NIJ is the research, development and evaluation agency of the U.S. Department of Justice.
Penalizing mass murder also doesn't seem to have worked to prevent 9/11. The question is how representative the perpetrators are in these cases. I'd say not very -- do you disagree?
> According to this fact sheet, "the certainty of being caught is a vastly more powerful deterrent than punishment".
Just because you read it in some fact sheet doesn't mean it's true or even makes any sense. Probabilities and punishments are not commensurable so what does this even mean (without some attempt to describe a subjective loss function)?
Taken literally it's obviously untrue. Examples abound where people don't care much about being caught because the punishment close to non-existent or very light in comparison to the rewards. This is why why gangs like to groom minors, the likely reason why San Francisco has a shoplifting problem, or to bring it back to white-collar crime, why certain types of corporate and individual malfeasance occur over and over again, because the risks, even when caught, are minor but the rewards are not.
Your original claim is tantamount to saying that people don't react to incentives. Which beggars belief. That is not to say that criminals in particular respond to incentives in a way that maximizes their life outcomes or is intuitively obvious, or that for many crimes lowering penalties and investing in other things instead (like detection or prevention) wouldn't produce better societal results. But on the whole I'd expect high-flying financial criminals to respond to incentives set by justice system in a way that is more aligned with their actual utility function than say crack addicts committing robberies to finance their next fix.
She didn’t of course, but it wasn’t impossible to do. She just wasn’t good enough.
After all most cells in your body do a few thousand blood tests on millilitres of blood every second. Our technology has a long way to go but it can be done.
Fraud is harm.
Part of the reason is because punishment is so wildly variable and also sentences are almost always shortened drastically. It never looks like justice prevails. A "20 year sentence" is never actually "20 years", it could easily end up being a few years + probation, or even less.
Also, america sure as shit better not go light on a rich lady who sold profit dreams to old men while giving outrageous sentences to poor people everyday. You want to talk about criminal Justice reform she is definitely last on the list of people who deserve leniency.
Destroying 100 million is best compared to something like a "killdozer"[0] rampage. Holmes' crime was the destructive equivalent of leveling ~300 homes.
[0]https://en.wikipedia.org/wiki/Marvin_Heemeyer#The_'Killdozer...
It was very lucky nobody was seriously injured by that thing.
In both theft and fraud, the victim is deprived of of something. That’s why people consider them similar crimes.
> Grand theft includes theft of property with a value of more than $950 or theft of a firearm (any value). The penalty for stealing a firearm is a felony, punishable by a state prison term of 16 months, two years, or three years. In all other cases, grand theft is a wobbler and can be charged as a misdemeanor or felony. A misdemeanor sentence results in up to one year in jail and a felony sentence results in prison time of 16 months, two years, or three years. (Cal. Penal Code §§ 487, 490.2 (2020).)
You actually can't get that much time for stealing a car or jewelry. What gives a criminal that much time is that "theft" is often actually "robbery", which involves the use of coercive violence. Violence is generally punished much more harshly.
> California Penal Code 211 PC defines the crime of robbery as “the felonious taking of personal property in the possession of another, from his person or immediate presence, and against his will, accomplished by means of force or fear.” Robbery is a felony punishable by up to 9 years in state prison.
> First-degree robbery includes robbery of
> any driver or passenger on a bus, taxi, streetcar, subway, cable car, etc., any person in an inhabited structure, or any person who has just used an ATM and is still in the vicinity of the ATM.4
> First-degree robbery leads to a California state prison sentence of between three (3) and nine (9) years.5
Even if you're lying to trick some companies and investors to give you millions you're still not as evil or dangerous to society as the person who chooses to terrorize individuals for their gain. The actions are what matters.
“Do you understand what I'm saying?" shouted Moist. "You can't just go around killing people!"
"Why Not? You Do." The golem lowered his arm.
"What?" snapped Moist. "I do not! Who told you that?"
"I Worked It Out. You Have Killed Two Point Three Three Eight People," said the golem calmly.
