On Monday, the seventh day of deliberations, the jury told US district judge Edward Davila that it was unable to reach a unanimous verdict on those three charges. In response, Davila encouraged them to deliberate further, but jurors later returned and rendered their final decision.
As the verdict was read, the Theranos founder bowed her head, remained seated and expressed no visible emotion. Her partner, Billy Evans, showed agitation in earlier moments but appeared calm during the verdict reading.
Holmes was found guilty on four charges: one count of conspiracy to defraud investors, and three counts of wire fraud against investors.
Holmes was meanwhile acquitted on three charges, including one conspiracy to defraud patients and two charges related to patients who received inaccurate test results. One charge was thrown out earlier in the trial, and the jury did not come to a verdict on the remaining three charges.
The verdict seals Holmes' extraordinary rise and fall and could have wide-ranging consequences for the tech industry. It also marked an indictment of the hype machine that helped rocket Holmes to fame, as she graced the covers of major magazines, headlined conferences, and drew comparisons to Apple's Steve Jobs.
The split verdicts are "a mixed bag for the prosecution, but it's a loss for Elizabeth Holmes because she is going away to prison for at least a few years", said David Ring, a lawyer who has been following the Holmes case closely.
Holmes, 37, faces prison time, although a sentencing date has not been set. She pleaded not guilty and is expected to appeal.
After the judge left the courtroom to meet with jurors individually, Holmes got up to hug her partner Billy Evans and her parents before leaving with her lawyers.
Over the course of nearly four months, federal prosecutors called 29 witnesses, outlining missteps and alleged fraud Holmes committed during her 15-year reign as CEO.
Holmes founded the company after dropping out of Stanford at 19 years old, promising a revolutionary technology that could run hundreds of health tests on just a drop of blood. But the company ultimately fell short of its ambitious pledge.
Once a charismatic figure, Holmes was initially hailed as a visionary. As Theranos grew, the company attracted big-name investors including the former secretaries of state George Shultz and Henry Kissinger. At its height, Theranos was valued at more than $9bn.
But cracks in the glossy surface began to show in 2015 when Wall Street Journal reporting revealed that its in-house tests had massive inaccuracies, and that the company was performing other tests using traditional blood drawing methodology and outside labs.
The fall of Theranos has been followed with perhaps even more fervor than its spectacular rise, inspiring multiple documentaries, a feature film, and an upcoming television show. Starting in late August, throngs of reporters have lined up in the early morning hours for a seat inside the federal court house in San Jose, California.
During the trial, prosecutors painted a picture of Holmes as a strict, power-hungry leader willing to go to any lengths to save her company's image, repressing internal and external dissent and manipulating the press.
"She chose fraud over business failure," prosecutor Jeff Schenk said in his closing arguments. "She choose to be dishonest with investors and patients. That choice was not only callous, it was criminal."
As witnesses, the prosecution called forward Theranos lab directors who testified that their concerns over the technology's shortcomings were largely ignored. Meanwhile, investors such as the former US secretary of defense James Mattis said he and others were discouraged from scrutinizing the company for fear of...
Elizabeth Holmes Background
Elizabeth Anne Holmes is an American former businesswoman found guilty of fraud in 2022, who was the founder and chief executive of Theranos, a now-defunct health technology company that soared in valuation after the company claimed to have revolutionized blood testing by developing testing methods that could use surprisingly small volumes of blood, such as from a fingerprick. By 2015, Forbes had named Holmes the youngest and wealthiest self-made female billionaire in America on the basis of a $9-billion valuation of her company. The next year, following revelations of potential fraud about Theranos's claims, Forbes revised its estimate of Holmes's net worth to zero, and Fortune named her in its feature article on 'The World's 19 Most Disappointing Leaders'.
The decline of Theranos began in 2015, when a series of journalistic and regulatory investigations revealed doubts about the company's technology claims and whether Holmes had misled investors and the government. In 2018, the U.S. Securities and Exchange Commission charged Theranos and Holmes with deceiving investors by 'massive fraud' through false or exaggerated claims about the accuracy of the company's blood-testing technology; Holmes settled the charges by paying a $500,000 fine, returning 18.9 million shares to the company, relinquishing her voting control of Theranos, and being barred from serving as an officer or director of a public company for ten years.
