From what I saw from the trial, no one did any real diligence at all, except the people who testified they didn't invest because they did diligence. The Devos family office testimony was.... laughable, what a joke, they basically just went off what everyone else said, and that has primarily been my experience in startup. If big names are involved, people almost ALWAYS do the diligence they want to do so that you pass, not so that you fail.

tbqh, I came away from the trial really feeling like the investors who testified against her deserved what they got because of how they approached the situation. IMO Elizabeth Holms isn't some mastermind manipulator, she's more akin to a child who was enabled by moronic parents.

You don’t get to commit fraud just because your victims should have known better. That’s not how the law works

It seems so, as she's going to jail. However, that wasn't the crux of my original point. The legal standard and the SV standard have been divergent in may circles for quite some time. May folks do "take liberties with the truth" because your investors should know better - If someone went for coffee with 26th US secretary of defense for the united states of america and explained how it would be useful for the military, and that person said it would be and they could easily have the military look at testing it, I don't believe it would be uncommon for a founder to then turn around and say to an investor "the military is going to be running a test with our equipment", I wouldn't traditionally expect then to have the possibility of being prosecuted for wire fraud hanging over me if my startup failed. That said, we should all now _expect_ the legal standard is the SV standard. It will be interesting to see how it impacts the industry, if at all.

> If someone went for coffee with 26th US secretary of defense for the united states of america and explained how it would be useful for the military, and that person said it would be and they could easily have the military look at testing it, I don't believe it would be uncommon for a founder to then turn around and say to an investor "the military is going to be running a test with our equipment", I wouldn't traditionally expect then to have the possibility of being prosecuted for wire fraud hanging over me if my startup failed.

I think the crucial distinction between a slight stretch like you describe and what Holmes did is the tense: the military is going to test our product vs. the military is testing our product (which did not, uh, exactly exist then). One is a rosy forecast and the other is just a lie.

> ...say to an investor "the military is going to be running a test with our equipment"...

But as I understood it, that's not what she said. Your phrasing is about the future, i.e. something nobody can know at the time it is being said whether it will come true or not. Therefore, something anyone with the least bit of common sense would think "Yeah, let's hope that will happen" about.

Completely different than saying "the military is running / has run a test with our equipment". That's a statement of actual ongoing or concluded fact. If it actually is happening or has happened when you say it is happening or has happened, then you're telling the truth; if it isn't / hasn't, then it's a lie.

From what I gather, what she said was the latter -- but it never actually happened: So, a lie. Said with intent to induce people to give her money: So, fraud.

Fortunately the law doesn't have a victim blaming statute in these cases, so any mistakes the investors made don't excuse Holmes for lying and commiting fraud.

Yeah, this is serious stuff. It's not as if it were some piddling shit like rape, where victim blaming is all but mandatory.