Elizabeth Holmes, founder of US health technology company Theranos, was found guilty of defrauding investors after a California jury found that she had lied about her company’s technology.
Holmes, 37, reportedly showed little emotion when the sentences were read. The jury found her not guilty on four counts of defrauding the public, although that came as cold consolation when she was charged against the other seven counts of investor fraud and electronic fraud. These accusations have been denied.
The experiment had a huge impact in California’s Silicon Valley, where Holmes’s company, Theranos, has been touted as a multibillion-dollar example of technology that is changing the world forever. Founded by Holmes in 2003, Theranos has advertised itself as a medical company whose technology can detect diseases using a fingerstick blood test.
In fact, the company was one of Silicon Valley’s most notorious products: a scam. Edison test machines from Theranos (an interior design not connected to the famous lamp company) produced results that are inconclusive at best. However, the Holmes-founded startup, which wore Steve Jobs-style turtlenecks, was a compelling enough story for investors and US business media alike, until a 2015 presentation by The Wall Street Journal Newspaper.
During Holmes’ trial, evidence emerged to suggest that Theranos’ representations to potential company partners were rigged to cover up poor results, while Holmes herself admitted to falsifying false sales presentations in drug company logos to suggest a link between Theranos and prominent market players.
While Pfizer and Schering-Plow wrote due diligence reports on Theranos, the company used its logos to indicate that its blood-screening machines were better than they actually were.
In her defence, Holmes alleged that her boyfriend, VP, COO, had abused her during their relationship, arguing that the worst thing she had done was to lead a company that failed, rather than intentionally deceiving anyone. Theranos itself was terminated in 2018 after the US Department of Justice began going after the CEO and COO. *
Meanwhile, a vital SQL database containing what prosecutors described as evidence incriminating fraud has been deleted. The database is named the Laboratory Information System, and contains details about Theranos’ test accuracy and failure rates.
Holmes faces a maximum sentence of 20 years in prison when she is sentenced. Currently, she is reported to be awaiting her sentencing hearing later this year while released on unconditional bail. ®
* Former COO of Theranos Ramesh “Sunny” Balwani, 56, is scheduled to appear for trial next month.