WSJ reveals their 2 year story involving 26 yr old taking down a multi-billion dollar company

Discussion in 'The Mainboard' started by Shock Linwood, Nov 17, 2016.

  1. Shock Linwood

    Shock Linwood Well-Known Member
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    Some of you may have heard of the company Theranos, lead by Elizabeth Holmes:

    [​IMG]

    She started the company which was going to revolutionize blood lab testing (they would only need a drop of blood from your finger) but it turns out their machinery wasn't accurate and they were doctoring the results. Her company has fallen apart and she has gone from one of the youngest self-made female billionaires ever to completely broke.

    A 26 year old kid, also the grandson of a Theranos board member, contacted the govt and the WSJ to blow the whistle. He has racked up $400,000 in legal fees as Holmes has come at him hard. The WSJ pulled the cover back today:


    http://www.wsj.com/articles/theranos-whistleblower-shook-the-companyand-his-family-1479335963
     
  2. Fancy

    Fancy anyway...here's Wonderwall
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    as an important doctor, what is your take here?
     
  3. Shock Linwood

    Shock Linwood Well-Known Member
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    Well I was excited because this would be a good thing for patients but it's incredible how fast it all fell apart.

    I used to work the night shift at a blood bank and we would test the blood overnight to get it ready for surgeries the next day. If we would fail an assay (100's of different donor's blood are on one assay) it would be a huge cost for the blood bank and there were many negative connotations when this would happen. Some lab techs to avoid the shame of failing an assay would doctor their controls (concentrate the positive control or dilute the negative control depending on which failed and then rerun the assay).

    We had a quality control guy named Silas Jefferson and he said something to me I will never forget: "I don't worry about the techs who fail assays. I worry about the techs that never fail an assay."
     
    #3 Shock Linwood, Nov 17, 2016
    Last edited: Nov 17, 2016
  4. leroi

    leroi Rival Shark Boat Captain
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    jesus what a depressing article. what horrible people.
     
  5. Baron

    Baron Well-Known Member
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    shes in quite a prickdicament
     
  6. Mix

    Mix I deserve to be blown before the Jacuzzi
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    Watching this company fail is fun. Horrible people all around.
     
  7. ryno23

    ryno23 Well-Known Member

    Can you post the article? Says you have to sign in to access it.
     
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  8. leroi

    leroi Rival Shark Boat Captain
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    http://www.cnbc.com/2016/11/15/ther...ictim-venture-capitalist-tim-draper-says.html

    Embattled Theranos CEO Elizabeth Holmes is a victim who has been "totally attacked," venture capitalist Tim Draper told CNBC on Tuesday.

    "Elizabeth Holmes is a great example of maybe why the women are so frustrated. She is a woman entrepreneur who built a fabulous company, did great things for consumers and she got attacked," the founding partner of Draper Associates and Draper Fisher Jurvetson said in an interview with "Closing Bell."

    Draper, who contributed the first $1 million to Holmes for the start-up, believes the company's technology will happen, whether it is through Theranos or another company.

    :facepalm:

    i feel like i need to take a shower after reading all this
     
  9. leroi

    leroi Rival Shark Boat Captain
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    copy the title of the article, paste it into google, and access it from there
     
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  10. Houndster

    Houndster Ball don't lie
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    Somebody wanna copypasta the story in spoilers for us non-subscribers?
     
  11. Baron

    Baron Well-Known Member
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    ^^ poor
     
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  12. Shock Linwood

    Shock Linwood Well-Known Member
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    Sorry in my circle we all have WSJ subs.



    WSJ
    Theranos Whistleblower Shook the Company—and His Family
    Tyler Shultz says he wanted to shield reputation of former Secretary of State George Shultz, a Theranos director and his grandfather; $400,000 in legal fees
    By John Carreyrou



    After working at Theranos Inc. for eight months, Tyler Shultz decided he had seen enough. On April 11, 2014, he emailed company founder Elizabeth Holmes to complain that Theranos had doctored research and ignored failed quality-control checks.

    The reply was withering. Ms. Holmes forwarded the email to Theranos President Sunny Balwani, who belittled Mr. Shultz’s grasp of basic mathematics and his knowledge of laboratory science, and then took a swipe at his relationship with George Shultz, the former secretary of state and a Theranos director.

