Reference no: EM133194759 , Length: 3 pages

Theranos: Who Has Blood on Their Hands?

Question 1. How should the U.S. District Court, Northern District of California, decide on the motion to dismiss the class action lawsuit brought by Robert Colman and Hilary Taubman-Dye against Theranos and its officers? Should the court allow the case to proceed and why?

Question 2. In examining the elements of fraud identified in the case, how strong is the case that Homes and Balwani engaged in fraud? Use the elements of fraud and facts in the case to support your answer.

Question 3. How well did Donald A. Lucas and Lucas Venture Group meet their responsibilities to Robert Colman? Should Colman be suing them? Consider if Donald Lucas and Lucas Venture Group met their fiduciary duties (duty of loyalty and duty of care) to Colman?

Question 4. Why did the board governance at Theranos fail even though governance in the case of privately-hold companies is often said to be superior to that of publicly-traded companies because investors have more at stake and are able to hold managers accountable and to ask more of them?

Question 5. Is this simply a story of ego and greed or are start-ups inherently flawed in that they raise money based on not much more than an idea?

Question 6. What lessons do you take away from the case as an investor, entrepreneur, employee or business partner? Are there specific lessons for the actors in the spaces of healthcare, medical devices, and biotech?

Theranos In-Class Discussion Questions

Question 1. Looking at the elements of fraud, how strong is the case that Holmes and Balwani engaged in fraud? Use evidence from the case to evaluate and support your answer. Argue there was no fraud. Argue why there might not be fraud.
a. Elements of Fraud
i. Misrepresentation
ii. Knowledge (scienter)
iii. Intent to defraud
iv. Justifiable Reliance by individuals who were defrauded
v. Resulting Damages

Question 2. Shouldn't Colman be suing Donald A. Lucas and Lucas Venture Group (LVG) for breach of fiduciary duties? (arguments for and against) Consider: how well is Donald A. Lucas and Lucas Venture Group meeting their responsibilities to Colman?

Question 3. How would you feel if you were in Colman's shoes?

Question 4. Can all investors here claim to have been defrauded? Can they claim justifiable reliance? Examine 2a, 2b, 2c, and 2d exhibits and using examples from the case study:

a. Examine early vs. late stage investors. Could both groups have relied or are there distinctions.
b. Examine sophisticated vs. unsophisticated investors. Could both groups have relied or are there distinctions.
c. Also consider those individuals that relied on investment groups.

Question 5. Why did the board governance at Theranos fail to prevent against what happened? Examine exhibits 11 and 8 for references of who was on Theranos' board compared to other Biotech companies.

Question 6. What would you have done differently if you were a board member?

Question 7. How important were outside factors or parties in helping explain what happened? What role did media play in terms of influence?

Question 8. Are early-stage entrepreneurs inherently conflicted and tempted to cross lines because their job is to raise money on the basis of an idea-that is, they must sell the dream before they can make it?

Question 9. What are concrete ways entrepreneurs can avoid crossing the line from visionary to a fraud as an entrepreneur?

Question 10. What do you think about what ultimately happened in this case and are you surprised by anything?

Question 11. What are the lessons that you take away or would like to take away from today's discussion?