https://www.bloomberg.com/news/artic...in-her-defense

I read John Carreyrou's interesting book, (i.e. "Bad Blood"), about Elizabeth Holmes and Theranos. While I agree that Ms. Holmes is delusional, I doubt that she is/was insane. A movie based on Carreyrou's book - with Jennifer Lawrence in the lead role - is in production. It will be interesting if the movie's release coincides with Ms. Holmes's trial.

I remember when Fortune magazine came out with their cover story, (featuring Ms. Holmes smiling face on the cover), proclaiming her "revolutionary" blood testing machine would overturn the blood testing business. Fortune fell for the photogenic Elizabeth's story portraying her as the female Steve Jobs. Fortune was one (of several) newspapers and business publications that swallowed her bait hook, line, and sinker. She managed to hoodwink a number of (supposedly smart) former Government officials, (i.e. Henry Kissinger and George Schultz were two), into joining her board. There were others who were taken in willingly joining the Theranos board.

An interesting subplot (in the book) was the interaction between the elderly Schultz and his grandson, Tyler, who worked at Theranos. Tyler knew Elizabeth Holmes (and her boyfriend Sunny) were running a massive fraud and people were being hurt and misled by faulty/incorrect test results. Tyler tried, in vain, to convince his grandfather that it was all a lie, but the former Secretary-of-State (under President Reagan) refused to believe his grandson. (It will be interesting seeing how this Grandfather/Grandson interaction is portrayed in the movie.)

Here's an interesting YouTube talk https://www.youtube.com/watch?v=YJx-cU9CKLI Tyler gave at Stanford discussing his experience working at Theranos.

Jim Mattis was also on the Theranos board, as I recall it.

Is there any actual evidence that Theranos testing was faulty? Much testing is faulty by the nature of the test, and most treatments are faulty with a good number being net harmful (one example being prostate tests and the entire prostate industry, which is both very harmful and incredibly wasteful). I'm not seeing where Theranos did a worse job than other half-assed labs and they were certainly far less harmful than other things that are standard in mainstream medicine that harm patients for pure cynical profit.

Yeah they defrauded investors and their business contacts, but I don't see how the case can be made that they hurt actual patients any more than anyone else in the medical business or that the testing they did provide to real patients was subpar compared to standards.

Howard:

It wasn't just General Mattis that got sucked in. Rupert Murdoch, (yes, the Rupert Murdoch that owns the Fox News Channel and the Wall Street Journal), invested (and lost) a [reported] $100 million in Theranos. (This is a bit ironic when you realize it was one of his WSJ reporters, Carreyrou, who was instrumental in uncovering the fraud.) Members of the Walton family also invested.

Shuffle:

As I was reading the book, I had the same thought. This is subjective on my part, but I have a sense that men of a certain age (i.e. older men) and a certain level of accomplishment are especially susceptible to a woman like Elizabeth Holmes. These men might see (or believe they see) Elizabeth as a reflection of the daughter they wish they had mentored. It strokes their ego to think that they are providing "wisdom" and guidance to an (obviously) exceptional young woman. Elizabeth, for her part, was masterful at spotting and attracting powerful men who might have seen her that way. (Maybe these men were just as delusional as Ms. Holmes - they really wanted to believe she was exceptional.)

They need to drop the case and let her start a new company so she can create a coronavirus vaccine. She'd have it done in like a week.

Also, lots of others besides Mattis were on the "all star board": https://en.wikipedia.org/wiki/Theranos

Freaking Bill Frist....

All true. I only singled out Mattis because I was in a separate discussion about him elsewhere yesterday and he was thus someone I was sure of. As I remember Carreyrou's book (which I thought was excellent), at least one of the heavy investors simply walked away from their investment and did not sue. I don't recall who that was and don't want the be glib and guess -- but it's a rare man in the modern world who takes full responsibility for his own decisions.

For anyone interested, another high profile fraud just being outed (today) is Nikola Motors. They use the same fraud playbook that Tesla/Elon Musk/Theranos had: wild exaggerations, faked demos and promises, faked products, a fantastic confidence game for investors and partner companies.

Nikola: How to Parlay An Ocean of Lies Into a Partnership With the Largest Auto OEM in America

I think it's ultimately the result of a world with a lot more spare money than available talent, and a gullible media that doesn't fact check. Holmes, Musk and the Nikola CEO all benefited greatly from pushing their lies and profiles through a well played media hype machine. How many magazine covers was Holmes on?

I mean even her voice was fake.

Her voice change was really weird cringey and a little unsettling.

Tesla's products actually work; that company isn't close to Theranos. Interesting article about Trevor Milton.

Holmes begged Murdoch to kill the WSJ story but Murdoch refused.

I don't know if Elon Musk is another Bernie Madoff or a modern day Steve Jobs. Several months ago Jim Chanos, the celebrated short seller, appeared on CNBC discussing Musk and the "irrational" price of Tesla's stock. (Since his appearance, Tesla's stock has gone up another 50 percent or maybe even doubled - I don't know ...) The discussion, as I recall, was centered around the topic of corporate fraud and "warning signs" investors should watch for.)

In specifically discussing Tesla, Mr. Chanos pointed to a book, (i.e. "The Seven Signs of Ethical Collapse"), by Marianne M. Jennings.

https://www.amazon.com/Seven-Signs-E...s%2C166&sr=1-3

Mr. Chanos asserted that Tesla (and Mr. Musk) match all seven of the warning signs Ms. Jennings details in her book. I suppose it's possible (maybe even likely) that notorious short seller Chanos was bad mouthing Tesla (and Mr. Musk) because he has (or had) a large short position in Tesla stock. OTOH, if Tesla (and Mr. Musk) do eventually crash and burn, Mr. Chanos will be among the first on CNBC saying "I told you so!"

