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Elizabeth Holmes: Who Protects the Public?

Theranos founder Elizabeth Holmes found guilty of defrauding investors.

Unless you have ignored the news for the past few months (many of us have), you are familiar with the rise and fall of Elizabeth Holmes.

Recently, a jury found the Theranos founder guilty of four counts of wire fraud and conspiracy to commit wire fraud for bilking well-oiled investors out of millions of dollars. Holmes and her partner, Ramesh Balwani (his trial is scheduled later this year) made multiple false claims to investors about the blood diagnostics company’s financial health, their own financial condition, and the future prospects of the company.

Holmes was found guilty of only three of the nine wire fraud counts and one of two of the conspiracy counts, each of which carry a maximum of 20 years in prison. Interestingly, Holmes was found not guilty of four counts charging her with defrauding patients and the jury deadlocked on three additional counts of wire fraud.

While the verdicts clearly judge her guilty of fraud on a very large scale and subject her to substantial jail time, I am troubled by the jury’s failure to protect the public from Holmes’ outrageous and false claims of potential health or life-saving benefits touted by her and her company. Similar to Purdue Pharma and its false claims about OxyContin, executives are not going to jail or facing financial ruin for lying to the public—they face prison time for screwing investors.

Don’t get me wrong—I am not suggesting that these are not serious crimes or potential consequences. But, while the case sets an important precedent for how “start-up” companies may hype products and services in a prospectus, the jury seemed to focus only on the wealthiest investors. How and why did they pick and choose? I’d like to hear more. All of the investor class victims were multi-millionaires who would, typically, sign an acknowledgement attesting that they understand the speculative nature of the investment. In other words, these agreements reduce the investment to nothing more than what I would call a "speculative bet."

Contrast this investor fraud with the fraud of inducing customers to pay for a blood test at Walgreens (Holmes’ test-distribution partner) that supposedly could diagnose a wide range of illnesses. These tests were never reliable; people received erroneous results.

This fraud—the one perpetrated on the public—could have caused serious illness or death.

Are billionaire investment profits more important than common folks’ health and safety? Apparently, the jury was not convinced the public was duped or, more likely, determined that the average citizen who paid a small fee for a phony test was not important enough. Maybe they thought a class action civil lawsuit was a better remedy. In my judgment, if the case was about dishonesty, as it should have been, the amount in controversy would only go to the degree of the criminal charge, not to the perp’s guilt or innocence. I think the jury got it wrong.

No date for sentencing has been scheduled. My educated guess as to prison time for Holmes? She will probably be sentenced to 10-15 years and will serve less than 10. Fair? Not Fair?

Another wealthy, entitled person serving less time than a kid selling a dime bag on the street? What do you think?

Mark M. Bello is an attorney and award-winning author of the Zachary Blake Legal Thriller Series, ripped-from-the headlines, realistic fiction that speak truth to power and champion the rights of citizens in our justice system. These novels, dedicated to the social justice movement, are not only enjoyable, they educate, spark discussion and inspire readers to action. For more information, please visit Mark also hosts the Justice Counts podcast with Not Fake News editor & publisher Bob Gatty, presenting bi-weekly interviews focused on social justice.

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I always wonder how people like this can put their heads on their pillows and sleep!

This is certainly not the first case and it is unlikely to be the last.I think the jury got it wrong too. Playing with the health and welfare of people by deliberate fraud should be in a different category.


Jan 07, 2022

Every now and then, investors are reassured that the markets are safe and reliable by sending a high profile female executive to jail. Example: Martha Stewart who committed the crime of listening to her broker and selling an issue worth about 150 K. This explains the allegations of fraud you refer to and the lack of patient safety concerns. Meanwhile, more skilled lower profile but higher value cheats go on doing business as usual. How long did it take for Bernie to come to the forefront? Years.

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