In June 2018, a federal grand jury indicted Holmes and former Theranos chief operating officer Ramesh Balwani on nine counts of wire fraud and two counts of conspiracy to commit wire fraud for distributing blood tests with falsified results to consumers. The trial in case, U.S. v. Holmes, et al., began on August 31, 2021. Holmes was convicted of four counts of fraud and conspiracy in January 2022. Holmes faces up to 20 years in federal prison, plus potentially millions in restitution and fines.
The credibility of Theranos was attributed in part to Holmes's personal connections and ability to recruit the support of influential people, including Henry Kissinger, George Shultz, Jim Mattis, and Betsy DeVos, all of whom had served or would go on to serve as U.S. presidential cabinet officials. Holmes was in a clandestine romantic relationship with Balwani during most of Theranos's history. Following the collapse of Theranos, she started dating hotel heir Billy Evans.
Holmes's career, the rise and dissolution of her company, and the subsequent fallout are the subject of a book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, by The Wall Street Journal reporter John Carreyrou, and an HBO documentary feature film, The Inventor: Out for Blood in Silicon Valley.
Contents 1 Early life 2 Theranos 2.1 Founding 2.2 Funding and expansion 2.3 Downfall 2.4 Criminal charges 2.5 U.S. v. Holmes, et al. 3 Promotional activities 4 Connections 5 Recognition 6 Personal life 7 In the media and influences 8 References 8.1 Notes 8.2 Works cited 9 Further reading 10 External links Early life Elizabeth Holmes was born February 3, 1984, in Washington, D.C. Her father, Christian Rasmus Holmes IV, was a vice president at Enron, an energy company that later went bankrupt after an accounting fraud scandal. Later he held executive positions in government agencies such as USAID, the EPA, and USTDA. Christian Holmes is of Danish and Hungarian ancestry. His great-great-grandfather Charles Louis Fleischmann was a Hungarian Jewish immigrant who founded Fleischmann's Yeast. Among Charles Louis Fleischmann's children were Julius Fleischmann, mayor of Cincinnati from 1900 to 1905 and entrepreneur. Her mother, Noel Anne, worked as a Congressional committee staffer.
Holmes attended St. John's School in Houston. During high school, she was interested in computer programming and says she started her first business selling C++ compilers to Chinese universities. Her parents had arranged Mandarin Chinese home tutoring, and partway through high school, Holmes began attending Stanford University's summer Mandarin program. In 2002, Holmes attended Stanford, where she studied chemical engineering and worked as a student researcher and laboratory assistant in the School of Engineering.
After the end of her freshman year, Holmes worked in a laboratory at the Genome Institute of Singapore and tested for severe acute respiratory syndrome coronavirus through the collection of blood samples with syringes. She filed her first patent application on a wearable drug-delivery patch in 2003. In March 2004, she dropped out of Stanford's School of Engineering and used her tuition money as seed funding for a consumer healthcare technology company.
Theranos Main article: Theranos Founding In 2003 Holmes founded the company Real-Time Cures in Palo Alto, California, to 'democratize healthcare'. Holmes described her fear of needles as a motivation and sought to perform blood tests using only small amounts of blood. When Holmes initially pitched the idea to reap 'vast amounts of data from a few droplets of blood derived from the tip of a finger' to her medicine professor Phyllis Gardner at Stanford, Gardner responded, 'I don't think your idea is going to work', explaining it was impossible to do what Holmes was claiming could be done. Several other expert medical professors told Holmes the same thing. However, Holmes did not relent, and she succeeded in getting her advisor and dean at the School of Engineering, Channing Robertson, to back her idea.
In 2003, Holmes renamed the company Theranos. Robertson became the company's first board member and introduced Holmes to venture capitalists.
Holmes was an admirer of Apple founder Steve Jobs, and deliberately copied his style, frequently dressing in a black turtleneck sweater, as Jobs did. Holmes says her mother dressed her in black turtlenecks when she was young, but an employee says she suggested copying Jobs's famous Issey Miyake turtleneck look in 2007.
During most of her public appearances, she spoke in a deep baritone voice, although a former Theranos colleague later claimed he heard her use the voice of a stereotypical woman in her twenties to welcome him when he was new. Her family, however, has maintained that her baritone voice is authentic. Claims of authenticity and inauthenticity both ignore how gender is performed situationally and socially; women in STEM fields commonly modify their voices and bodies to gain acceptance into cultures of science and technology that assume masculine as the norm.