    “The only reason I have taken so much time away from work to address this personally is because you are Mr. Shultz’s grandson,” wrote Mr. Balwani to his employee in an email, a copy of which was reviewed by The Wall Street Journal.

    Mr. Shultz quit the same day. As he was leaving Theranos’s headquarters in Palo Alto, Calif., he says he got a frantic cellphone call from his mother, who told him Ms. Holmes had just called the elder Mr. Shultz to warn that his grandson would “lose” if he launched a vendetta against the blood-testing startup.

    The only reason I have taken so much time away from work to address this personally is because you are Mr. Shultz’s grandson.

    —Theranos President Sunny Balwani to Tyler Shultz in a 2014 email
    Tyler Shultz, now 26 years old, was among several Theranos employees who tried to voice concerns inside the company about what they saw as troubling practices, and Mr. Shultz was the first to blow the whistle to a state regulator. He says he wanted to expose the problems to protect the health of patients and his grandfather’s reputation.

    The elder Mr. Shultz, 95, was President Richard Nixon’s Treasury and labor secretary, the first Office of Management and Budget director, and secretary of state for President Ronald Reagan, with whom he had a close relationship. In 1989, Mr. Reagan awarded Mr. Shultz the Medal of Freedom, the U.S.’s highest civilian honor.

    Using an alias, Tyler Shultz contacted New York state’s public-health lab and alleged Theranos had manipulated a process known as proficiency testing, relied on by federal and state regulators to monitor the accuracy of lab tests. That was the first known regulatory complaint about Theranos’s lab practices. In early 2015, Mr. Shultz began speaking to a Journal reporter as a confidential source.

    [​IMG]
    Elizabeth Holmes, Theranos’s founder and chief executive, in September 2015. PHOTO: DAVID ORRELL/GETTY IMAGES
    Theranos accused him of leaking trade secrets and violating an agreement to not disclose confidential information. Mr. Shultz says lawyers from the law firm founded by David Boies, one of the country’s best-known litigators and who later became a Theranos director, surprised him during a visit to his grandfather’s house.

    They unsuccessfully pressured the younger Mr. Shultz to say he had talked to the reporter and to reveal who the Journal’s other sources might be. He says he also was followed by private investigators hired by Theranos.

    The tension opened a rift in the Shultz family. While growing up, Tyler played in the pool at his grandfather’s house, and he often dropped by the elder Mr. Shultz’s home or his office at the Hoover Institution think tank while attending Stanford University.

    In the past year and a half, the grandson and grandfather have rarely spoken or seen one another, communicating mainly through lawyers, says Tyler Shultz. He and his parents have spent more than $400,000 on legal fees, he says. He didn’t attend his grandfather’s 95th birthday celebration in December. Ms. Holmes did.

    “Fraud is not a trade secret,” says Mr. Shultz, who hoped his grandfather would cut ties with Theranos once the company’s practices became known. “I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing.”

    Theranos and Ms. Holmes declined to comment for this article, and Mr. Balwani couldn’t be reached. He left the company earlier this year.

    Fraud is not a trade secret. I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing.

    —Tyler Shultz about his ordeal after quitting his job at Theranos
    The elder Mr. Shultz joined Theranos’s board of directors in 2011. Former Secretary of State Henry Kissinger, former Secretary of Defense William Perry, and former Sen. Sam Nunn, all fellows with Mr. Shultz at the Hoover Institution, joined the Theranos board around the same time. They couldn’t be reached for comment.

    The unusually high-profile board gave Theranos an aura of power, connections and gravitas as it raised money from investors and developed the blood-testing devices Ms. Holmes touted as revolutionary.

    After the Journal published in October 2015 its first article detailing problems at Theranos, the company announced that all four men had been moved from the board of directors to a newly formed board of counselors.

    RELATED COVERAGE


    Tyler Shultz is cooperating with an investigation of Theranos by federal prosecutors, according to people familiar with the matter. Theranos is the subject of criminal and civil investigations by the U.S. attorney’s office in San Francisco and the Securities and Exchange Commission, which are trying to determine if the company misled investors and regulators about its technology and operations. Theranos has said it is cooperating.

    Mr. Shultz’s allegations that Theranos’s proprietary Edison machines frequently failed quality-control checks and produced widely varying results were corroborated in inspection results released in Marchby the federal Centers for Medicare and Medicaid Services. In April, Theranos told regulators it had voided all test results from Edison machines for 2014 and 2015, as well as some other tests it ran on conventional machines.

