The Elizabeth Holmes story goes beyond questions of simple fraud.

Visionary and the next Steve Jobs or Sociopath?

Can it be both?

Ms Holmes is charged with 'Defrauding Investors and Patients' and "Ms. Holmes’s lawyer, Lance Wade, countered that “failure is not a crime.” "

Is the main difference defined by what you deliver or fail too?
Is this merely an exercise of applied hindsight logic?

For a long time now a guiding ethos behind many Silicon Valley entrepreneurs taking a Moonshot swing at Industry and Life altering technological advances have touted the philosophy or 'Fake it until you Make it' as a necessary step of success.

Where do we draw a line between Moonshot type promises that may never be realized (the type Elon Musk is often criticized for and only a look into the future will answer) and reality based representations? is it solely a 'Buyer Beware' type constraint that is needed to answer this question?

I think everyone agree on one clear line which is 'identifiable fraud' and that is one Elizabeth Holmes seemed to have clearly crossed but what about those other lines around fakery?

This case will hinge on 'What she knew and when she knew it' and what representations she was putting out to the public at those same points in time which again goes back to the 'Fake it until you make it' belief system many adapt in this sector.

But should these questions go beyond Holmes and peer into culpability of her Blue Chip Board?

It is the Board that is responsible for holding the CEO to account. They are to be the protectors of the various stakeholder of the company and despite having some of the biggest names available for Board duty they seemed shamefully absent in doing, what should have been their required due diligence. In my experience the Board showed a shocking lack of oversight that could and maybe should see them held also accountable, if not for the fraud elements then in a civil suit by other shareholders for negligence in their fiduciary duty.

For me, the least interesting aspects of following this trial will be the establishment (and I believe conviction) on fraud charges as I think that is a slam dunk. Instead I want to see how effective her counsel can be in establishing elements that might put society on trial as they raise this Idolatry that arose that gave her an ever expanding platform, ...the issues of Fake it to you Make it being template for many, ...and that 'Failure should not be criminalized' which is arguing that the system is ok with this type of approach as long as you succeed. Something I largely believe to be accurate.

And i would argue the latter is largely true. Despite all of Holmes abuses had she had a technological break thru near the end that delivered on her promise, then all that happened prior would not have mattered or been forgiven, imo. Even had the various whistleblower reports continued to come out, with success I think they end up being a nothing burger.

And it is because of that I think you will see other Entrepreneurs continue to push that envelope in similar ways to how Holmes did including fraudulent representations believing success achieved ultimately is the only thing that matters. It purges all prior sins.

So what say you? Is this a Business story only or a much broader look into the drivers within Society that creates, unleashes, Idolizes, rewards and/or harshly punishes Entrepreneurs via success of failure as the driving constraint?

Thoughts welcome and a place to comment as the trial unfolds and the Defense makes its case?




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- Elizabeth Holmes Case | Personality & Theranos Fraud
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- Elizabeth Holmes’ private texts reveal she described herself as the ‘best business person of the year’
- Elizabeth Holmes' turtlenecks: Steve Jobs-inspired look became 'symbol of hubris'
- The psychology of deception: How Elizabeth Holmes fooled everyone about Theranos for so long
- Elizabeth Holmes poetry steals the show at Theranos trial

I read the book by Carreyrou and I don't think there's much to say about "society" here.

Does Bernie Madoff say anything about society?

Holmes is just a batshit crazy fraudster who leveraged the stellar reputation of her board to keep the smoke and mirrors going for longer than they otherwise would have.

Unless you're inferring that the fact she was a woman helped keep the scam going, in which case I'm certain you could argue that case. I'm sure this sort of thing happens all the time on a smaller scale and with less famous names attached.

There is a distinction most accept between someone like Madoff who was just a pure ponzi scheme and people like Holmes who may actually start out with a vision and then believing their own hype.

Sure you can argue they both end at the same point (the fraud) but it is that distinction that this thread seeks to discuss.

Me: What kind of battery thingy?
Colleague: Something to do with advanced quantum thermodynamics.
M: Lost my cliffs.
C: Electric semi going coast to coast and back on one charge?
M: I hate you!

Caveat emptor.

I mean, Inso0 is not wrong here.