Funding and expansion By December 2004, Holmes had raised $6 million to fund the firm. By the end of 2010, Theranos had more than $92 million in venture capital. In July 2011, Holmes was introduced to former secretary of state George Shultz. After a two-hour meeting, he joined the Theranos board of directors. Holmes was recognized for forming 'the most illustrious board in U.S. corporate histor'y over the next three years.
Holmes operated Theranos in 'stealth mode' without press releases or a company website until September 2013, when the company announced a partnership with Walgreens to launch in-store blood sample collection centers. She was interviewed for Medscape by its editor-in-chief, Eric Topol, who praised her for 'this phenomenal rebooting of laboratory medicine'. Media attention increased in 2014, when Holmes appeared on the covers of Fortune, Forbes, T: The New York Times Style Magazine, and Inc. Forbes recognized Holmes as the world's youngest self-made female billionaire and ranked her 110 on the Forbes 400 in 2014. Theranos was valued at $9 billion and had raised more than $400 million in venture capital. By the end of 2014, her name appeared on 18 U.S. patents and 66 foreign patents. During 2015, Holmes established agreements with Cleveland Clinic, Capital BlueCross, and AmeriHealth Caritas to use Theranos technology.
Downfall John Carreyrou of The Wall Street Journal initiated a secret, months-long investigation of Theranos after he received a tip from a medical expert who thought the Edison blood testing device seemed suspicious. Carreyrou spoke to ex-employee whistleblowers and obtained company documents. When Holmes learned of the investigation, she initiated a campaign through her lawyer David Boies to stop Carreyrou from publishing, which included legal and financial threats against both the Journal and the whistleblowers.
In October 2015, despite Boies's legal threats and strong-arm tactics, Carreyrou published a 'bombshell article' detailing how the Edison device gave inaccurate results, and revealing that the company had been using commercially available machines made by other manufacturers for most of its testing. Carreyrou continued to expose problems with the company and Holmes's conduct in a series of articles and, in 2018, published a book titled Bad Blood: Secrets and Lies in a Silicon Valley Startup, detailing his investigation of Theranos.
Holmes denied all the claims, calling the Journal a 'tabloid' and promising the company would publish data on the accuracy of its tests. She appeared on CNBC's Mad Money the same evening the article was published. Cramer said, 'The article was pretty brutal', to which Holmes responded, 'This is what happens when you work to change things, first they think you're crazy, then they fight you, and then all of a sudden you change the world.'
In January 2016, the Centers for Medicare and Medicaid Services sent a warning letter to Theranos after an inspection of its Newark, California laboratory uncovered irregularities with staff proficiency, procedures, and equipment. CMS regulators proposed a two-year ban on Holmes from owning or operating a certified clinical laboratory after the company had not fixed problems in its California lab in March 2016. On The Today Show, Holmes said she was 'devastated we did not catch and fix these issues faster' and said the lab would be rebuilt with help from a new scientific and medical advisory board.
In July 2016, CMS officially banned Holmes from owning, operating, or directing a blood-testing service for a period of two years. Theranos appealed that decision to a U.S. Department of Health and Human Services appeals board. Shortly thereafter, Walgreens ended its relationship with Theranos and closed its in-store blood collection centers. The U.S. Food and Drug Administration also ordered the company to cease use of its Capillary Tube Nanotainer device, one of its core inventions.
In 2017, the State of Arizona filed suit against Theranos, alleging that the company had sold 1.5 million blood tests to Arizonans while concealing or misrepresenting important facts about those tests. In April 2017, the company settled the lawsuit by agreeing to refund the cost of the tests to consumers, and to pay $225,000 in civil fines and attorney fees, for a total of $4.65 million. Other reported ongoing actions include an unspecified investigation by the U.S. Federal Bureau of Investigation and two class action fraud lawsuits. Holmes denied any wrongdoing.
On May 16, 2017, approximately 99 percent of Theranos shareholders reached an agreement with the company to dismiss all current and potential litigation in exchange for shares of preferred stock. Holmes released a portion of her equity to offset any dilution of stock value to non-participating shareholders.
