Elizabeth Holmes is currently on trial for multiple counts of wire fraud. The once Stanford drop-out Silicon Valley superstar has come crashing down to face reality. She claimed that her company Theranos had developed technology capable of determining a wide range of diseases from just a few drops of blood. These wild claims, if they were true, would have revolutionized the field of medicine. But like most things that seem too good to be true, it was all just a lie.
The whole fraud was built on Holmes’ communication skills. Come to think of it, all successful frauds revolve around a great liar. Time and time again people are swindled out of their money because they are sold on an opportunity that’s too good to pass up on. The US has clear guidelines on how to punish people after fraud is committed. But doesn’t the perpetual cycle of frauds shine a light onto the negative sides of free speech?
I think it’s incumbent upon any perspective investor to do their due diligence. A major portion of Holmes’ pitch was her association to influential people. She would often boast about having major tech entrepreneurs and former generals on her board. In addition, the high investment threshold gave her an added level of validation. How could a company with Larry Ellison and General Mattis on their $1.3 billion cap table be a fraud? Looking at this info isn’t conducting due diligence, it’s falling for the story. Of course hindsight is 20/20 and Holmes falsified many documents to make her science look real. But if you took a step back, all along unaffiliated industry experts were challenging the efficacy of this technology. In February of 2015, three years before the collapse of Theranos, Stanford researchers published a paper asserting that the secretive nature of the project made it impossible to verify the validity of the science.
Stealth research creates total ambiguity about what evidence can be trusted in a mix of possibly brilliant ideas, aggressive corporate announcements, and mass media hype. The unquestionable success of computer science, engineering, and social media technologies has created reasonable hope that these technologies can also improve health in ways that the biomedical and life sciences have failed to do until now. But then how can the validity of the claims made be assessed, if the evidence is not within reach of other scientists to evaluate and scrutinize?
This info was as publicly available as any talk Holmes would give. I think this points to people’s inability to properly evaluate the free speech they consume. I think that people today believe they have an innate ability to spot out a fraud at first glance. Cons prey on this human trait, because they know once a person is hooked, they won’t question you anymore. I think people need to become better evaluators of speech. This comes down to focusing not on the story but rather the facts on which it is built. If people would have done this Holmes wouldn't have sold her lie to anyone.
I followed the story of Elizabeth Holmes for a while and I find it so fascinating. I agree that the onus is on investors to look into the validity of the company in which they are investing. This is important because the way that Elizabeth Holmes was able to scam her way into millions of dollars of investments is incredibly dangerous and this is something that we cannot allow to be repeated. I enjoyed reading your insight on the matter.
I thought this was a very interesting blog post, I did not really know anything about this story and I believe you raised some very good points. I completely agree with you that there are some incredibly smart people who are very talented liars, making them prime suspects for fraud. I think there is a huge difference between convincing someone to buy into your idea versus completely defrauding research documents. This was a really illuminating blog post and I am excited to continue reading your writing.
As someone who is very interested in bioethics (and has been following this case as a source of entertainment for quite a while--someone could write a whole op-ed about that) I think there are a few things going on here about truth, lies, and free speech. Holmes' whole trial is about whether or not she had the intent to defraud, and the prosecution has been tying her exaggerated (false) claims (both to the media and public as a whole, and to individual investors in private) to investor confidence (and financial investment) in order to construct a narrative of intentional fraud.
The defense, meanwhile, has taken a similar stance to the one articulated here: why didn't these investors, scientists, professionals, etc.…
I remember reading about this several months ago as this began to unfold in the public eye. As I do strongly agree that people like Holmes are upfront and honest about their product. I find it very unfair to equate this to any form of freedom of speech. This is not an issue of speech but much rather completely unethical business practices that should be dealt with the utmost penalty. Intentionally trying to defraud investors is not a speech issue but rather a issue with business as a whole.