Unravelling the web of female con artists.
SHE CONVINCED HER INVESTORS AND THE PUBLIC SHE WOULD REVOLUTIONISE TESTING FOR GENETIC DISEASES – BUT SHE WAS LYING. THERANOS FOUNDER ELIZABETH HOLMES IS THE LATEST IN A LINE OF SLIPPERY WOMEN UNDER THE SPOTLIGHT. ANN FRIEDMAN INVESTIGATES HOW HER FALL FROM GRACE AFFECTS THE REST OF US
Even before it all came tumbling down, Elizabeth Holmes was riveting. Her baritone voice. Those black turtlenecks. The seemingly endless plaudits she received from the tech world. That well-crafted narrative about how her fear of needles and desire to change the world led her to found a company, Theranos, that she said could perform complicated medical tests with only a finger-prick of blood. She exhibited all the qualities that women are typically discredited for — fashion quirks, outrageous ambition, unusual vocal tics, failure to provide hard evidence — and soaked up rounds of funding anyway.
Theranos’s board was stacked with the kind of old white guys whose approval has long been synonymous with power. Holmes performed a sleight of hand not often achieved by women in public life. She didn’t have to prove her ideas to be handsomely rewarded for them. She was a kind of anti-hillary: underprepared, underqualifed and beloved by men.
Now that the US Securities and Exchange Commission has charged her with “massive fraud” for “deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyser”, she’s no longer the world’s youngest self-made female billionaire. She’s still fascinating, but for an entirely different reason. In March, Holmes settled with the SEC, which also alleged that she “claimed... that the company would generate more than $135 million in revenue in 2014. In truth, Theranos... generated a little more than $135,000 in revenue from operations in 2014.” Holmes agreed to pay a $678,000 fine and cede voting control of the company she created. As part of the settlement, she “neither admitted nor denied” any wrongdoing.
Is Holmes’ story a cautionary tale of what happens when you get swept up in possibilities and fake it till you make it? Or a deliberate con? The distinction might not matter. Women are constantly second-guessed; we struggle to be taken seriously when it comes to our experiences with harassment, or our attempts to get credit we deserve at work. So while part of me admires Holmes’ audacity, mostly I’m angry with her for setting women back, and reinforcing the idea that we’re not to be believed.
There is a “gender gap in ethics”, according to Laura Kray, professor of leadership at the University of California, Berkeley’s Haas School of Business. Her research shows that men are quicker than women to lie for their own personal benefit. This is partly because women are more prone to “the moral emotions of guilt and shame”, according to 2013 research by Kray and Jessica Kennedy, now an assistant professor at Vanderbilt University.
But there are more female fraudsters out there than one might think. “Female con artists are incredibly underreported,” says Maria Konnikova, author of The Confidence Game: Why We Fall for It… Every Time. “People don’t want to admit they’ve been taken advantage of, they never want to admit to having fallen for a female con artist.” She observes that all successful swindlers exhibit a knack for convincing people to do what you want while making them believe it was their own idea. “Women are very good at it,” says Konnikova. “Often they don’t have real authority, so they create their authority in other ways.” Picture a female tech CEO stacking her board with former secretaries of state and signalling her world-changer status with those black Steve Jobs turtlenecks.
And unsurprisingly, when professional women are caught in a lie, Kray says, they face harsher consequences than men who commit similar offences. “People expect it from men,” she says. “To be a woman is to be caring and selfless. So if you’re behaving unethically, then not only are you surprising us, you’re violating these cultural codes.” Take Martha Stewart, who built her career in the feminised world of canapés and wreaths, then became the poster girl for finance fraud when she was sentenced to five months in prison in 2004. Stewart was convicted of lying to government officials about the reason she sold her shares in a company called Imclone to avoid a loss of around $60,000. Yet her name comes up alongside Enron’s Jeff Skilling, who sold more than $81 million in shares, and banker Dennis Levine, who netted $17 million, on lists of infamous insider trading incidents. “The same traits in women
are perceived very differently,” Konnikova says. “No-one’s going to say a man is a blight on society. It’s like, ‘He’s kind of brilliant.’ For women, it’s the opposite: ‘We always told you women were deceitful.’ The stories are cast in a very different light.”
Virtually everyone engages in some low-level dishonesty, but you rarely hear men’s transgressions used as argumentending confirmation of negative stereotypes. Take Jackie, the woman whose graphic story of a frat-house gang rape at the University of Virginia was published by Rolling Stone in 2014 and later completely discredited. Reporter Sabrina Rubin Erdely explained that, despite inconsistencies in her story, she found Jackie “very credible”. Indeed, social scientists analysing crime records report that the rate of rape allegations that can be proven to be false is only two to six per cent. But that doesn’t stop people from using the Rolling Stone debacle to dismiss women who come forward about an assault. Jackie’s story ultimately had consequences for all women in similar — truthful — situations.