In March 2018 the U.S. Securities and Exchange Commission charged Holmes and Theranos's former president, Ramesh Balwani, with fraud by taking more than $700 million from investors while advertising a false product. On March 14, 2018, Holmes settled an SEC lawsuit. The charges of fraud included the company's false claim that its technology was being used by the U.S. Department of Defense in combat situations. The company also lied when it claimed to have a $100 million revenue stream in 2014. That year, the company only made $100,000. The terms of Holmes's settlement included surrendering voting control of Theranos, a ban on holding an officer position in a public company for 10 years, and a $500,000 fine.
At its height in 2015, Theranos had more than 800 employees. It dismissed 340 people in October 2016 and an additional 155 in January 2017. In April 2018, Theranos filed a WARN Act notice with the State of California, announcing its plans to permanently lay off 105 employees, leaving it with fewer than two dozen employees. Most of the remaining employees were laid off in August 2018. On September 5, 2018, the company announced that it had begun the process of formally dissolving, with its remaining cash and assets to be distributed to its creditors.
Criminal charges On June 15, 2018, following an investigation by the U.S. Attorney's Office for the Northern District of California in San Francisco that lasted more than two years, a federal grand jury indicted Holmes and former Theranos chief operating officer and president, Ramesh 'Sunn'y Balwani, on nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Both pleaded not guilty. Prosecutors allege that Holmes and Balwani engaged in two criminal schemes, one to defraud investors, the other to defraud doctors and patients. After the indictment was issued, Holmes stepped down as CEO of Theranos but remained chair of the board.
In June 2019, Bloomberg News reported Holmes and Balwani were looking into a possible defense strategy of blaming the media for the downfall of Theranos and whether journalist John Carreyrou's reporting caused undue influence upon government regulatory agencies in order to write a sensational story for The Wall Street Journal. Later unsealed documents indicated Holmes's plans to blame Balwani, who 'dominated' her to such an extent she was unable to make her own decisions. 'Ms. Holmes plans to introduce evidence that Mr. Balwani verbally disparaged her and withdrew "affection if she displeased him'; controlled what she ate, how she dressed, how much money she could spend, who she could interact with – essentially dominating her and erasing her capacity to make decisions.' Holmes may also be preparing a 'mental defect' defense, to explain why she was dominated by Balwani.
In October 2019, The Mercury News reported that Cooley LLP, Holmes's legal team in a class-action civil case, requested that the court allow them to stop representing her, stating that she had not paid them in a year for services, and that 'given Ms. Holmes's current financial situation, Cooley has no expectation that Ms. Holmes will ever pay it for its services as her counsel.' In November 2019, The Recorder reported that Senior District Judge H. Russel Holland, who was overseeing the civil case, indicated that he would allow Cooley to withdraw.
In February 2020, Holmes's defense requested a federal court to drop all charges against her and her co-defendant Balwani. A federal judge examined the charges and ruled that some charges should be dropped: since the Theranos blood tests were paid for by medical insurance companies, the patients were not deprived of any money or property. Prosecutors would hence not be allowed to argue that doctors and patients were fraud victims. However, the judge kept the 11 charges of wire fraud.
In August 2020, prosecutors filed a third superseding indictment, adding a twelfth fraud charge relating to a patient's blood test. Holmes and her legal team reacted by claiming the new indictment violates her rights because the grand jury that handled it was created during the pandemic and not selected at random from a fair cross-section of the community, and they requested access to the jury selection records. Subsequently, prosecutors urged the court to deny Holmes's request, saying she was asking for too much by suggesting 'without basis' that the jurors were improperly selected.
In late August 2020, Holmes's legal team filed new motions seeking the dismissal of seven of the 12 felony fraud charges, claiming that Judge Edward Davila had made a mistake about her obligations to the Theranos investors.
In September 2020, Bloomberg News reported that Holmes was exploring a 'mental disease' defense for her criminal fraud trial when the judge overseeing the case ruled that government prosecutors can examine Holmes.
In February 2021, federal government prosecutors accused Holmes and other executives of destroying evidence in Theranos's final days in business. The attorney for Holmes argued the government was to blame for their failure to preserve critical evidence. The specific evidence in question concerned the company's history of internal testing, including the accuracy and failure rates of Theranos's blood-testing systems.
