The Continuing Frauds of Elizabeth Holmes

Also: Inside the heated Oval Office talks and Washington messaging wars as U.S. default looms, and how the Coronation of King Charles III raises thorny questions about the state of the UK's democracy.

The Continuing Frauds of Elizabeth Holmes

No one should be surprised that the convicted CEO of Theranos is trying to rehab her image. What is stunning is how quickly someone took the bait.

Two weeks ago, the former founder and chief executive of now-defunct biotech startup Theranos was due to report to prison.

Elizabeth Holmes was supposed to begin serving a 135-month sentence after a jury convicted her of four federal charges of fraud – three counts of wire fraud and one count of conspiracy to commit wire fraud. Those criminal convictions stemmed from Holmes knowingly defrauding investors out of hundreds of millions of dollars by misleading them about the capabilities of her company’s blood-testing technology.

Her lies propelled her to the upper echelons of Silicon Valley for a time, while making her the youngest self-made billionaire on earth and pushing her Palo Alto, Calif., company’s valuation to $9 billion.

More disturbingly, the frauds arose from Holmes promoting “revolutionary” fingerstick blood tests she was fully aware provided inaccurate and unreliable results to patients, risking their health and their lives.

At one point, Holmes offered the blood tests to the public, putting her company’s flawed technology to use on patients with serious medical conditions and causing them risk of grave physical harm. The inaccurate findings went out to patients being screened for cancer, to women closely monitoring their pregnancies, and even to one patient who, due to her blood tests, was led to believe they might have the precursor virus to AIDS.

In the meantime, Holmes “enjoyed a lavish life while carrying out her fraudulent scheme, living in a $15 million mansion and traveling in a Theranos-paid private jet,” according to the U.S. Department of Justice.

She gained a national profile, adorning the covers of Fortune, Forbes, Inc., Glamour and The New York Times style magazine. “Holmes dined at the White House, joined the Board of Fellows of Harvard Medical School and was named by Time as one of the 100 Most Influential People in the World,” the DOJ noted.

Even after Theranos voided its erroneous tests, according to the DOJ, Holmes “was undeterred and again chose deceit over candor by downplaying the extent of the patient impact to investor-victims and continuing forward with her elaborate fraud.”  

Considering the blood tests – which she claimed “produced results that were better, cheaper and more accurate than existing methods and at a speed faster than ever before possible,” including superior monitoring for infectious diseases – did not work as advertised, how is it Holmes is still avoiding prison?

Elementary, this spring she filed a last-minute appeal of U.S. District Judge Edward Davila’s decision for her to start her prison sentence on April 27^th with the Ninth Circuit Court of Appeals, which allows her to walk free while she awaits the results.

Holmes, now 39, has sought to remain free following her convictions in January 2022 and, this year, giving birth to her second child.

Just after she was found guilty, it was discovered she had purchased a one-way ticket to Mexico in what prosecutors alleged was an effort to flee the country. “The government became aware on January 23, 2022, that defendant Holmes booked an international flight to Mexico departing on January 26, 2022, without a scheduled return trip,” prosecutors wrote in a filing. “Only after the government raised this unauthorized flight with defense counsel was the trip canceled.”

Holmes’s legal team claimed she was just traveling to a friend’s wedding south of the border, assuming she would not be found guilty.  

Shortly before having to report for prison last month, Holmes tried and failed to persuade Judge Davila to allow her to steer clear of incarceration while she appealed her convictions. Instead, the judge recommended Holmes be sent to a low-security facility in Texas, though it is not yet certain she will serve out her sentence there.

Her latest tactical move to once again delay doing time appears to be working – for now. And it turns out, she has also been very busy during her reprieve.

This week, we learned she has been telling her story to The New York Times, which printed a puff piece of staggering proportions, calling Holmes “Liz,” and characterizing her as “an authentic and sympathetic person.”

The article, printed alongside crisp, jumbo-sized photos of Holmes and her husband, Billy Evans, in jeans and bare feet, cuddling their blonde babies by the ocean, portrayed Holmes as “gentle and charismatic, in a quiet way.”

It also depicted her as a loving mother and wife, sorrowful of her past mistakes and dreading how she must soon go to prison rather than be with her children.

The writer of the article, Amy Chozick, asked questions such as: “How do you have an honest conversation with a person whose fraud trial has played out so publicly? I tried to ask Ms. Holmes this directly. How do I believe you when you’ve been convicted of (basically) lying? But how could I ask someone who was nursing her 11-day-old baby on a white sofa two feet away if she was actually conning me?”

The story, which notes Holmes has not spoken to the media since 2016, doesn’t get much better from there. Describing the convicted CEO as “modest but mesmerizing” Chozick concludes, “If you are in her presence, it is impossible not to believe her, not to be taken with her and taken in by her.”

The Times story was met with widespread criticism, with even Fox News piling on, proclaiming, “New York Times dragged for Elizabeth Holmes profile,” noting that when contacted, the Times refused to comment.

“She did, in fact, perpetrate an elaborate scheme to defraud investors, as established by a mountain of bulletproof journalism, federal investigations and a criminal trial,” Axios healthcare editor Sam Baker wrote on Twitter after the article was published.