"I have never laid a finger on anyone in my life, Mr Pump. I may be–– all the things you know I am, but I am not a killer! I have never so much as drawn a sword!"
"No, You Have Not. But You Have Stolen, Embezzled, Defrauded And Swindled Without Discrimination, Mr Lipvig. You Have Ruined Businesses And Destroyed Jobs. When Banks Fail, It Is Seldom Bankers Who Starve. Your Actions Have Taken Money From Those Who Had Little Enough To Begin With. In A Myriad Small Ways You Have Hastened The Deaths Of Many. You Do Not Know Them. You Did Not See Them Bleed. But You Snatched Bread From Their Mouths And Tore Clothes From Their Backs. For Sport, Mr Lipvig. For Sport. For The Joy Of The Game.”
Fraud is not a zero-victim crime and less than petty theft is. Just because the investors can 'afford' it, their losses are passed on to society eventually.
Also a very American way of thinking AFAICS.
In that sense, this CEO could be like the Sackler family - responsible for so much suffering across American society for the past decade or so, but because the scale is so large they've effectively abstracted themselves away from the evil and terror they are responsible for. The implication being that the opioid addict gets the full judgment of the law and society for terrorizing individuals to feed their addition, but the people who made the addiction possible get away with being tricksters. The only reason Elizabeth Holmes doesn't approach that level is because she and her startup got caught before they could release their fake products at scale, before the more serious consequences would begin.
If you ask me, I'd prefer to see both being held appropriately accountable, preferably in a way that encourages rehabilitation and not retribution or cruelty.
Above all, I think, because it's so diluted across a lot of people. To me, all these fraud-on-a-grand-scale-apologists are as naïve as Moist von Lipwig in the Pratchett quote in a sibling comment.
Personally, I'm with the gholem.
She should be though. People had unnecessary and invasive medical treatment as a direct result pf her fraud.
The actus reus is her fraud, the original criminal act, and having decided to do crimes she is also responsible for any harm caused.
https://en.wikipedia.org/wiki/Actus_reus
In the US is it up to the harmed individuals or their surviving relatives to peruse this?
If you assume average salary of 100k per year per person with 1/4th of time work per year. that's effectively 400k per year per person. He stole a hundred million which would be 250 years.
From people who could easily afford to lose it and who should have known better. None of the people she defrauded have a materially worse quality of life than they did before.
Her biggest crime was making rich people look stupid, and they REALLY don't like that.
It does not matter at all that they could afford to lose it. Her biggest crime was the one she just got convicted of, being a fraud and lying for profit.
One side of this conversation is unnecessarily harsh, I get that, but the other side of this conversation is playing mental gymnastics to try and downplay what she did. Both are wrong.
Who in turn gained their money from trickle-up economics targeting the working and middle classes, in all likelihood.
I don't get this apologetic comment.
The crime she was convicted of isn't a crime you should spend effectively the rest of your life in jail for. It's as simple as that.
Not if you're a young(-ish) and relatively good-looking female billionaire CEO, at least.
Apparently, judging from the fact that I haven't seen all you people spouting this line on the barricades fighting for more lenient sentences for ordinary lowlife ugly middle-aged male fraudsters.
That's how simple it is.
"Notably, Theranos’ investors weren’t the usual-suspect venture capital firms. Rather, her funding came from individuals like former Secretary of Education Betsy DeVos, billionaire media mogul Rupert Murdoch, former Secretary of State Henry Kissinger and the Walton family, among other wealthy elites. Some evidence showed that these investors were willing to give Theranos money even when Holmes evaded their more probing questions."
https://techcrunch.com/2022/01/03/elizabeth-holmes-verdict-g...
And there we have the crux of why she was prosecuted...
You're much better off screwing average people, then it's just "capitalism".
And the optics would be _awful_; no sensible president would do it in the first place.
That's obviously no longer a constraint. The optics of pardoning Anthony Lewandowski (among many, many others) looked awful and he was still pardoned.
And I think that was a little different; in that highly polarized environment it was possibly a little easier to sell corrupt pardons if they were of people on the president's 'team'; at least some of his supporters would put up with it on that basis. Holmes wouldn't qualify; she's just a generic wealthy criminal.