U.S. v. Holmes, et al. Main article: United States v. Elizabeth A. Holmes, et al. The criminal trial of Holmes in the case of U.S. v. Holmes, et al. was held in the United States District Court for the Northern District of California. It began on August 31, 2021, after being delayed for over a year due to the COVID-19 pandemic and Holmes's pregnancy. The case was prosecuted by the United States Attorney for the Northern District of California, with Holmes being defended by premier white-collar crime litigation firm Williams & Connolly. A jury was selected on September 2, 2021, composed of 7 men and 5 women who are residents of Santa Clara County. On November 29, 2021, Holmes testified in court, claiming that her ex-romantic partner Sunny Balwani, who is also facing trial, held influence over her during the romantic relationship they had and which was still ongoing when the alleged criminal acts happened.
On January 3, 2022, Holmes was found guilty on four counts of defrauding investors of Theranos – three counts of wire fraud, and one of conspiracy to commit wire fraud. The jury returned no verdict on three counts of wire fraud, and a not guilty verdict on three additional counts of wire fraud and one of conspiracy to commit wire fraud. The three no verdict counts will be retried in a new case. Lawyers for Holmes intend to appeal the verdict. Holmes is awaiting sentencing while home on bail, she faces a maximum sentence of twenty years in prison, and a fine of $250,000, plus restitution, for each count of wire fraud and for each conspiracy count, but the sentences would likely be served concurrently.
Promotional activities Holmes partnered with Carlos Slim Helú in June 2015 to improve blood testing in Mexico. In October 2015, she announced IronSisters to help women in science, technology, engineering, and mathematics careers. In 2015, she helped to draft and pass a law in Arizona to let people obtain and pay for lab tests without requiring insurance or healthcare provider approval, while misrepresenting the accuracy and effectiveness of the Theranos device.
Connections Theranos's board and investors included many influential figures. Holmes's first major investor was Tim Draper – Silicon Valley venture capitalist and father of Holmes's childhood friend Jesse Draper – who 'cut Holmes a check' for $1 million upon hearing her initial pitch for the firm that would become Theranos. Theranos's pool of major investors expanded to include Rupert Murdoch, the Walton family, the DeVos family including Betsy DeVos, the Cox family of Cox Enterprises and Carlos Slim Helú. Each of these investors lost tens to hundreds of millions of dollars when Theranos folded.
One of Holmes's first board members was George Shultz. With Shultz's early involvement aiding Holmes's recruitment efforts, the 12-member Theranos board eventually included: Henry Kissinger, a former secretary of state; William Perry, a former secretary of defense; James Mattis, a future secretary of defense; Gary Roughead, a retired U.S. Navy admiral; Bill Frist, a former U.S. senator ; Sam Nunn, a former U.S. senator ; and former CEOs Dick Kovacevich of Wells Fargo and Riley Bechtel of Bechtel.
Recognition Before the collapse of Theranos, Holmes received widespread acclaim. In 2015, she was appointed a member of the Harvard Medical School Board of Fellows and was named one of Time magazine's 'Time 100 most influential people'. Holmes received the Under 30 Doers Award from Forbes and was ranked number 73 in its 2015 list of 'the world's most powerful women'. She was also named Woman of the Year by Glamour and received an Honorary Doctor of Humane Letters from Pepperdine University. Holmes was awarded the 2015 Horatio Alger Award of the Horatio Alger Association of Distinguished Americans, making her its youngest recipient in history. She previously had been named Fortune's Businessperson of the Year and had been listed in its 40 Under 40 feature.
Following several journalistic and criminal investigations and civil suits, regarding Theranos's business practices, she was charged with 'massive fraud' by the Securities and Exchange Commission. In 2016, Fortune named Holmes in its article on 'The World's 19 Most Disappointing Leaders'.
Holmes at Stanford University, April 17, 2013 Holmes was romantically involved with technology entrepreneur Ramesh 'Sunn'y Balwani, a Pakistani-born Hindu who immigrated to India and then the US. She met him in 2002 at age 18, while still in school; he was 19 years older than she was and was married to another woman at the time.