Silicon Valley communications strategist Brooke Hammerling quipped, “I truly hope the PR person behind this gets enough money to buy an estate in Kauai.”

Perhaps being the first to trot out Elizabeth Holmes’s latest pre-incarceration incarnation was too tempting to resist, even for the Times. But it is hard not to recall what James Stewart wrote in his 1989 bestselling book, “Den of Thieves,” about how the most infamous offenders can eventually recover from public disgrace by hiring the best PR teams.

In it, Stewart observed how Wall Street titans, such as Michael Milken, the famed 1980s junk bond trader who went to prison, managed to resuscitate their reputations by playing the long game. 

The goal, he wrote, “was to turn public opinion from outrage to neutrality to acceptance – and finally to admiration.”

Lo and behold, the Milken Institute Global Conference concluded its 26^th year this spring as one of the hottest tickets on Wall Street, convening “the best minds in the world to tackle its most urgent challenges.” 

Who’s to say the Elizabeth Holmes Planetary Summit won’t be next?

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Biden is Biding, Yellen is Yelling, As U.S. Default Looms

To avoid “catastrophe,” Congress has to do just one thing: its job.

Despite ongoing talks, the debt ceiling battle is not going swimmingly for either side.

President Biden met with Congress’s Big Four in the Oval Office on Tuesday in an attempt to get Congress to raise the debt ceiling limit to $31.4 trillion. 

But as of this writing Wednesday, they remained at an impasse, with House Republicans demanding trillions of dollars in spending cuts in exchange for their approval. The Oval Office talks included U.S. House of Representatives Speaker Kevin McCarthy, a Republican from California; Senate minority leader Mitch McConnell, a Republican from Kentucky; and Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries, both Democrats from New York. (For full backgrounder of the unfolding events — and Wall Street’s chagrin — check out Power Corridor’s Big Read from Friday.)

So far, the group has been unable to cobble together a plan that would pass both chambers of Congress. Speaking after the meeting, Biden seemed open to compromises, characterizing the talks as “productive,” although they remain deadlocked. He insisted “default is not an option” and that the U.S. cannot be a “deadbeat” in paying the debt it already owes.

He cautioned that Republicans must back off their threat of defaulting the U.S. economy, underscoring that if Congress does not raise the debt ceiling before the U.S. Treasury hits what is being called the “X-date” – the moment when it runs out of funds to pay its bills – the nation’s economy will “fall into significant recession,” shredding retirement accounts and raising borrowing costs for Americans.

U.S. Treasury Secretary Janet Yellen has stated the X-date could come as soon as June 1. Over the weekend, she stepped up her warnings while doing the rounds on television, saying, “It’s Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making.” 

She added that the negotiations should not be undertaken “with a gun to the head of the American people.”

If the higher debt ceiling limit is not approved in time, the federal government may not be able to make wage, welfare, health benefit, or other payments. 

Biden says his staff will continue to meet with Republican staff daily and talks among the Big Four will reconvene this Friday. “Obviously, this is the single most important thing on the agenda,” he said.

Coronation Abomination

No golden crowns or jeweled scepters can cover up deficits in democracy.

Police officers in the United Kingdom have been known to take an oath to “well and truly” serve the monarch as part of a special ceremony before a magistrate when they become constables.

Late last year, British police officers began taking this oath, known as the attestation, to serve King Charles III following the death of the Queen.

Still, it came as a surprise to many when, during last week’s Coronation, the UK’s Metropolitan Police Service descended on anti-monarchy protesters with what appeared to be Minority Report-like zeal, arresting a total of 64 people based on concerns that some of them might – at some point in the future – disrupt the event, according to Sir Mark Rowley, head of the Met.

As part of these concerns, it was feared protesters might use rape alarms, possible “lock-on” devices and loud hailers that would disturb the military horses, in addition to vandalizing monuments during the multimillion-dollar Coronation procession. “Clearly, this would not only have been unlawful, but also extremely dangerous,” Rowley wrote, defending his officers.

He noted that, 12 hours before the Coronation, “we had become extremely concerned by a rapidly developing intelligence picture suggesting the Coronation could suffer.” 

Among those arrested were six protesters with the anti-monarchy group Republic, who were held for nearly 16 hours before being released.  They were told their bail would be canceled and no charges would be brought against them. (In the UK, “republicans” believe in replacing the monarchy with a republic and support new-fangled ideas such as having a popularly elected head of state instead of a monarch.)

Police expressed “regret” after it was found there was no proof to support their suspicions that the protesters were seeking to use lock-on devices to attach themselves to objects, which would have violated the law.

Matt Turnbull, one of the protesters arrested, stated, “It is a concerning thing for everyone for the police to be able to determine that you may be about to commit a crime when there is no evidence of that to be had.”

The chief executive of Republic, Graham Smith, also part of the arrested bunch, said he had received a personal apology from the police officers, but did not accept the apology and would be taking legal action. 

He called for a “full inquiry,” adding, “We have a lot of questions to answer and we will be taking action.”

Smith also cried foul on police claims that the officers had acted on credible information his group had planned to break the law. 

“They also said they had intelligence, which is untrue,” he said.

A good reminder, for those who may have forgotten amid the pageantry and glittery baubles, that monarchy and democracy just don’t mix.

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