In Forbes, Professor Miriam Baer Weighs in on Potential Criminal Charges for Theranos Founder

03/16/2018

Professor Miriam Baer, an expert in white collar crime and criminal law and an associate director of the Law School’s Center for the Study of Business Law and Regulation, was quoted in a March 15 Forbes story about Elizabeth Holmes, the founder and CEO of blood-testing company Theranos who agreed to settle with the SEC on fraud charges this week. Baer commented on the potential for Holmes to face criminal charges, explaining that, although Holmes and the company didn't admit or deny the allegations that she deceived investors to raise $700 million, she could still face jail time if prosecutors decide to pursue her.

The SEC charges are not criminal but civil, and carry no jail time. However, the settlement—in which Holmes agreed to pay a $500,000 fine, return 18.9 million Theranos shares, give up her voting control of the company, and be barred from serving as an officer or director of a public company for a decade—does not preclude the U.S. Attorney’s Office from bringing its own charges after reviewing the case, said Baer.

"If you have a large fraud that deceives the public, then certainly that would be a kind of factor that might suggest that criminal charges are forthcoming," said Baer, noting that the burden of proof is higher for a criminal case and prosecutors will need to determine whether Holmes was acting recklessly or had intent to deceive her investors.

Whether Holmes could get locked up would also depend on what criminal charges she faces, if any. Based on the size of a $700 million fraud, Baer said, U.S. recommended sentencing guidelines “would almost certainly involve jail time."

Baer is a member of the American Law Institute and a Fellow at the American Bar Foundation. At the Law School, she teaches in the areas of corporate law, white collar crime, criminal law, and criminal procedure. Her scholarship, which focuses on organizational wrongdoing in public and private settings, has twice been selected for the prestigious Stanford-Yale-Harvard Junior Faculty Forum and for the American Law and Economic Association’s Annual Meeting. She has published her work in many journals, including the Columbia Law Review, Michigan Law Review, Virginia Law Review and Yale Law Journal Online, among others.