    Theranos is appealing sanctions proposed by regulators, including a ban on Ms. Holmes from the blood-testing industry for at least two years. Last month, the company shut down all its blood-testing facilities and said it would focus on developing products that could be sold to outside labs, hospitals and doctors’ offices.

    The younger Mr. Shultz and Ms. Holmes met in late 2011 while he was visiting his grandfather’s house next to the Stanford campus. Tyler Shultz was a junior at Stanford majoring in mechanical engineering.

    [​IMG]
    Former Secretary of State George Shultz at a Senate committee hearing in January 2015. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
    He says he “fell in love with her vision” of instant and painless blood tests run on tiny samples of blood collected from fingertips. “I knew I had to be part of this,” he recalls thinking.

    Mr. Shultz interned at Theranos that summer and went to work there full-time in September 2013. He had just graduated after changing his major to biology to better prepare for a career at the startup, he says.

    Theranos began offering blood tests to the public in late 2013. The company soon achieved a valuation of $9 billionfrom investors, with Ms. Holmes owning a majority stake. She also is chief executive of Theranos.

    The new employee was assigned to the assay validation team, which was responsible for verifying and documenting the accuracy of blood tests run on Edison machines before they were deployed in the lab for use with patients.

    Mr. Shultz says he found that results varied widely when tests were rerun with the same blood samples. To reduce that variability, Theranos routinely discarded outlying values from validation reports it compiled, he says.

    One validation report about an Edison test to detect a sexually-transmitted infectious disease said the test was sensitive enough to detect the disease 95% of the time. But when Mr. Shultz looked at the two sets of experiments from which the report was compiled, they showed sensitivities of 65% and 80%.

    That meant that if 100 people infected with the disease were tested only with the Edison device, as many as 35 of them would likely incorrectly conclude they were disease-free.

    A few months later, Mr. Shultz moved to Theranos’s production team, where he quantified by how much patient tests should be allowed to vary during daily quality-control checks. Under federal rules, labs are allowed to set those parameters on their own within the bounds of accepted industry guidelines.

    He says he noticed Edison machines often flunked Theranos’s quality-control standards. He says Mr. Balwani, the No. 2 executive at the company, pressured lab employees to ignore the failures and run blood tests on the machines anyway, contrary to accepted lab practices.

    Related Video

    the Journal’s first article was published in October 2015. The article included a description of the regulatory complaint Mr. Shultz had filed under the alias Colin Ramirez but didn’t identify him by his real name.

    An assistant to George Shultz said he was unavailable to comment but “wishes you to know that he deeply loves and respects his grandson Tyler, is very proud of Tyler and all he has accomplished and will accomplish, and knows Tyler to be a man of great integrity. Mr. Shultz is deeply sorry that Tyler’s experience at Theranos was so unsatisfactory for Tyler.”

    After leaving Theranos, Tyler Shultz worked briefly for a biotechnology company and now is collaborating with a team of researchers to try to build a portable device capable of diagnosing a dozen diseases from a person’s blood, saliva and vital signs. The team is vying for a multimillion-dollar cash prize in the prestigious Qualcomm Tricorder XPrize competition.

    Mr. Shultz visited his grandfather in July. They hadn’t spoken for seven months. He says he told his grandfather he was disappointed about not getting more support from him throughout the ordeal. He asked the elder Mr. Shultz to publicly distance himself from Theranos.

    “I am pleading with you as your grandson,” Tyler Shultz recalls saying, “please do the right thing.” His grandfather, still on Theranos’s board of counselors, remained noncommittal. They haven’t seen each other since.

    Write to John Carreyrou at [email protected]
     
  13. Mix

    Mix I deserve to be blown before the Jacuzzi
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    Google Theranos and this pops right up under news and you can read it
     
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  14. ryno23

    ryno23 Well-Known Member

    For us poors



    WSJ
    Theranos Whistleblower Shook the Company—and His Family
    Tyler Shultz says he wanted to shield reputation of former Secretary of State George Shultz, a Theranos director and his grandfather; $400,000 in legal fees
    By John Carreyrou



    After working at Theranos Inc. for eight months, Tyler Shultz decided he had seen enough. On April 11, 2014, he emailed company founder Elizabeth Holmes to complain that Theranos had doctored research and ignored failed quality-control checks.

