General > General Technical Chat
Elizabeth Holmes to seek mental disease/insanity
MK14:
--- Quote from: tom66 on January 06, 2022, 09:49:45 am ---They're not truly socialised but they expect the courts to prosecute someone for their lack of due diligence.
It's not enough to just go on reputation when you're spending millions!
--- End quote ---
But you're doing victim blaming here. I don't think things are as Black and White (clear-cut) as you are implying here. There are a number of factors. On the one hand, there should be decent due diligence on the part of the investors, but there is also requirements for the people you are investing with, to be honest and not scam merchants.
Hiding real, large medical test equipment (not even made by them), used behind the scenes, to secretly create medical test results. Which were not produced by Elizabeth Holmes's new small medical test device(s), was a scam. So I agree with prosecuting such people.
tom66:
--- Quote from: MK14 on January 06, 2022, 10:00:01 am ---But you're doing victim blaming here. I don't think things are as Black and White (clear-cut) as you are implying here. There are a number of factors. On the one hand, there should be decent due diligence on the part of the investors, but there is also requirements for the people you are investing with, to be honest and not scam merchants.
Hiding real, large medical test equipment (not even made by them), used behind the scenes, to secretly create medical test results. Which were not produced by Elizabeth Holmes's new small medical test device(s), was a scam. So I agree with prosecuting such people.
--- End quote ---
Maybe I'm just tired of VC's throwing millions at moronic projects that go nowhere, because they expect 90% of their investments to fail, and then expecting the courts to clean up their mess. No doubt the investors will sue Holmes personally. And, I suppose they will probably win pennies on the dollar. All while completely tying up the court system to the tune of millions of hours of wasted time for lawyers, judges and possibly juries.
It leads to inefficient allocation of resources putting out fires like this. Due diligence on Theranos would have consisted of asking Theranos for published, peer reviewed research that describes their process, which could be protected by patents if Theranos was worried about proprietary technology being leaked. Or, they could have interviewed some of the staff involved in the process or research. Or watched carefully over a demonstration of a test performed. Yet it seems investors pretended as if the technology worked fine.
The fact is Theranos only had a concept - not an implementation - and yet investors were still convinced it was a feasible product / technology. No doubt Holmes committed fraud, and she'll face the consequences for it. But why did it take this long?
We see a similar issue with Nikola, who have defrauded investors to the tune of billions, with a truck rolling down a hill. For some reason, no one actually ever investigated whether they had feasible hydrogen fuel cell technology, despite the likes of GM pouring money into the company? It's really bloody weird. I probably spent a day's research on buying a £300 phone, yet a $500 million investment is agreed on the basis of napkin maths and a body-in-white.
MK14:
It's sad that they are tying up the courts valuable time. I've heard these cases are also ridiculously complicated, and mean the unfortunate jury members, have to endure such a trial, for a rather long time and they are sometimes or often, bewildered by the complexities of such trials. But, assuming we agree to keep the laws as they are, as regards fraud, I don't know what the solution is. But it could be to have three (quantity can be changed), expert fraud judges, who make the judgement, without a jury.
The Due diligence situation, reminds me of some of the Kickstarters, that are mentioned on these forums. In some cases, it is obvious to most of the people who are members of this forum, that it is a complete scam and technically/scientifically almost impossible, to achieve the stated goals.
For example, a free energy machine, which charges up batteries using spinning magnets and fills an empty water bottle, with pure/fresh water, anywhere, within minutes.
But in this case, I don't think it is that obvious, that a rather small medical blood test system, can't be developed, especially if billions of dollars are invested in it.
But it is a pity, they weren't identified as scammers, much earlier. The Medical Test Experts and Technical Experts, should have spoken up and/or been consulted more. As you say, it should have had professional feasibility reports, or whatever is needed. Before investing in it big time.
fourfathom:
--- Quote from: tom66 on January 06, 2022, 09:49:45 am ---
--- Quote from: fourfathom on January 04, 2022, 11:55:58 pm ---And how are private VC losses socialized? There's no equivalent to FDIC (Federal Deposit Insurance) or other bailout. The best you can do is to write off your losses against other gains. Even after taxes it's still a loss, just not as big.
--- End quote ---
They're not truly socialised but they expect the courts to prosecute someone for their lack of due diligence.
It's not enough to just go on reputation when you're spending millions!
--- End quote ---
The investors money is *gone*, and no court is going to get more than a tiny fraction of it back. The prosecution is to punish fraudulent behavior, and we hope discourage others from pulling this type of scam in the future.
And in the VC world, there is a huge dependence on reputation. Due diligence can warn you if something is truly impossible, or perhaps impractical, but part of the VC spectrum is finding people that can figure out how to do the previously impractical and make it profitable. This is where reputation comes in big-time, and VCs expect that a large percentage of these will fail to deliver to their supposed potential.
I would put U-Beam in the category of "truly impossible" -- not that some sort of sonic charging itself is impossible, but that what was being pursued was impossible. Those investors should have known better. I don't know if there was an actual scam though, or at least not in the early days.
Theranos was more of an "impractical" development, one that could possibly be made practical by achievable breakthroughs. In hindsight, I suppose it should have been obvious that Holmes herself didn't have the skills to advance the technology sufficiently, but perhaps she would have been able to hire people who could. Early due diligence might have legitimately rated Theranos as a high-risk but potential big winner. Most of the investors were not technically savvy enough to do their own due diligence, but were relying on the reputation of the lead investor. This all turned into a scam as soon as Theranos started lying to the investors and clients about the status and capability of their product. I am surprised that the investors let this go on as long as they did, but they may have hoped that there would at least be some useful technology being created, which could be sold to reduce their losses. This is best done by acquisition, rather than after a company is shuttered -- when you have a "fire sale" situation. Honestly, if the investors were aware of the scam being perpetrated on the customers/victims then the investors themselves should also be prosecuted.
(Most of my knowledge re. Theranos comes from reading "Bad Blood: Secrets and Lies in a Silicon Valley Startup". And I've been in a few startups. I also used to do a bit of "due diligence" work for my company and for VCs. )
SiliconWizard:
As with many other projects, the idea was all nice, and potentially very useful. No doubt about that. But that can be said for almost any other startup project that promises wonders. The ideas, *if* they can be realized, are almost always great - in terms of outcome. Problem is, they are very rarely practical, and the determining if the project is achievable or not IS the responsibility of investors AND board members. Anyone getting trapped while not having done their homework is a moron.
Sure, sometimes things are very interesting, but very challenging, and even if you do your homework and the plans are clear, things can fail. Shit happens. But that's not the case here, not with many other startups. Doing proper diligence would have shown, almost from the start, that it was bound to failure. And, if not right from the start, because hey, hope is always nice, then along the way - before eventually injecting what? Billions of dollars? :-DD Who are they kidding?
Punishing fraudulent behavior is all nice, but making it a purely individual problem, it's just a recipe for the same thing happening again and again, and ecouraging investors - and typically old retired chaps getting bored with their life - to do it all over again without ever taking any responsability, while THEY are the ones who can make all of this possible. Without money, you do nothing. So you have the utmost responsibility as an investor.
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