Why Female Fraud Is So Rare: 5 Elizabeth Holmes Lessons

Elizabeth Holmes is the rare exception of a fraudulent female leader. (HBO photo)

Most everyone would see prison time as a big deterrent to hatching a fraudulent business. But on the other hand, someone may see $9 billion in valuation as a big incentive to keep the lies inflating.

Elizabeth Holmes, the young and restless founder and CEO of Theranos, who (if you have been away on vacation and away from TV and news) was recently the center of the HBO documentary, “The Inventor: Out for Blood in Silicon Valley.” Jennifer Lawrence is also set to play her in an upcoming movie about the scandal.

And while Holmes’ rise in fame, stature and expertise–and possible prison time– make for a 21st century cautionary tale for billions of reasons, I think deconstructing the myths and reinforcing the need for transparency can help perhaps the rest of us mortals avoid such a sorry ending.

“Deconstructing the myths and reinforcing the need for transparency in the story of #ElizabethHolmes can help perhaps the rest of us mortals avoid such a sorry ending.”

According to CNBC, “Theranos was once the start-up darling of Silicon Valley: It had a $9 billion valuation and claimed its technology could accurately run hundreds of tests on a few drops of blood. Then it was revealed to be a fraud.”

The latest news is that “Theranos officially dissolved in September, just six months after Holmes settled with the Securities and Exchange Commission over charges of ‘massive fraud’ in a deal that included a $500,000 fine and banned her from serving as a director or officer of a public company for 10 years. Holmes and former Theranos President Ramesh “Sunny” Balwani still await trial on criminal fraud charges and could face up to 20 years in prison if convicted.”

Holmes bucks the gender trend of fraud. Penn State researchers announced in a 2013 study that women were less likely to be involved in corporate fraud than men.

“#ElizabethHolmes bucks the trend. Penn State researchers announced in a 2013 study that women were less likely to be involved in #corporatefraud than men.”

“In most cases when women do take part in corporate crime, they tend to play minor roles in the overall conspiracy, according to the researchers, who reported their findings in American Sociological Review,” according to Penn State News.

“The findings suggest that placing more women in executive leadership positions in corporations may raise ethical standards. Women are socialized to take fewer risks for business advantage and may feel they are under greater surveillance so they self-censor more,” the report shows.

This was backed up by a later 2016 study by Meredith College researchers that found, “The presence of at least one female leader decreases the likelihood that the company will be involved in litigation for financial reporting fraud. The findings add to the literature which indicates that women tend to be more risk averse and are more committed to ethics policies.”

It is true; women are very rarely implicated in fraud. According to Forbes, of the 10 biggest frauds in U.S. history, 100 percent were commandeered by white males.

Is Holmes an anomaly? Or, perhaps, if you are more cynical, Holmes’ deceit may be seen as a victory on the path to gender parity in fraud as well as leadership.

The only female fraudster who comes to mind in the last 40 years is Leona Helmsley, dubbed the Queen Of Mean, who with billions in worth in hotels and real estate assets, went to jail in 1992 for fraud and tax evasion.

Just to be clear, we get it that most of us will never err on the side of what Holmes concocted with Theranos. There is a reason women leaders rarely get caught for fraud—most never commit it. Here are lessons learned from the 21st century poster daughter for hubris.

Many of the “9 Leadership Power Tools To Advance Your Career” created by Take The Lead co-founder and president Gloria Feldt can address these challenges. Power Tool # 2, to “define your own terms,” and Power Tool #3, “use what you’ve got,” call for a bold grasp of your own career path and an embrace of authenticity.

Authenticity matters. Don’t fabricate a lower voice. Don’t adopt a costume so people think you are like someone else—Steve Jobs for instance. Don’t lie about a relationship with the chair of the company. People will find out the lies you tell, and it will not be pretty. Carol Leaman, CEO of Axonify,writes in Fortune: “I’ve said it before and I’ll say it again: women can be their own worst enemies sometimes. They get inside their own heads, compare themselves to others, convince themselves that only perfection is an option, and get paralyzed by the idea that someone else is smarter and better. And then all that self-talk manifests itself in the behaviors and attitudes that come through at work. They diminish themselves, thereby diminishing the confidence others have in them.”

If you make a mistake, admit it. Try to hide a huge error and it will only get worse. Admit the mistake. Say you were wrong, say it was not as planned. And fix it. “You know of course to never do anything illegal or immoral at work, because those are mistakes that will get your fired or worse. Still, keep in mind it is wise to avoid these missteps so your climb up the ladder goes as well as possible,” Take The Lead reports. “Maybe it’s a tad redundant to include a mistake about making mistakes, but you have to honestly look at your own track record to see how to avoid similar bumps– that you have created or contributed to along your career path. ‘Know Your History,’ is No. 1 of the 9 Leadership Power Tools for a reason. Be honest with yourself and ‘you can create the future of your choice,’” says Feldt.

“There are #leadershiplessons to be learned from the 21st century poster daughter for hubris, #ElizabethHolmes: Authenticity matters, admit when you make a mistake, stay humble, and be honest.”

Stay humble, but own your ideas. Part of Holmes’ downfall was that she believed in her own fabrications and hype. As a creative leader, you innovate, revise and collaborate constantly on new ideas. Stay grounded, and give credit where credit is due. Including to yourself. “You know you’re making an impact when other people start using your ideas without attribution. But for all women who are struggling to be heard and acknowledged, allowing our ideas to be used without acknowledgement because we believe in a cause or a business proposal is asking for more selflessness than we should expect from ourselves or others,” writes Feldt.

Read more from Gloria Feldt in take The Lead on taking credit for your ideas.

Publicity for publicity’s sake is cheap. Take The Lead reports, “Career coach and personal branding expert Erica Breuer of Clevertech suggests to polish your image as a woman in leadership you stay away from cute titles and fuzzy profile shots on social media. While calling yourself ‘Queen of Everything’ may be funny to your tribe of friends, it doesn’t appeal so much to the headhunters in HR.”

Be honest in all your communications. Be truthful, honest and transparent always. Take The Lead reports, according to new research from Coventry University, “normalization of corruption and the normalization of lying allows for lying to become institutionalized, rationalized and socialized into the structure and culture of an organization such that it becomes embedded, maintained and strengthened over time as a legitimate and integral part of the job. The study found that not only normalizing deception, but rationalizing it, happens in the workplace culture with bottom-up reinforcement from peers, as well as top down praise. In this study, one company aimed to lie to clients and it was rewarded by both men and women leaders.” So don’t start. Stay with the truth.

Read more in Take The Lead on corruption in business.

Of course not every female leader is perfect and not everyone is above deception. Nor are most of us teetering on the edge of an ethical breach. But it is prudent to look at this enormous downfall of a brilliant mind to see what never to do.

Allison Willmore writes in BuzzFeed News, “If Holmes’ story has a larger meaning, it’s not just one about the tech industry, or about venture capital, or about media criticism. It’s also a cautionary tale about our need to fit real-world figures and events into neater narratives — how the desire to boil them down to a larger meaning sometimes leads us to oversimplify, to ignore indications there might be more to the story than what fits into straightforward messaging.”

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About the Author

Michele Weldon is editorial director of Take The Lead, an award-winning author, journalist, emerita faculty in journalism at Northwestern University and a senior leader with The OpEd Project. @micheleweldon www.micheleweldon.com