As the founder and CEO of Theranos, Elizabeth Holmes was found guilty of misleading investors. The jury has made a decision that will have long-term ramifications in Silicon Valley and abroad, after four months of court procedures and seven days of discussion. Two counts of conspiracy to commit wire fraud and nine counts of wire fraud were brought against the former youngest and wealthiest female self-made millionaire. Holmes was found guilty of scamming investors including members of the DeVos family, hedge fund manager Brian Grossman, and former estate and trust attorney Dan Mosely. She was found not guilty of charges linked to patient deception.
Three-wire fraud counts involving Black Diamond CEO Chris Lucas, Hall Group executive Bryan Tolbert, and money manager Alan Eisenman, who all testified in the trial, were not found guilty by the jury. On these three counts, Judge Edward Davila declared a mistrial. Prosecutor Jeffrey Schenk said he would consult with the Department of Justice and report to the court next week on the government’s plans. After quitting Stanford, Holmes created Theranos in 2003. Instead of drawing blood intravenously and waiting days for test results, she pitched investors and partners on technology that would revolutionize healthcare.
Instead of drawing blood intravenously and waiting days for test results, her technology would prick a tiny drop of blood and instantly run dozens of tests on it. She was soon the CEO of a $10 billion corporation, but there was one problem: the technology was not working. Despite the fact that Theranos has been defunct since 2018, Holmes’ criminal trial just started this fall due to delays caused by the epidemic and the birth of Holmes’ child.
The prosecution built its case against Holmes over 11 weeks, examining witnesses such as former US Secretary of Defense James Mattis, whistleblower Erika Cheung, Theranos patients, investors, medical professionals, and journalists. Despite the fact that Theranos’ technology failed to achieve what the firm claimed, Holmes insisted that she was speaking the truth, even claiming that the slideshows she showed to investors created scientists and engineers. However, the prosecution was able to persuade the jury on several counts that Holmes willfully misled investors and partners – one piece of evidence showing that while negotiating a relationship with Walgreens, Theranos utilized Pfizer’s logo in an unlawful manner.
Daniel Edlin, a former senior product manager at Theranos, testified that the company feigned demonstrations of its technology in front of investors. According to Edlin, when billionaire investor Rupert Murdoch’s blood examined, Theranos erased any aberrant results before giving out the data. In a major twist for the high-profile trial, Holmes testified herself, claiming that her failure as a startup founder did not imply that she committed fraud. Holmes said that Theranos COO Ramesh “Sunny” Balwani mistreated her in a pivotal moment.
Balwani, who will stand trial separately, next year, was Holmes’ secret boyfriend. They met when Holmes was 18 and Balwani was 37, and the year after she dropped out of Stanford, she moved in with him. She also claimed throughout the trial that she was raped as a Stanford student, which was one of the reasons she did not complete her degree. “I decided to establish a life by building this firm,” she says. Balwani’s controlling behavior outlined in the report included a written record that prescribed her daily schedule, including what she ate, slept, and how she dressed. “He was dissatisfied with my mediocrity and was attempting to educate me how to be better,” she explained.