    The reply was withering. Ms. Holmes forwarded the email to Theranos President Sunny Balwani, who belittled Mr. Shultz’s grasp of basic mathematics and his knowledge of laboratory science, and then took a swipe at his relationship with George Shultz, the former secretary of state and a Theranos director.

    “The only reason I have taken so much time away from work to address this personally is because you are Mr. Shultz’s grandson,” wrote Mr. Balwani to his employee in an email, a copy of which was reviewed by The Wall Street Journal.

    Mr. Shultz quit the same day. As he was leaving Theranos’s headquarters in Palo Alto, Calif., he says he got a frantic cellphone call from his mother, who told him Ms. Holmes had just called the elder Mr. Shultz to warn that his grandson would “lose” if he launched a vendetta against the blood-testing startup.

    The only reason I have taken so much time away from work to address this personally is because you are Mr. Shultz’s grandson.

    —Theranos President Sunny Balwani to Tyler Shultz in a 2014 email
    Tyler Shultz, now 26 years old, was among several Theranos employees who tried to voice concerns inside the company about what they saw as troubling practices, and Mr. Shultz was the first to blow the whistle to a state regulator. He says he wanted to expose the problems to protect the health of patients and his grandfather’s reputation.

    The elder Mr. Shultz, 95, was President Richard Nixon’s Treasury and labor secretary, the first Office of Management and Budget director, and secretary of state for President Ronald Reagan, with whom he had a close relationship. In 1989, Mr. Reagan awarded Mr. Shultz the Medal of Freedom, the U.S.’s highest civilian honor.

    Using an alias, Tyler Shultz contacted New York state’s public-health lab and alleged Theranos had manipulated a process known as proficiency testing, relied on by federal and state regulators to monitor the accuracy of lab tests. That was the first known regulatory complaint about Theranos’s lab practices. In early 2015, Mr. Shultz began speaking to a Journal reporter as a confidential source.

    [​IMG]
    Elizabeth Holmes, Theranos’s founder and chief executive, in September 2015. PHOTO: DAVID ORRELL/GETTY IMAGES
    Theranos accused him of leaking trade secrets and violating an agreement to not disclose confidential information. Mr. Shultz says lawyers from the law firm founded by David Boies, one of the country’s best-known litigators and who later became a Theranos director, surprised him during a visit to his grandfather’s house.

    They unsuccessfully pressured the younger Mr. Shultz to say he had talked to the reporter and to reveal who the Journal’s other sources might be. He says he also was followed by private investigators hired by Theranos.

    The tension opened a rift in the Shultz family. While growing up, Tyler played in the pool at his grandfather’s house, and he often dropped by the elder Mr. Shultz’s home or his office at the Hoover Institution think tank while attending Stanford University.

    In the past year and a half, the grandson and grandfather have rarely spoken or seen one another, communicating mainly through lawyers, says Tyler Shultz. He and his parents have spent more than $400,000 on legal fees, he says. He didn’t attend his grandfather’s 95th birthday celebration in December. Ms. Holmes did.

    “Fraud is not a trade secret,” says Mr. Shultz, who hoped his grandfather would cut ties with Theranos once the company’s practices became known. “I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing.”

    Theranos and Ms. Holmes declined to comment for this article, and Mr. Balwani couldn’t be reached. He left the company earlier this year.

    Fraud is not a trade secret. I refuse to allow bullying, intimidation and threat of legal action to take away my First Amendment right to speak out against wrongdoing.

    —Tyler Shultz about his ordeal after quitting his job at Theranos
    The elder Mr. Shultz joined Theranos’s board of directors in 2011. Former Secretary of State Henry Kissinger, former Secretary of Defense William Perry, and former Sen. Sam Nunn, all fellows with Mr. Shultz at the Hoover Institution, joined the Theranos board around the same time. They couldn’t be reached for comment.

    The unusually high-profile board gave Theranos an aura of power, connections and gravitas as it raised money from investors and developed the blood-testing devices Ms. Holmes touted as revolutionary.

    After the Journal published in October 2015 its first article detailing problems at Theranos, the company announced that all four men had been moved from the board of directors to a newly formed board of counselors.