This pardon abuse has been going on for awhile.
I don't think any of the founding fathers foresaw presidents using their power to pardon their friends. The whole system is extremely vulnerable to an insider attack - very few tools are in place to work around corrupt leaders.
Interestingly, this pattern repeats itself; countries which became independent from Britain later on often have a far less powerful president, with similar powers to when _they_ left. The president of Ireland, for instance, is non-executive, doesn't have a veto, and can't commute sentences... much like the British monarch when Ireland became independent.
As it stands, it's an anachronism that only survives because it's _really_ difficult to change the US constitution, I suspect.
The US President should have handed this power over to a similarly dusty committee resolving real injustice years ago. This would be less corrupting and more effective because a President is busy whereas the committee would be doing nothing else except investigating the circumstances of potential injustice and choosing how to resolve them (new trial, pardon, etc.)
As for Ms. Holmes, she defrauded very rich and powerful people. I would be surprised if she were shown any leniency at all, never mind a Presidential pardon.
That's because his original 24 year sentence was reduced to 14 after a Supreme Court case vacated part of his convictions.
My bet, based on some calculators I've seen, is that Holmes serves (actually in jail) 14-18 years.
It's non-violent. Nobody died. I think 5-10 years. Maybe she can be Shkreli's pen pal.
She was peddling non functional healthcare devices and services. People could have died, and she clearly didn't care.
I think their customers just ended up stuck with the bill and had to go to a regular lab.
What does that mean to you? I am curious to know why you'd make that bet with the OP with those two facts alone.
Edit: Duh, four.
Non American here, why do people use this infantile term to refer to a spouse? Unless I am mistaken, the father of her child is her husband - why use another term?
Edit: Thanks everyone for pointing out that you don't need to be married to have a child, wow, everyday a school day on HN.
But her husband _is_ as far as we know, the father of her child.
She then married her current spouse.
"Baby daddy" is often used to imply that the woman is not really attracted or attached to the man who fathered a child.
I think OP is implying that Holmes hooked up with and married the new guy as a cynical ploy to get a war chest for the impending legal actions.
I can't speak at all to Holmes' motivations, but it certainly doesn't conflict with what I read on Wikipedia, or with her apparent ethics.
Not exactly sure where the term came from, but I know I’ve heard it in songs, seen it in movies and on TV, etc. It’s just a popular phrase.
Yes. And, as the G(GG...?)P said, a stupid one.
I said soon to be sentenced.
And words towards 'won't she be in jail through any appeal process.'
But in response to the original comment saying she won't get jail time at all due to appeals, do you think she will not be sentenced and the appeal with happen before then where they disregard this conviction during that process?
Anyway, confusion aside I was trying to politely point out they seem wrong in their assumption she will never see jail due to an appeal process. That's not how the process works.
I think she'll only start serving time once the very last round of appeals ends - which is going to be many years after her death. They'll just Jarndyce v Jarndyce for decades to come.
Otherwise it signals that wantrepeneurs can keep doing it with minimal repercussions.
I knows Theranos was headquartered in Palo Alto for part of its life, but is it really a SV company? Looking at their board I see mostly old-school business people from a construction company, Wells Fargo, and James Mattis and a former head of CDC. Only real tech person seems to be someone from NetApp. On the investor side, I don't see any of the big SV names either. Initial funding came from Rupert Murdoch.
Theranos was located in SV and Holmes referred to it as a SV style company, you might argue this is enough to make something a "Silicon Valley Company". I think OP would view such a company as one both in SV and embraced by the local ecosystem of developers and investors. I think SV "learning a lesson" from the downfall of a company only makes sense for the latter definition, and I don't think Theranos fits it.
In reading Bad Blood it becomes apparent that, Tim Draper aside, the SV investor community realized much earlier than anyone else that Theranos was shady and either pulled their money or stopped investing. As someone living here in the area at the time I felt it was common knowledge in dev circles that Theranos was shady and lying about their capabilities (though not to the level that was revealed). Certainly it did not seem to be a prestigious place to have on your resume.
