Criminal Prosecutors See No Evil in Silicon Valley

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“Silicon Valley is much cleaner than when I started out during the dot-com bubble of the 1990s,” said Reed Kathrein, a San Francisco attorney who successfully sued Ms. Holmes and Theranos on behalf of investors in 2016. “Everyone is throwing money at these start-ups. Everyone thinks they will win the lottery. It’s easier to be honest.”

reforms initiated by WorldCom’s downfall, a long-distance telephone company, and Enron, an energy company, also made an impact in the early 2000s.

“Some law changes, such as the Sarbanes-Oxley Act, have put accountants in a difficult position,” Mr. Kathrein said. “Now they have to do their job.”

Thirty years ago, the tech industry was as much known for physical products as it was for software. Indeed, software used to be a physical product. If sales weren’t going well, it offered possibilities for cheating.

MiniScribe, a struggling Colorado disk storage company, was acquired in 1984 by leading Silicon Valley financiers Hambrecht & Quist. The investment firm pumped money and set up its own management. In 1988, MiniScribe executives packed 26,000 bricks into MiniScribe boxes and shipped them to Singapore to keep their numbers up. When the plan was revealed, the company went bankrupt and the CEO went to jail.

Mr Kathrein noted that, in this sense, Ms. Holmes’ case was a setback. It was accused of making false and misleading statements to investors that Theranos’ proprietary analyzer, called Edison, was a medical miracle capable of performing a series of clinical tests. He couldn’t.

“He was carrying bricks,” he said. Ms. Holmes’ lawyer declined to comment.

Mr Kathrein’s conclusions are not widely accepted. When asked if tech workers have been more honest over the decades, Margaret O’Mara The Silicon Valley historian burst into laughter.

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