    RELATED COVERAGE


    Tyler Shultz is cooperating with an investigation of Theranos by federal prosecutors, according to people familiar with the matter. Theranos is the subject of criminal and civil investigations by the U.S. attorney’s office in San Francisco and the Securities and Exchange Commission, which are trying to determine if the company misled investors and regulators about its technology and operations. Theranos has said it is cooperating.

    Mr. Shultz’s allegations that Theranos’s proprietary Edison machines frequently failed quality-control checks and produced widely varying results were corroborated in inspection results released in Marchby the federal Centers for Medicare and Medicaid Services. In April, Theranos told regulators it had voided all test results from Edison machines for 2014 and 2015, as well as some other tests it ran on conventional machines.

    Theranos is appealing sanctions proposed by regulators, including a ban on Ms. Holmes from the blood-testing industry for at least two years. Last month, the company shut down all its blood-testing facilities and said it would focus on developing products that could be sold to outside labs, hospitals and doctors’ offices.

    The younger Mr. Shultz and Ms. Holmes met in late 2011 while he was visiting his grandfather’s house next to the Stanford campus. Tyler Shultz was a junior at Stanford majoring in mechanical engineering.

    [​IMG]
    Former Secretary of State George Shultz at a Senate committee hearing in January 2015. PHOTO: ANDREW HARRER/BLOOMBERG NEWS
    He says he “fell in love with her vision” of instant and painless blood tests run on tiny samples of blood collected from fingertips. “I knew I had to be part of this,” he recalls thinking.

    Mr. Shultz interned at Theranos that summer and went to work there full-time in September 2013. He had just graduated after changing his major to biology to better prepare for a career at the startup, he says.

    Theranos began offering blood tests to the public in late 2013. The company soon achieved a valuation of $9 billionfrom investors, with Ms. Holmes owning a majority stake. She also is chief executive of Theranos.

    The new employee was assigned to the assay validation team, which was responsible for verifying and documenting the accuracy of blood tests run on Edison machines before they were deployed in the lab for use with patients.

    Mr. Shultz says he found that results varied widely when tests were rerun with the same blood samples. To reduce that variability, Theranos routinely discarded outlying values from validation reports it compiled, he says.

    One validation report about an Edison test to detect a sexually-transmitted infectious disease said the test was sensitive enough to detect the disease 95% of the time. But when Mr. Shultz looked at the two sets of experiments from which the report was compiled, they showed sensitivities of 65% and 80%.

    That meant that if 100 people infected with the disease were tested only with the Edison device, as many as 35 of them would likely incorrectly conclude they were disease-free.

    A few months later, Mr. Shultz moved to Theranos’s production team, where he quantified by how much patient tests should be allowed to vary during daily quality-control checks. Under federal rules, labs are allowed to set those parameters on their own within the bounds of accepted industry guidelines.

    He says he noticed Edison machines often flunked Theranos’s quality-control standards. He says Mr. Balwani, the No. 2 executive at the company, pressured lab employees to ignore the failures and run blood tests on the machines anyway, contrary to accepted lab practices.

    Related Video

    the Journal’s first article was published in October 2015. The article included a description of the regulatory complaint Mr. Shultz had filed under the alias Colin Ramirez but didn’t identify him by his real name.

    An assistant to George Shultz said he was unavailable to comment but “wishes you to know that he deeply loves and respects his grandson Tyler, is very proud of Tyler and all he has accomplished and will accomplish, and knows Tyler to be a man of great integrity. Mr. Shultz is deeply sorry that Tyler’s experience at Theranos was so unsatisfactory for Tyler.”

    After leaving Theranos, Tyler Shultz worked briefly for a biotechnology company and now is collaborating with a team of researchers to try to build a portable device capable of diagnosing a dozen diseases from a person’s blood, saliva and vital signs. The team is vying for a multimillion-dollar cash prize in the prestigious Qualcomm Tricorder XPrize competition.

    Mr. Shultz visited his grandfather in July. They hadn’t spoken for seven months. He says he told his grandfather he was disappointed about not getting more support from him throughout the ordeal. He asked the elder Mr. Shultz to publicly distance himself from Theranos.

    “I am pleading with you as your grandson,” Tyler Shultz recalls saying, “please do the right thing.” His grandfather, still on Theranos’s board of counselors, remained noncommittal. They haven’t seen each other since.