Which brings us back to Holmes. In Silicon Valley, women struggle to get a fraction of the funding she was able to secure for Theranos. Just two per cent of venture capital dollars goes to all-femalefounded start-ups. That’s partly because funders don’t believe women’s companies have the same potential. Venture capitalists, according to a study by the Harvard Business Review, “tended to ask men questions about the potential for gains and women about the potential for losses”. Male founders are asked about their highest ambitions for the company; women are asked how they’re preventing failure scenarios. Holmes, it seems, enjoyed the benefits of a line of questioning typically afforded to men. Which is why her fraud charges are so devastating. At high-profile conferences and in dozens of glowing write-ups, Holmes was held up as a model of what happens when ambitious businesswomen gain an unprecedented level of investment and trust. To our great detriment, because of the charges against her, the world may have an answer: they fake it. And now it’ll be that much harder for the rest of us to make it. E
A seemingly legit 25-year-old “German” heiress, Anna Delvey, managed to convince everyone she met that she was about to inherit $14 million… and racked up thousands in unpaid bills before going to jail.
Then there’s Yvonne Bannigan, a former assistant to US Vogue’s Grace Coddington, who was arrested for charging $68,000 of her own things to her boss’s credit card.
Here in Australia, who can forget Belle Gibson, who lied about healing her own cancer with a wholefoods diet? She’s been in the news again recently for failing to pay the $410,000 fine.
So yeah, as Jia Tolentino for The New Yorker writes, it’s “grifter season”. But what compels someone to lie to such an extent that it becomes a crime?
The truth is, we all have the tendency to lie, even just a little, from telling ourselves we won’t hit the snooze button to bailing on dinner plans due to “sickness”. The con artist is simply at the other end of the spectrum of untruths, says forensic psychologist Misia Temler. “We all lie, but it’s mostly not harmful.” It might even be necessary for our survival. “We don’t have the physical power and speed of other animals, but we can make things up and hope they become true,” says Ian Leslie, author of Born Liars.
Lying for gain is something we probably all do, but con artists take it to the next level. Dan Ariely, author of The Honest Truth About Dishonesty, talks of a museum gift shop where money frequently went missing. When the museum finally set up registers to monitor the flow of money, the losses stopped – it turned out almost all staff were stealing small amounts of money every now and then. The lesson? “Only a tiny minority feel comfortable stealing a huge amount, but given the chance, nearly everyone steals or cheats a little,” says Ariely.
But what truly separates scammers from your everyday, run-of-the-mill liar is usually a disregard for the moral code. “Liars like these tend to have anti-social personality disorder,” says Temler. “They have their own ‘rules’ and moral code they live by,
and they ignore the social contract.” There’s an element of narcissism there, too, says Temler, in that those who lie in such ways tend to blame others for their problems (Holmes fired people who dared question Theranos’s non-existent technology).
Scams thrive in times of change, says Konnikova, as it breeds uncertainty – the con artist’s greatest ally. And what time could be more uncertain than this one?
Tom Gara, a Buzzfeed writer, suggests that 2018 is to scammers what 16th-century Florence was to sculptors: so ripe for success it’s almost rotten. Climate change, fake news, Trump, Brexit, the very real possibility of falling in love with the Honey Badger: it’s all kind of bonkers. No wonder we’re so quick to believe people who seem unusually confident (which, incidentally, is where the “con” in con artist comes from).
“There’s more of a cultural acceptance of lying these days,” says Temler. “To some degree, we all know that social media is a lie, or at least allows us to stretch the truth or omit things we don’t like.” Who among us hasn’t posted a pic of our “amazing weekend”, leaving out the bit about the hangover and the Uber-ed hash browns?
Online communication itself, with its distant nature and sense of anonymity, is fuelling our dishonesty, too, says Ariely. “The more communicating we do online, the more our crimes are seen as victimless. All our research shows these are the crimes we’re happiest to commit, because we have no sense of hurting anyone.” Case in point: Belle Gibson, who lied via Instagram, and showed little remorse afterwards.
But perhaps the biggest reason we all lie (even just those harmless white lies) is because it’s so easy. “It’s much easier to lie in order to get someone’s money or wealth than to hit them over the head or rob a bank,” says Harvard ethicist Sissela Bok.
The more we lie, the easier it gets, say studies. For a con woman (or man, for that matter), who tells lie upon lie, the act gets easier and easier, until, of course, it all comes crashing down.
GRIFTER SEASON IS IT THE GOLDEN AGE OF THE SCAMMER?