Elementary, Holmes

Elizabeth Holmes is set to go to trial for the massive Theranos fraud.  Oddly, I know an anti-fraud lawyer who was defrauded by her, and as is the case in so many frauds, it was hubris that greased the skids for the loss. 

Back in May of 2016, I was asked about it.  I answered by text from the waiting room of a veterinarian’s office, where I was making some very difficult decisions about a very old dog.

I actually think the black turtleneck is key. That's not a uniform; it's a costume. She bears as much relation to Steve Jobs as I do to Johnny Cash.  

I suspect, that she thought she could squirrel up the money and the arc of technology would follow on, but like Madoff, her lies expanded faster than her abilities. But at a certain point, you have to paper over the holes. 

She had a dentist running her lab, for god's sake.  She had to know that the large molecule/small molecule stuff was bullshit. 

She also had to know that her whole regime called for not medically necessary tests, which is a way of generating huge numbers of false positives and really bad medicine.  

One key "tell" is that she raised money from people like John, who are not laboratory people, blood experts, or chemists. She was selling a moonshot to car salesmen and lawyers. Sometimes, when you are looking for a fraud, you're looking for what people don't do, not what they do. She's a classic case of that, I think.

And, of course bad followed on.  The fraud fighting lawyer brought in David Boies to see what was going on, and Boies turned his legal guns on the whistleblower, who was the grandson of George Schultz.  You can Google the rest, but it’s all par for the course.

The lesson here is that skills and knowledge are not transferable.  

Because you are a competent lawyer who has won some health fraud cases does not mean you know very much about health or fraud. 

The fraudster was counting on the hubris of her marks, and she calculated correctly.