Balwani divorced his wife in 2002 and became romantically involved with Holmes in 2003, about the same time Holmes dropped out of university. The couple moved into an apartment together in 2005. Although Balwani did not officially join Theranos until 2009, when he was given the title of chief operating officer, he was advising Holmes behind the scenes from the company's inception. Holmes and Balwani jointly ran the company with a corporate culture of 'secrecy and fear' according to employees. Their romantic relationship was kept secret for much of their time running the company. Balwani left Theranos in 2016 in the wake of investigations. The circumstances of his departure are unclear; Holmes has stated that she fired him, but Balwani says that he left of his own accord.
On November 29, 2021, Holmes testified that she had been raped while she was a student at Stanford and that she sought solace from Balwani in the aftermath of the incident. She also said Balwani was very controlling during their romantic relationship, which lasted more than a decade, and at times he berated and sexually abused her. In her testimony, she stated he also wanted to 'kill the person' she was and create a 'new Elizabeth'. However, she also testified that Balwani had not forced her to make the false statements to investors, business partners, journalists and company directors that had been described in the case. In court filings, Balwani has 'categoricall'y denied abuse allegations, calling them 'false and inflammatory.'
Before the March 2018 settlement, Holmes owned half of Theranos's stock. Forbes listed her as one of America's Richest Self-Made Women in 2015 with a net worth of $4.5 billion. In June 2016, Forbes released an updated valuation of $800 million for Theranos, which made Holmes's stake essentially worthless, because other investors owned preferred shares and would have been paid before Holmes, who owned only common stock. Holmes reportedly owed a $25 million debt to Theranos in connection with exercising stock options. She did not receive any company cash from the arrangement, nor did she sell any of her shares, including those associated with the debt.
In early 2019, Holmes became engaged to William 'Bill'y Evans, a 27-year-old heir to Evans Hotels, a family-owned group of hotels in the San Diego area. In mid-2019, Holmes and Evans reportedly married in a private ceremony. Holmes has not directly confirmed that the two are actually married, and several sources continue to refer to him as her 'partner' rather than her husband. The couple lives in San Francisco. Holmes gave birth to a boy in July 2021.
In the media and influences Holmes has been credited with creating a negative stigma for other women entrepreneurs, particularly in the sciences and health care industries, who are often compared to her. Writing in The New York Times, technology journalist Erin Griffith commented that 'Holmes continues to loom large across the start-up world because of the audacity of her story, which has permeated popular culture,' with women entrepreneurs reporting that 'the frequent comparisons are pernicious'. Investor and executive Ellen Pao wrote in a New York Times opinion piece that Holmes was targeted for prosecution because of 'sexism', and that her trial was a 'wake-up call for sexism in tech.'
Holmes has been featured in a number of media works:
In May 2018, author John Carreyrou released the book Bad Blood: Secrets and Lies in a Silicon Valley Startup, describing the life of Holmes and the inner workings of Theranos. The film rights to Carreyrou's book were purchased by Legendary nearly two years before the book was published. In January 2019, ABC News, Nightline, and Rebecca Jarvis released a podcast and documentary about the Holmes story called The Dropout. It included interviews and deposition tapes of key figures, including Elizabeth Holmes, Sunny Balwani, Christian Holmes, Tyler Shultz, Theranos board members Bill Frist, Gary Roughead, Robert Kovacevichz and others. The series also featured an interview with Jeff Coopersmith, the attorney representing Balwani. On March 18, 2019, HBO premiered the documentary The Inventor: Out for Blood in Silicon Valley, a two-hour documentary film first shown at the Sundance Film Festival on January 24, 2019. It portrays the claims and promises made by Holmes in the last years of Theranos and how ultimately the company was brought down by the weight of many falsehoods. The documentary ends in 2018, with Holmes and Balwani indicted for multiple crimes. On April 10, 2019, Deadline reported that Hulu would launch a TV series based on The Dropout podcast, also called The Dropout. In March 2021, Amanda Seyfried was cast to star in it. Season 7, episode 12 of the US comedy-drama Younger features a musical number about famous scammers, in which Elizabeth Stanley portrays Holmes. On August 8, 2021, the Australian newsmagazine 60 Minutes featured the Theranos story and Holmes's upcoming trial. In December, 2021, Apple Studios boarded a feature film adaptation of John Carreyrou's book, starring Jennifer Lawrence and directed by Adam McKay.