Eh, you would have to prove that the capital would have been allocated to something more useful in the absence of Theranos to prove that that hurts anyone. Most of her investors were not in the medical field, which is part of the reason they never realized she was selling snake oil.

> Penalties for misrepresenting your company help ensure that society devotes resources towards actually good ideas.

I agree with this in theory but I think fines and a ban from working in certain industries or founding companies is probably enough, not a decade in prison.

Even if their backup was to invest in medical index funds of some sort, this would have been a better usage.

I don't think it was common knowledge that theranos was a scam in the medical industry until relatively late.

If it’s not possible to catch these scams in advance, what other chilling effect is going to reduce the quantity of others taking billions of dollars while lying through their teeth?

Near as I can tell, a decade is light