Given that the SV ecosystem seemed to largely sniff out Theranos before the rest of the world it seems weird to expect them to learn a lesson from its downfall.
The answer to this depends a lot on whether you consider e.g. Arrillaga-Andreessen "SV" or not. Holmes certainly wanted Theranos, and herself, to be viewed and valuated as such.
I don't follow startups that closely. The only example I can think of is Elon Musk's "full self driving" promises, but the gap between promise and reality is a lot smaller in that case. Even then, the claims are still mostly future timelines, not "it works now, no I can't show you, trust me!!"
I'm no fan of Holmes, but what good does it serve to lock up non violent criminals for decades?
“non-violent” criminals can do much more widespread damage individually than violent criminals are likely to, but are also more likely to be rationally deterrable with a sufficient consequences (which anything you'd willing gamble against the potential upside of the massive crime is not.)
For many (though certainly not all) of the investors victimized by Holmes, I'm not terribly sympathetic. As implied by "qualified investor", if you write such a big check, it's sort of up to you to do the homework.
I do have some sympathy for people who got Theranos tests and were mislead about their efficacy, but on the charges of defrauding patients Holmes was found not guilty! (Similarly, I have some sympathy for employees who went to work at Theranos and ended up bullied and threatened by the company, as with Tyler Schultz, but they aren't represented by any of the criminal charges!)
The only thing that has a small deterrent effect is how likely a potential offender think they are of getting caught.
My understanding is that even in cases where deterrents are known to work poorly, there's still some effect. For example, with drug addicts, there are diminishing returns in as little as a couple days, but I think there was still SOME effect.
It just winds up being mostly pointless, because a weekend sentence works pretty much the same as eg. months to years or more. You should be careful about extrapolating from behavioral studies, and other crimes.
It's not just about deterrent IMO. I also care about justice, fairness, and making it not worth it to commit white collar crimes. If the sentence is not substantial, you've basically gotten away with it to me.
It's worth 1-5 years in prison to spend 5-10 years in luxury, being told how amazing you are. Maybe not for me, but it certainly is for a lot of people. A ton of white collar criminals end up better off for their crimes, if you're not harsh enough.
Maybe the takeaway is that criminals (and humans) aren't entirely rational, and 65 years is just a great "headline" for deterrence. But framing this as about deterring rational criminals strikes me as then putting a high burden of proof on the argument for 65 vs 10.
How did you come to that conclusion? It seems like a difficult argument to support.
In terms of human life, probably not, right? I mean hypothetically the investors could have gone on to spend their money on lifesaving ventures and charities but that seems like a roll of the dice.
They may not not technically be criminals because the government and judicial system protect this class of people, so in the interest of liability let's not allege they committed any crimes, but in the context of the the question yes white-collar or non-violent "whoopsie daisies" can do much more widespread damage.
In the context of the broader discussion here, though I find it unsatisfying -- Holmes was specifically found guilty of defrauding the investors, and (as far as I've seen) acquitted of defrauding the patients. I don't think the main punishment for tobacco, etc company execs should be based around, hypothetically, ripping off investors (actually I guess their investors don't feel ripped off in many cases).
The main victims, in the case of tobacco and asbestos, seem to be people who've essentially been poisoned. This ought to be considered a violent act in my opinion. Unfortunately the legal system seems to see it differently, so again you are correct, but again I'm left a bit unsatisfied...
Our system is ludicrous, but within its current bounds, over 10 years would be just.
If you're stealing hundreds of millions of dollars, is anything less than a decade really a deterrent? Especially since sophisticated actors are the most likely to be deterred by long prison sentences.
Heck, does it really do any good to lock up someone who comes home to find his wife cheating and kills her and her lover for 20-plus years? I would contend that locking up the white-collar criminal does more good.
But I'll take on your specific example. Any crazy rich people out there, I will serve 5 years in a minimum security Western European prison for 143MM USD safely accruing interest in accounts for when I get out.