    Write to John Carreyrou at [email protected]
     
  15. Shock Linwood

    Shock Linwood Well-Known Member
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  16. Shock Linwood

    Shock Linwood Well-Known Member
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    What's insane is she was worth $4.5 billion at age 32. And now is worth zero.

    [​IMG]
     
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  17. Shock Linwood

    Shock Linwood Well-Known Member
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    Wouldn't know.

    Apparently the guy who directed The Big Short is making a movie about her. Jennifer Lawrence will play Elizabeth Holmes.

    [​IMG]
     
  18. laxjoe

    laxjoe Well-Known Member
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    pretty unbelievable. i remember reading about theranos a few years ago and while it all seemed fantastic, there was always the mention that "theranos was very secretive about it's practices". fascinating watching this over that time just completely fall apart.
     
  19. JohnnyChimpo

    JohnnyChimpo This man, Lenny Pepperidge, AKA Lenny the Pep...
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    Guy contributes $1 million, company grows to a "valuation" of $9 billion (lord knows how much he was being told his equity was worth at that point), then learns everything is worth $0

    Can't imagine why his jimmies are rustled
     
  20. Pirasea

    Pirasea Well-Known Member
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    I think I remember reading something on her awhile back where she was obsessed with Jobs, so it probably was intentional.
     
  21. beist

    beist Hyperbolist
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    Lose your job, rack up $400k in legal fees, and piss off your rich grandfather. Maybe next time just look the other way guy.
     
  22. dukebuckeye

    dukebuckeye P.G.I.T
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    I don't have a Lawyer Job, but isn't there a law that protect whistleblowers?
     
  23. Shock Linwood

    Shock Linwood Well-Known Member
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    That's for govt shit.

    If it applied to private companies everyone and their brother would have an axe to grind and be reporting shit.
     
  24. laxjoe

    laxjoe Well-Known Member
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  25. laxjoe

    laxjoe Well-Known Member
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    Notre Dame Fighting IrishSan Diego Padres

    it's even better than that
     
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  26. rodmansrage

    rodmansrage wearing a hoodie.

    bingo.

    jobs was her "idol."

    bitch can get fucked and burn in hell, fuck her.
     
  27. brolift

    brolift currently retired from posting
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    The CEO of Theranos is a criminal imo
     
  28. Stagger Lee

    Stagger Lee Crazy. Sexy. Cool.
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    Schultz screwed up. Shouldn't have leaked this information to the regulators, reporters, etc. Could have filed a qui tam suit under seal and potentially had the Justice Dept. take on the case and then been able to sit back and take a cut of the civil penalties and damages imposed (and had his attorney's fees paid for).
     
  29. Baby Rabbit

    Baby Rabbit Pelican fan
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    Wrong.

    It's called a qui tam lawsuit and it applies to much more than "govt shit". Under the False Claims Act it can be used against any company that defrauds a govt. program.

    So if any Medicare/medicaid patients used Theranos, or if the company had any govt contracts, a Theranos employee could bring a whistleblower suit.

    \lawyer
     
  30. Baby Rabbit

    Baby Rabbit Pelican fan
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    This
     
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  31. OopsPowSurprise

    OopsPowSurprise Owed one ass kicking from poweshow
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    Yeah he did it the wrong way

    But that junk science that the company was touting could have fucked things up severely for people and the health field so I'm glad he did it. Just should have been smarter about how though
     
  32. Stagger Lee

    Stagger Lee Crazy. Sexy. Cool.
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    Back when I used to litigate, I represented some qui tam whistle blowers. Talk about a cake practice area. You literally just file a lawsuit and wait. If it's meritorious and/or touches on politically attractive issues, the state or federal AG, as applicable, will take the case and pretty much do all of the work from thereon. Sometimes the AG will request fairly substantial assistance in the prosecution; other times they just tell you to get out of their way, in which case you basically just sit back and make sure your whistle-blower client gets taken care of. I hated litigating with a passion, but would do it all day long if I could live solely on qui tam claims.

    One of my clients managed a hedge fund and would file qui tam suits against companies the fund had shorted. The fund made a bloody fortune on the occasion the AG unsealed the suit.

    I was also involved in a state action where the defendant dentist fraudulently billed and collected like $160mm over the course of a decade from Medicaid. I can't remember the amounts very well, but I want to say the amount the dentist billed Medicaid during that time period was, by itself, greater than all of the combined Medicaid billings of all dentists and orthodontists of like 45 states during that same time period. It was so absurd. I wish I could show you pictures of this dentist's house.

