THERANOS’ ELIZABETH HOLMES SENTENCED
As long-time readers of this website know, I am fascinated with the story of Elizabeth Holmes and her Silicon Valley start-up, Theranos. In case you don't know the story, here's a brief summary: Holmes' idea was simple enough: design a computerized desktop home medical testing system that could test comprehensively for a wide variety of ailments, all from one tiny drop of blood. Many luminaries and renowned figures quickly lined up to be on Theranos' board of directors: Riley Bechtel and former Secretaries of State George Schultz and Henry Kissinger, General James Mattis (later secretary of Defense), to name just a few. (See Controversial health startup Theranos has barely any medical experts on its board of directors) Ms. Holmes was once the darling Wunderkind of Silicon Valley, making the talk show circuits and so on. The problem was, she had dropped out of college to pursue her dream, and many have questioned whether she had the expertise, or could recognize the expertise and technological competence needed to pull off what she wanted to accomplish.
The rumours grew that her desktop testing system simply did not (and according to some, could not) work, and hence, the suspicions of fraud grew into allegations, and the allegations into an indictment, and the indictment into a trial and guilty verdict, and now, a sentence on Ms. Holmes to eleven years, according to this article spotted and shared by M.W.:
The mystery only deepened for me, however, because a little investigation showed that Ms. Holmes was on to something, and that indeed, other companies were pursuing the same idea. In fact, I did a whole series of blogs on the Theranos/Elizabeth Holmes story, because something to this day isn't quite right about it:
When one sums all my blogs together, something is still not right about the Theranos/Holmes story, and that peculiar odor is hovering, not around Holmes, but around everyone else connected with the story. For example, this author and this website were one of the few places that even noticed that the Japanese Toshiba company had taken out a patent for a very similar type of technology to that being pursued by Holmes. Similarly, this author and this website were one of the few that noticed recent discoveries in medical optics had implications that bore directly on the Theranos story and its pursuit of a new kind of blood testing technology. In the last article and blog linked above, I pointed out that one of the largest unanswered questions about the whole Theranos story was how Holmes managed to convince the likes of George Schultz or Kissinger or Riley Bechtel or General James Mattis to be on her board. And no, I'm not for a minute buying that it was her "pure charm", attractive looks, or "female wiles" or any of the other non-explanations and non-answers that have hit the media.
In fact, one of the most curious things about the whole Theranos/Holmes story is the utter absence of any interviews with the big name members of her board of directors. There's no one out there asking General Mattis, for example, "General what do you think of the sentencing of Elizabeth Holmes? Can you tell us how and why you first became involved in her company, General? Did she approach you? or did you approach her? What was your first clue that the whole operation might have been fraud?" and so on.
So now, according to the Zero Hedge article about her sentencing, the sentencing judge has given Ms. Holmes a sentence of 11 years, as a warning to Silicon Valley:
While everyone is fixated on the disgraced founder of FTX, Sam Bankman-Fried, and his collapsed cryptocurrency exchange, another Silicon Valley fraudster, Theranos CEO Elizabeth Holmes, will be sentenced in a federal courthouse Friday, putting an end to the years-long saga of her phony blood-testing startup.
Holmes' sentencing will take place in a San Jose, California, courtroom where she was convicted earlier this year of three felony counts of wire fraud and one count of conspiracy to commit wire fraud for scamming investors.
Federal prosecutors wrote in court papers ahead of the sentencing hearing that Holmes' crimes are "among the most substantial white-collar offenses Silicon Valley, or any other district, has seen" (wait until SBF's court case...).
And from the beginning of the article:
The judge ordered Ms. Holmes to surrender on April 27, 2023.
Judge Davila made clear that future deterrence was a big part of his rationale for the sentence.
He called the Theranos fraud “a cautionary tale” for Silicon Valley.
A "cautionary tale" for Silicon Valley? A warning?
Indeed, a cautionary tale and a warning. But what's the message? Don't start fraudulent start-ups? Or rather, be very cautious about taking lots of big names with connections to the military-industrial complex on your board, and make sure you deliver on a technology before the Japanese do? Or where are the fraud investigations of Toshiba?
Bottom line for me: there is still something mightily peculiar about the Theranos story, and I suspect the real fraudsters are never going to be questioned...
See you on the flip side...
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