Because people are bad at estimating low probability and high outcome expected values. If you are old you might even not deterred at all by a very long sentence if there is only a small chance that you actually both get caught and have to serve the time.
We should destroy her life for cavalierly playing around with other people's lives in that manner. Theranos intentionally destroyed the database of test results, but their clear goal was to yolo out medical tests.
See eg [1] or [2]
[1] https://mondaynote.com/theranos-trouble-a-first-person-accou...
[2] https://www.theverge.com/2021/9/21/22687026/theranos-patient...
Hopefully screwing around with medical tests will have much more serious consequences than stealing money. Hopefully this was just the first step, and having her in jail will prevent her from tampering with the evidence for the more serious crimes. Hopefully we live in a society that values lives more than money...
She was, but she was acquitted on those charges.
Like if you order some bullets from a gun shop, and the guy delivers them by doing a drive-by on your house, surely the only legal problem for the deliveryman can't be "these bullets were a ripoff, the gunpowder is already expended!"
The bad diagnostic test in exchange for money is the essence of the fraud she was acquitted of, not some separate harm.
I mean, it's not impossible she could face state law claims about it separate from the federal ones, but any federal criminal claims from the same set of actions would be foreclosed now by double jeopardy (besides retrial on the charges that the jury hung on.)
We absolutely love throwing people in prison for ridiculous lengths of time, because we are, for the most part, violent busybodies.
Perhaps the judge can factor that kind of thing into the sentencing; I'm not sure.
In an ideal world (not that we live in anything resembling a perfect world) it seems to me that the harm you're talking about would be remedied in separate criminal and/or civil trials. Certainly, unless I'm mistaken, the victims of the fraudulent tests could still file civil suits.
I'm not a lawyer, in case it wasn't blindingly clear.
Because words have meaning and fraud is non-violent no matter how much you stretch it
If you have a problem with US sentencing culture, as a moral and a political issue you should probably not start with rich well-connected scammers.
With all the charges grouped, including the conspiracy charge, we'd be looking at an offense level around 35 --- 168 to 210 months.
I'm not saying I agree there should be a downward departure (imo, her pregnancy came across as a "Pregnancy Of Convenience"), just that there could be.
Never having a baby seems better than having a baby you won't be able to be a mother to for 10-20 years. It's not unlikely the kid would hate you when you get out of prison.
I would also expect leniency if you got the child after you were charged, even though that implies people could just get kids to look for leniency, there is the idea that once someone gets a child they calm down and become more cautious. Maybe not so important in cases of non-violent, monetary crime.
However as it is commonly thought in society, and backed up by science ( https://www.psychologicalscience.org/publications/observer/o... ), that women take on a more nurturing role for the children and the absence of a mother would be more traumatizing (statistically, in the case of my son he freaks out if I leave but doesn't care much about the mother), the father can expect less leniency than a woman.
If we really think of it, shouldn't single person get leniency because him being in jail doesn't hurt others. So that can be considered in thinking about planning of crime. As others clearly aimed to hurt their families and friends by getting in jail in first place.
All that said, I would hope for at least 8-12 years, possibly more. I don't take that sentence lightly and consider it very harsh (I can't stand people from the USA that consider less than 5 years and "easy sentence"). 3 years is a serious sentence, and 8-12 is extremely harsh, for good reason. It's very important to me to call this like it is. There should be heavy handed punishment, because this is among our most serious crimes.
She blatantly lied multiple times about a medical product. She had a team of enforcers harass people who tried to talk. Across the board, it was a very extreme case. More importantly, with so much at stake, these type of white collar crimes are quite frankly worth committing if the sentence is less than 5 years (I'm not sure the exact number, but it's at least 5).
For a substantial portion of the population, having that kind of wealth and influence for a short time is worth it; in some cases, even if you die. So it might not deter everyone, but I do think the possibility of spending lots of time locked up, will stop a lot of gray area people.
I also think it is necessary for fairness. I care about making these crimes "not worth it". At a certain point, you're basically letting people keep their ill gotten gains. Getting to be king for a decade, then go away for a year or two is no punishment at all.
I don't think 10-20 years is necessarily inappropriate.