The line is that Holme's fraud had the potential to hurt or kill people. If a silicon valley huckster tricks some VC's into lighting a lot of money on fire on a software idea, that's not great, but it's a completely different thing.

It is difficult to muster a lot of sympathy for the Silicon Valley dudes who apparently threw giant piles of money at her and put zero effort into looking into whether her idea could possibly work or not.

This, too. Although they weren't all Silicon Valley dudes. Maybe someone can pull the list of investors, but IIRC there were a lot of high-ranking politicians on there.

https://news.crunchbase.com/news/the...vestors-board/


Board members included:

Oh my, that last one inspires a lot of confidence in the CDC. I wonder what he thinks about masks?

Investors also included Rupert Murdoch and Larry Ellison. I don't think anyone is feeling sorry for any of these folks.

Cute young white girl fleeces dirty old men.

I have to read quite a bit before I cast my vote but so far it's meh.....

(So far I'm interested in reading up on the board as it's easy to dup an individual but the whole power in numbers thing should make it hard to dup a bunch of pros)

If she gets found guilty, I doubt there will be tearful victim impact statements at sentencing.

Groupthink.

off topic

did ay any point bernies clients get money back? or dd they get money back but one day it all went poof eventually and stopped?

The extent of his fraud was overstated, because the 50bn figure included the fake returns on investment. He prob stole about 10b in cash.

He had about 200m or so left when it unwound, so the victims prob got about 2-5% back, after the clawbacks. Back of the napkin type calc.

remember when you pretended to get all upset at me saying that investors had some responsibility for what they invest in.

Which as I'm sure you now realise is no defense of any other parties action and responsibilities.

Yep. The distinction I made previously.

Politically the focus on madoff (now he is prison) should be on the problem of auditors/regualtors who should catch this sort of fraud quickly and easily.

On Holmes once the trial is done the focus should be, as you mentioned, on boards. Every director with responsibility should be criminally culpuble for criminal actions of the company - if they didn't know then the onus is on them to justify being deceived as it's their duty to know. Other directors should only be culpable if there's evidence that they were involved or helped cover it up.

The most serious issue afaik is that the medical tests were carried out on patients. This is a different league to grandious visions, ludicrous over-optimism or puffery.

Yes, this is the problem. The victims here weren’t the rich stockholders. The victims were the regular people going into a pharmacy to get a medical test that was meaningless.

Good luck getting anyone on boards, especially non-profits where it is a volunteer position.

It's no problem. They will just do their jobs and be paid lots of money for it. Non-profits with voluntary positions might well justify different standards.

There was no problem getting auditors in the Uk when the partners in firms has everything on the line - not just the partner involved with the particular client but all the partners. There was no problem getting auditors and auditors will held in very high regard because they did their ****ing job. Gone downhill a long way since .

When you say "justify different standards" what do you mean by that? How exactly can a small non-profit write different standards that bypass a criminal code change. Liability insurance (standard for board members) will not help with criminal charges.

Also, a lot of paid board positions are trivially low pay - so what about those - they get different standards as well? How do you plan to have all of this work when you change the criminal code because of this situation?

I think chez misunderstands/doesn't understand the concept of "limited liability" and the burden required to pierce the corporate veil.

I'm not suggested any firm writes different standard. They dont get to the right the standards at all- the law does. The law could be different for non-profits if that's what is considered a good thing.

A lot of board positions are not the responsible ones. If you're the FD and there's financial fraud then the onus is on you to prove you're not responsible (ignorance itself not being a defense for you). If you're the HR director or IT director or ... then the onus is on the court to prove you're culpable as you're not the responsible director.

Silly troll. Not as silly as you're previous troll about madoff but still very silly.

BTW That's exactly the problem with auditors that I explained for you. They used to be partnerships with unlimited liability and it was far better.

and just in case you're tryign to follow. The point about the burdon of proof and directers responibility to is bypass the corporate veil. This veil is a huge problem - maybe you dont understand it very well.

Chez, I don't understand you very well because you appear incapable of making a cogent statement. I have to literally squint at the screen to understand what the **** you are trying to say, and even then, and I am struggling after those indefatigable efforts.

What does any of this have to do with auditors? Can you please try to elucidate your point? Pretend I am 5.