    I wish more people knew about the federal and state whistle blower laws. The government subsidizes everything and has so ineffective in policing its rules for obtaining subsidies. It's most valuable weapon against being defrauded is whistle blowers affiliated with the defrauding party filing qui tam suits.
     
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  33. pperc15

    pperc15 Well-Known Member
    Donor

    She was never worth Billions. Forbes is ridiculous in how they assess wealth. None of it was liquid. None.
     
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  34. Shock Linwood

    Shock Linwood Well-Known Member
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    I promise you if she wanted to sell her shares she could. Theranos was the hottest thing around for the last 2 years. If people could get a hold of any shares they would buy them for sure.
     
  35. Stagger Lee

    Stagger Lee Crazy. Sexy. Cool.
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    Not if her shares are restricted.
     
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  36. pockets

    pockets Lesser-Known Member
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    Dodd-Frank created nice monetary incentives for people to become whistleblowers in the finance industry.
     
  37. JohnnyChimpo

    JohnnyChimpo This man, Lenny Pepperidge, AKA Lenny the Pep...
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    Investors poured over $700 million into this company, most of whom who (obviously) did little/no due-diligence.

    Some of whom (see: Partner Fund Management) are now suing Theranos for 'misleading statements made by both the company and Holmes'

    I love this shit
     
  38. pperc15

    pperc15 Well-Known Member
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    Promise me? I do this for a living. No one was buying her common shares that those sorts of crazy valuations.
     
  39. pperc15

    pperc15 Well-Known Member
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    They are always restricted, yup... she could try to sell back to the company or to the existing investors, but you take massive discounts when you sell common shares at the bottom of a very large preference stack.
     
    Stagger Lee likes this.
  40. pperc15

    pperc15 Well-Known Member
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    They didn't raise from the typical healthcare VCs... the main reason being Theranos didn't want to open things up to real diligence by real firms.
     
  41. Shock Linwood

    Shock Linwood Well-Known Member
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    No one was buying the shares at crazy valuations? She made $4.5 billion for herself off that company before it ever produced a dime of profit.

    And her shares likely weren't restricted, she founded the company, she wasn't executive. Doubtful she placed exotic restrictions on her own equity.
     
  42. JohnnyChimpo

    JohnnyChimpo This man, Lenny Pepperidge, AKA Lenny the Pep...
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    It's not the restrictions it's that her shares would be common shares which are behind the senior debt, mezz, and preferred stock. All the money they raised (over $700m) gets paid before her which is why her net worth quickly fell to $0
     
  43. Shock Linwood

    Shock Linwood Well-Known Member
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    They are worth zero now because nobody wants to buy them because clearly the company is a big scam.

    But over the last two years there was no hotter company. She could've easily unloaded her shares because there was demand.
     
  44. Stagger Lee

    Stagger Lee Crazy. Sexy. Cool.
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    The Board and outside investors (with each round) place the restrictions on the equity, not the officers. I guarantee you there were restrictions on her being able to just sell all her stock. No major investor, debt or equity, is putting a dime in without restrictions on the Company's key personnel being locked in. Sure some share may have been fully-vested, but if she were to sell them, the value would include large discounts for lack marketability and control, and the shares would likely be subject to a ROFR negotiated by a prior round of investors. And depending on the prior offerings and whether the Company was preparing for an IPO, there may have been regulatory restrictions on her ability to sell her shares.

    Finally, I bet a lot of her "equity" was actually options that were never in the money.
     
    #48 Stagger Lee, Nov 18, 2016
    Last edited: Mar 14, 2018
  45. pperc15

    pperc15 Well-Known Member
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    You're out of your element on this one. Posts above me are spot on. Preference stack and ROFRs.

    She never made $4.5B. It was all paper gains based on what morons were willing to buy in at. Like those above said, the preference stack on her shares meant that they weren't worth anything close to what Forbes suggested. She didn't just "lose $4.5B". Forbes methodology was dumb.
     
  46. pperc15

    pperc15 Well-Known Member
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    There wasn't demand from knowledgeable investors. They all wanted to know what the hell Theranos had and why dumb money was paying so much for it.
     
    Iron Mickey likes this.