65 years in prison would be a fair sentence for her. Homeless people in America have been sentenced to over 15 years in prison for stealing $100. Holmes stole an order of magnitude more than that. The US justice system needs to send a clear message to the would-be fraudsters that there are indeed some very serious penalties for being a criminal in this society.
Using an existing injustice in the US to defend another does not make it right.
I am no fan of Holmes or what she did, but locking away people for life is clearly not a winning strategy.
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> Using an existing injustice in the US to defend another does not make it right.
While that is true, it is also true that the law must be fairly enforced on everyone. Having some people receive lighter sentences for similar-in-intent but larger-in-scale crimes is not fair enforcement.
Though, it was my intent to communicate on the interwebs with a writing concept often referred to in some circles as 'a figure of speech'...
No. SIX OR SEVEN orders of magnitude.
Do you have a link for that? I can't tell if this is hyperbole or not.
In general we prosecute violet offenses (including the threat of violence, even if the gun wasn't real) more seriously than nonviolent offenses. While 15 years seems excessive (as do most prison sentences in the US, IMO), there's a lot of important context missing in your statement. Hyperbole might not be the right word, but I'd call it "substantially misleading".
I get the vibe you are a white-collar criminal apologist, I could be wrong, but am I?
Absurd statement. Of course it does, if the punishment is harsh enough.
Besides, she can likely get probation with good behavior after a decade or two of time served.
Meanwhile the only real sticking crimes are the one she commit against Betsy Davos (dirty corrupted rabbit hole warning if you Google her name). Obviously Bets placed few phonecalls. It it wasn't some VIP, she would get away with that too because all investments comes with risk.
Not fair to frame her sentence as Betsy pulling strings, even when I’m no fan of that woman for obvious reasons.
In fairness, Betsy was 16th in line for for the US Presidency when Holmes was being charged and everything set up. And were it not for COVID-19 she would have been in that position for the entire trial. I'm sure with that kind of political power she was pulling some strings for vengeance.
I couldn’t care less or sympathize with billionaires who have already made back magnitudes of the money they lost on Theranos with other investments.
For example, Larry is up $14 billion(!) on a $1 billion investment in Tesla in 2018.
https://markets.businessinsider.com/news/stocks/larry-elliso...
If Holmes had decided to reinvent herself as a Robin Hood figure, she might be feted in Jacobin by now.
The prosecutors are not stupid. They have to come up with charges that actually stick, otherwise they risk losing this case in a spectacular fashion. If they went with an angle "X is morally bankrupt and her actions caused some deaths", it would make so much harder to prove and get the jury to agree to it.
Also: I'm seeing from various websites that the maximum time-left-to-serve for minimum security (federal prison camp) is 10 years, but nothing definitive - [1] is the most in-depth but only specifies this requirement for male prisoners, whereas other requirements are clearly distinguished between male and female.
[1] https://alanellis.com/securing-favorable-federal-prison-plac...
Generally, yes.
If her sentence is high she might not classify as minimum security (prison camp) and might have to serve some years at a medium before being moved.
Remember, federal prison sentences are generally "85%" which means you can get 15% off your sentence for good behavior. Almost every prisoner will get the maximum 15%.
I didn't read the indictment. Are her offenses nonprobationable? Usually non-violent offenses are probationable for first-time offenders.
They're actually even more specific for fraud cases, beyond the general 2B1.1 basic economic crime rule of sentencing according to the most severe count; for fraud, you apparently sum up all the losses from all the counts, which has the net effect of bumping Holmes up 2 additional levels.
https://www.ussc.gov/sites/default/files/pdf/guidelines-manu...
They're long and mostly not relevant except for the sections pertaining to Holmes conduct.
Here's the indictment:
https://www.justice.gov/usao-ndca/page/file/1135066/download
Holmes was found guilty of one 18 USC 1349 charge, and 3 18 USC 1343 charges; the 1343's she was found guilty on were in amounts ranging from $100k to $100MM(!).
It should be possible to come up with a better guess than the New York Times' "20 years per count, but likely served concurrently".