Megan McArdle’s Washington Post column, published in the Press Herald on Jan. 7 (Page A7), on the securities fraud conviction of Theranos CEO Elizabeth Holmes, posits that “Holmes is still probably going to jail for a good long time.” Yes, you’d think so after defrauding billions from investors and putting thousands at risk with her make-believe medical invention. But I wouldn’t count on it.

APTOPIX Theranos Founder Fraud Trial

Elizabeth Holmes leaves federal court after the verdict in San Jose, Calif., on Jan. 3. Holmes was convicted of fraud for turning her blood-testing startup Theranos into a sophisticated sham that duped billionaires and other unwitting investors into backing a seemingly revolutionary company whose medical technology never worked as promised. Nic Coury/Associated Press

Two other securities fraud cases I tracked over the years make me wonder about the justice of it all. Some 20 years ago in Portland’s federal court, my family member was convicted of securities fraud involving $7 million. She served 15 years in federal prison, filling time teaching writing to mostly Black and Hispanic women. She said most inmates were there for drug- and poverty-related crimes such as bouncing checks. The worst thing was listening, at night, to mothers wailing about separation from their children.

The other fraud case? The 2008-2009 financial meltdown. Not a “case,” really, since no one was tried. Nevertheless, it’s one of the greatest scams ever, involving hundreds of billions. It crashed the world’s economies and cost millions their jobs, their savings, their homes. The culprits? Self-proclaimed “Masters of the Universe,” the titans of Wall Street, who knowingly, wantonly and recklessly put billions of other people’s money into junk products. The number of these predators who were charged, convicted and served time? Zero. The amount of money Wall Street lost? Virtually nothing after being bailed out by taxpayers.

Where will Ms. Holmes’ sentence fall between these extremes: teaching writing, or a light Wall Street scold and slap?

Michael Petit

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