Why is Elizabeth Holmes on trial?

Disgraced billionaire was once the darling of the US elite

Theranos founder and former chief executive Elizabeth Holmes once had a boardroom of political giants, recruited famous investors and hosted a fund-raiser during the 2016 US presidential election cycle.

The disgraced billionaire now is on trial, following years of delays, after being indicted for reportedly lying about the capabilities of her company's blood-testing technology.

She could face up to 20 years in prison and has pleaded not guilty.

Ms Holmes, 37, was once hailed as a visionary of Silicon Valley, drawing comparisons to Apple chief executive Steve Jobs. She was so inspired by the American business magnate that she copied his signature look, often wearing a black turtleneck.

“It was an incredibly alluring narrative that everyone wanted to believe,” said Margaret O’Mara, a historian of Silicon Valley

Then-US vice president Joe Biden visited the company's lab in California in 2015 as part of a healthcare innovation conference. Ms Holmes also hosted a fund-raiser for former US secretary of state Hillary Clinton's 2016 presidential campaign.

But after raising $700 million and bringing in some of the most notable figures in politics and media, Ms Holmes was forced to step down as chief executive after facing a multitude of allegations and indictments against her company's technology.

How did it all start?

A Stanford dropout, Ms Holmes founded Theranos in 2003 at the age of 19.

Inspired by her fear of needles, she founded the company with claims of having revolutionised blood testing. Patients were promised they could test for conditions like cancer or diabetes with only a drop of blood.

Ms Holmes in 2013 began to publicly promote Theranos and she quickly became a media darling herself, featuring on a series of magazine covers.

Quote
It was an incredibly alluring narrative that everyone wanted to believe
Margaret O’Mara, a historian of Silicon Valley

Ms Holmes's company also sealed a partnership with Walgreens, which invested $140m in the company.

But an investigation by The Wall Street Journal in 2015 raised concerns about Theranos's diagnostics technology, which often delivered inaccurate and inconsistent results.

Prosecutors allege that Ms Holmes and former chief operating officer Ramesh “Sunny” Balwani deliberately misled investors, doctors and patients.

Both Ms Holmes and Mr Balwani have been charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

A star-studded list of board members and investors

Court filings show the potential for high-profile witnesses.

Political titans Henry Kissinger and former US defence secretary James Mattis, both of whom served on Theranos's board, could take the stand. Media mogul Ruper Murdoch, who invested $125m in the company in 2015, could also give evidence.

FILE - In this Wednesday, Nov. 1, 2017, file photo, Fox News chairman and CEO Rupert Murdoch attends the WSJ. Magazine 2017 Innovator Awards at The Museum of Modern Art in New York. Murdoch has told senior managers at 21st Century Fox that he will be working from home for a few weeks after a recent back injury in a sailing accident. (Photo by Evan Agostini/Invision/AP, File)

Theranos's once star-studded board also included former US secretary of state George Shultz, former Wells Fargo chief executive Richard Kovacevich, former Bechtel Group Inc chairman Riley P Bechtel and prominent US lawyer David Boies, among others.

A separate Wall Street Journal investigation found Theranos cost prominent investors more than $600m.

These investors include the family of former US education secretary Betsy Devos, Mr Murdoch, Atlanta's Cox family, Mr Bechtel, Walmart's Walton family, Mexican business magnate Carlos Slim and New England Patriots owner Robert Kraft.

What is her defence?

Though it is unclear what her lawyers' defence strategy will be, Ms Holmes claimed she was abused by Mr Balwani, who was her boyfriend at the time.

Court papers submitted last year and unsealed on Friday revealed that Ms Holmes had accused him of psychological and sexual abuse.

Ms Holmes's lawyers say her “deference” to Mr Balwani led her to believe reportedly false statements about Theranos that he controlled, including a claim about the partnership with Walgreens.

Court papers also show Ms Holmes is “highly likely” to provide evidence about these claims.

Mr Balwani denied allegations of abuse in a 2019 court filing.

Updated: September 1st 2021, 6:52 PM
EDITOR'S PICKS
NEWSLETTERS