Elizabeth Holmes, who is 37 years old former biotechnology entrepreneur, has been found guilty of defrauding investors out of millions of dollars. She was one of Silicon Valley’s young executives working with blood testing with innovative technology.
Founder of Theranos
Holmes founded Theranos at 19 years old and soon after dropped out of Stanford University to pursue her company full time. Theranos promised technology that could screen patients for hundreds of diseases with a tiny sample of blood. She raised $945 million from investors and at its peak, Theranos had a value of $9 billion. But, when the machines were added to Walgreens stores, they gave patients false results.
The Evidence aginst Holmes
The evidence showed Holmes’ role in falsified validation reports, misleading contract claims, and overstate financials. The jury watched videos and heard recordings of Holmes making misleading claims about Theranos.
Before shutting down in 2018, Theranos voided two years’ worth of its blood tests and paid off numerous investor lawsuits, as well as fraud charges by the Securities and Exchange Commission.
After a 7-day deliberation, the 14-person jury found Elizabeth Holmes guilty of three counts of wire fraud and one count of conspiracy to commit wire fraud for lying to investors.
The jury found Holmes not guilty of four other fraud-related charges regarding patients who received false results from tests conducted by Holmes’ company.
The jury could not reach a unanimous verdict regarding three other counts of investor fraud and the judge is expected to announce a mistrial on those charges.
The Sentencing of Elizabeth Holmes
Elizabeth Holmes’ sentencing date has not yet been set but she faces 20 years behind bars, a fine of $250,000, and restitution. She showed no visible reaction as her verdict was read.
Over 30 witnesses called by prosecutors were presented over the four-month trial in San Jose, CA and Holmes took the stand for 7 days in her defense. She presented herself as an entrepreneur who received millions of dollars in investment for a medical device that never delivered on her promises.
Elizabeth Holmes showed remorse, saying she wished she had handled certain things differently. But she also blamed others as well. She said that the lab directors she trusted were the ones closest to the technology. And she said Balwani was the one who ran the company’s financial forecasts, which were later found to be exaggerated.
Holmes testified that she and Balwani had an abusive relationship. He tried to control every aspect of her life. She also accused him of sexual assault charges. Balwani is set to testify this year but has pleaded not guilty.
The government had evidence suggesting Holmes closely oversaw the operations, saying she helped spread false information which led to the millions of investments from investors that were misled.
This verdict is one of few for executives as it is rare for there to be a conviction of fraud. This makes Holmes one of the most notable female executives to serve time in prison. Her conviction is a warning sign to other executives about being careful with the statements given to investors as well as the public.
Photo credit Glenn Fawcett