The Theranos fraud, discussion

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2022-01-13 17:00:14

Ripping off rich people. This was Madoff’s big mistake. You steal from the poor, you have a better shot at skating. You steal from the wealthy and they pull levers. Not only the wealthy – she also stole from powerful people – a General and a former Secretary of State and some famous venture capital titans. And, for this crowd, worse than losing money is losing respect. She humiliated her entire board and shareholder base. They publicly promoted her. It was a fiasco. She had to pay.

Her fraud took advantage of a regulatory loophole. Unlike prescription drugs, there is considerably less oversight for blood testing. Although it would have required FDA approval for Theranos to sell its blood testing machines, it there was considerably less oversight for Theranos to sell its blood-testing services, such as to Walgreens or online. Of course, Theranos’ blood testing machines were useless.

It’s a common myth or misconception I see online that stealing from the rich incurs a much more severe penalty or certainty of punishment than stealing from the poor. Anyone who does the basic research on the matter can see that this is not true. He refutes his own argument by giving the example of Madoff, who got away with his crimes for at least three decades until finally being arrested in 2008. If protecting the rich is such a high priority, why were all the warnings and obvious signs of fraud, from as far back as 2000, ignored until it was too late? Tax evasion only has a maximum punishment of 5 years in prison, for effectively defrauding the federal government (versus up to 20 years for wire fraud). It doesn’t get any ‘richer’ than the federal government.

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