Charlie Munger, Warren Buffett's sidekick, has also expressed reservations about Elon Musk. If I recall correctly, (somebody please fact check me), Mr. Munger acknowledged that Musk has accomplished some great things, but he [Munger] thought it was possible it could all be built on a house of cards. (I'm paraphrasing a bit.) The general gist of Mr. Munger's comments was that he didn't fully understand how Elon Musk was making all these good things happen. If Charlie Munger is confused, what are mere mortals (like us) to make of Elon Musk?

I can guarantee one thing. If I take a long position in Tesla, the stock will immediately crash. Every stock I have bought immediately tanked - which explains why I was always in the running for the Wall Street equivalent of the Heisman Trophy for "Worst Investor of the Year" award. My stock picks were closely monitored by short sellers looking for a quick score.

Jcrew:

That's the impression I got from reading the book - that Rupert Murdoch, (who considers himself one of the smartest, most astute businessmen in the world), was highly pi**ed - incensed might be a better word - that he had been played for a fool by Ms. Holmes. I suspect the mistake all of them made was that their greed overwhelmed their sense of caution and due diligence. It's interesting that Warren Buffett wasn't taken in by Ms. Holmes. He and Charlie Munger probably talked to the top people at LabCorp and Quest Diagnostics who told them: "Theranos is a fraud. Don't go near that stock!" Warren Buffett does his homework.

Walgreens, the pharmacy chain, lost a huge sum of money placing Theranos "mini clinic" blood testing centers in their stores. They were all shut down once the fraud became apparent. I wonder how many careers were destroyed at Walgreens as the blame for the fiasco was parceled out?

When the movie comes out, I hope they focus on all these (supposedly smart) business people who were suckered by Elizabeth Holmes. As far as I know, none of them have committed suicide, but their reputations were not enhanced by their association with EH.

Theranos device I believed worked reasonably well for STD testing. And other tests had inaccuracy rates of low teens vs high single digits of competing labs. Faked some tests using commercial devices, lied about amount of blood needed for most tests. Also had many tests that were not better than random.

Tesla has working BEVs that runs but games EPA ratings (75% to real world experience and probably using aggressive battery management to game range at the detriment of battery life). Faked solar tiles, faked battery swap, faked FSD demo, lied about FSD progress. Also many clearly unethical business practices.

So Tesla fraud is just more diluted.

They should cast Saoirse Ronan to play EH.

check out the HBO documentary: https://www.hbo.com/documentaries/th...silicon-valley

Speaking of windows and doors, does anyone know where I could buy some for a remodel I’m doing? Probably the best value you can get for your money, windows and doors

The consumerist society turned sales into the most important business skill long before Theranos, Tesla or Nikola. And along with it, finance turned into the most prominent industry and with the nonstop news cycle and social media, these bullshit schemes will keep getting bigger and more ostentatious without being outright frauds.

I don't know if Court TV is still broadcasting - I can't find it on my cable channel menu - but it will be "Must See TV" if Elizabeth's trial is broadcast live. A number of scammed Theranos investors are suing Ms. Holmes in civil court, but the real drama will be her criminal trial. If Elizabeth is convicted on all counts of criminal fraud and securities law violations, she could be facing a 20-year prison stretch.

The real drama in all this will be when the jury comes back to announce their verdict. If she's found "Guilty" on all counts, it will be interesting watching to see if her facial expression changes as the verdict is read. It would be weird "justice" if EH is convicted in criminal court - and sentenced to the clink - but somehow manages to avoid responsibility in civil court. All those (supposedly) "astute" investors who lost minor fortunes swallowing Elizabeth's dish of fried malarkey deserve their fate. For folks like Rupert Murdoch and members of the Walton family, their pride probably suffered a greater hit than their pocketbooks. If Elizabeth doesn't have to pay [money] for her duplicity and deceit, it will be like pouring salt in the wounds of her investors.

Although they are not Theranos "investors" per se, the ones who are really benefitting from this spectacle are the lawyers. For a criminal defense attorney, Elizabeth Holmes is the perfect client: She has plenty of money to pay for her legal defense and she's [probably] scared to death. In her wildest dreams I'm sure Elizabeth never imagined being behind bars - a fate she probably equates with the darkest depths of despair. (Egads! She'll have to turn in those black turtlenecks for orange prison garb. Oh, the humanity!)

If she's convicted, I wonder if they'll send her to the Federal Correctional Center in Butner, North Carolina where she can "pal around" with Bernie Madoff? Maybe the two of them can write a book together entitled: "How To Swindle the Stupidest People on Earth: Rich Folks!" It would be a bestseller!

One has to wonder why these frauds never stop when they can. I can only assume they lose touch with reality. It would have been quite easy to fake an illness and cash out, or announce flaws with your testing and have to wind it back or turn it into a normal blood testing company. Holmes had many outs to retire rich with deniability; it was only a dogged reporter that caught her in the end and only because she'd become incredibly high profile. Same with the NKLA guy now getting caught for fraud. He could literally have cashed out hundreds of millions if he wanted to on a pretext

Yeah I think they get caught up in their own BS. Reminds me of those fake martial arts masters who delude themselves so much they eventually agree to take on challenges from real fighters.

The expert she hired is an expert in domestic violence so it is probably less of an "insanity" defense and more of a blame Sonny defense.

Fake it until you make it is a thing in the Valley. it is often said openly as a business model.

These CEO's believe that given almost unlimited capital they will get there and thus the end result justifies the means. True 'results based thinking'.

And the fake it, very often means making fraudulent statements about where the product is today to get the capital in the hopes of getting it there tomorrow.