{"id":175602,"date":"2021-01-12T19:58:00","date_gmt":"2021-01-13T00:58:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/01\/12\/not-a-good-look\/"},"modified":"2021-01-12T19:58:00","modified_gmt":"2021-01-13T00:58:00","slug":"not-a-good-look","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2021\/01\/12\/not-a-good-look\/","title":{"rendered":"Not a Good Look"},"content":{"rendered":"

It turns out that Theranos has systematically destroyed incriminating evidence<\/a>.<\/p>\n

This appears to be deliberate obstruction of the investigation: <\/p>\n

Failed blood-testing unicorn Theranos trashed vital incriminating evidence of its fraud, prosecutors said on Monday. <\/p>\n

The imploded startup’s extensive testing data over three years, including its accuracy and failure rate, was \u201cstored on a specially-developed SQL database called the Laboratory Information System (LIS),\u201d according to a filing [PDF<\/a>] in the fraud case against Theranos’s one-time CEO Elizabeth Holmes and COO Sunny Balwani. <\/p>\n

\u2026\u2026\u2026 <\/p>\n

The reality, however, was that for one set of tests, the failure rate was 51.3 per cent. What does that mean? Prosecutors explain: \u201cIn other words, Theranos\u2019s TT3 blood test results were so inaccurate, it was essentially a coin toss whether the patient was getting the right result. The data was devastating.\u201d <\/p>\n

\u2026\u2026\u2026<\/p>\n

From the filing: \u201cOn or about August 31, 2018 – three months after a federal grand jury issued a subpoena requesting a working copy of this database – the LIS was destroyed. The government has never been provided with the complete records contained in the LIS, nor been given the tools, which were available within the database, to search for such critical evidence as all Theranos blood tests with validation errors. The data disappeared.\u201d <\/p>\n

\u2026\u2026\u2026<\/p>\n

When a grand jury issued a subpoena for the database, Theranos\u2019s lawyer came up with a strategy to supply the info without exposing the company\u2019s appalling test results: hand over a backup of the database to the government and fail to provide the necessary materials to reconstruct it.<\/p>\n

How do we know this? Because prosecutors said they have the internal emails showing staff discussing exactly that: how the backup wouldn\u2019t come with the \u201clayers of applications and data.\u201d Its VP of Operations emailed an internal lawyer: \u201cIf we are just handing over a database, I\u2019m not sure it will meet the needs.\u201d <\/p>\n

If that wasn\u2019t enough, all three versions of the backup provided to the US government came with a password that was necessary to open it up. And no one was able to remember it, at least according to the various internal emails flying around. After some discussion, it was agreed that Theranos\u2019s former head of IT, Antti Korhonen, was the only one with the password. But then Korhonen wasn\u2019t able to find it either. <\/p>\n

Unable to get at the database, Uncle Sam put an expert on the case: \u201cThe government retained a computer forensic expert to assist in retrieving this data, who found that the \u2018key\u2019 file on the hard drive, required to reconfigure the SQL database, is itself encrypted by a distinct password (not the one provided with the transmittal letter to open the hard drive), and cannot be opened.\u201d <\/p>\n

While all this was going on, Theranos decided to shut down the facility that housed the database in Newark, New Jersey. Execs were warned that if the hardware and servers were taken apart \u201cit would be almost impossible to recreate the database\u201d by Theranos IT contractor Michael Chung. But they shut it down anyway, and any access to the database from that point was lost \u2013 both for Theranos and government investigators.
Oops? <\/p>\n

Uncle Sam’s legal eagles are not convinced this was an innocent mistake. Referring to the IncRev\u2019s CEO, they note: \u201cEven though Chandrasekaran knew the LIS hardware would be coming apart on Friday, August 31, 2018, and even though he was on an email chain in which the \u2018all clear\u2019 was given to take apart the hardware, he waited until two days later, September 2, 2018, to email a senior Theranos official with a list of items he would need from the database in order to reconstruct the LIS. <\/p>\n

\u2026\u2026\u2026 <\/p>\n

Its conclusion? \u201cIt does not appear from the timing of Chandrasekaran\u2019s requests that he, in fact, intended to successfully copy the database before it shutdown.\u201d <\/p>\n

There is plenty of other evidence that, despite Theranos\u2019s repeat claims, its machines were so inaccurate that they were fundamentally worthless. But the database would have provided clear proof that the company had to be aware that its entire testing system was fundamentally flawed, which itself supports the argument that the startup knowingly misled investors. While lying in press releases and interviews is reprehensible, it\u2019s not necessarily a crime. However, lying in presentations to people in order to pull in investment is. <\/p>\n

The failure to retain a working copy of a database that the company had paid millions to build and maintain, and which contained critically important information for the functioning of the business, is, let\u2019s say, suspicious. Sufficiently suspicious that prosecutors wrote an entire filing about it. <\/p>\n

\u2026\u2026\u2026<\/p>\n

Other filings reveal that Holmes would often personally handle complaints about how inaccurate its tests appeared to be, something that prosecutors says is evidence that the CEO knew that its testing machines didn\u2019t work while at the same time continuing to claim the opposite in public. Holmes and Balwani face<\/a> a dozen criminal wire fraud charges apiece, and up to 20 years in prison if found guilty.<\/span><\/p><\/blockquote>\n

Throw the book at them.<\/p>\n

There are way too many unicorns out there who are little more than fraud, and we need to start throwing their founders in jail.<\/p>\n","protected":false},"excerpt":{"rendered":"

It turns out that Theranos has systematically destroyed incriminating evidence. This appears to be deliberate obstruction of the investigation: Failed blood-testing unicorn Theranos trashed vital incriminating evidence of its fraud, prosecutors said on Monday. The imploded startup’s extensive testing data over three years, including its accuracy and failure rate, was \u201cstored on a specially-developed SQL …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[365,368,575,440],"class_list":["post-175602","post","type-post","status-publish","format-standard","hentry","tag-business","tag-corruption","tag-fraud","tag-medical"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/175602"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=175602"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/175602\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=175602"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=175602"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=175602"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}