Elizabeth Holmes trial: Theranos founder guilty of fraud and conspiracy

Holmes spent years promising her company would be able to scan for hundreds of diseases with a few drops of blood

Jurors listened to three months of evidence in the Elizabeth Holmes fraud trial. Bloomberg
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Disgraced American businesswoman Elizabeth Holmes was convicted on Monday of defrauding investors in her blood-testing start-up Theranos, in a high-profile case seen as an indictment of Silicon Valley culture.

Holmes is a rare example of a technology executive being brought to book over the failure of a business in a sector littered with the carcasses of money-losing companies that once promised untold riches.

Her case shone a spotlight on the blurred line between the "hustle culture" that characterises the industry and outright criminal dishonesty.

Jurors deliberated for seven days to reach their verdict, finding her guilty on four counts of tricking investors into pouring money into what she claimed was a revolutionary testing system.

But the panel, who had listened to weeks of sometimes complex evidence, also acquitted her on four charges and could not reach a verdict on three others.

Holmes, 37, now faces the possibility of 20 years in jail for each conviction. She remains free before another hearing on the terms of her bail next week. No date was set for sentencing.

Holmes made no comment as she left the court and when asked if she intended to appeal.

After the judge left the courtroom to meet jurors, Holmes stood up to hug her husband Billy Evans and her parents before leaving with her lawyers.

The case has attracted worldwide attention.

At its core was the rise and fall of Holmes, who started Theranos as a 19-year-old college dropout and then broke through Silicon Valley’s male-dominated culture with her bold claims and fund-raising savvy.

She become a billionaire on paper before it all evaporated amid allegations she was more of a charlatan than an entrepreneur.

Elizabeth Holmes leaves the Robert F Peckham Federal Building in San Jose, California. Getty Images / AFP

Holmes was charged with lying to investors and patients about the capabilities of Theranos machines and the company’s financial health.

She spent seven days in the witness box acknowledging she made some mistakes and decisions she regretted, while staunchly maintaining that she never stopped believing Theranos was on the verge of revolutionising health care.

Holmes spent years promising Theranos would be able to scan for hundreds of diseases and other health problems with a few drops of blood taken with a finger prick instead of relying on vials of blood drawn from a vein.

It was such a compelling concept that Theranos raised more than $900 million and agreed partnerships with major retailers Walgreens and Safeway. Holmes herself became the subject of cover stories in business magazines.

But unknown to most people outside Theranos, the company’s blood-testing technology was flawed, often producing inaccurate results that could have endangered the lives of patients.

After the flaws were exposed in 2015 and 2016, Theranos eventually collapsed and the US Justice Department filed a criminal case in 2018 that charged Holmes with 11 counts of fraud and conspiracy.

Holmes said she had not purposely misled investors and patients.

She had also sought to put some of the blame on Ramesh “Sunny” Balwani, a boyfriend almost two decades her senior whom she brought in to help run the company. Mr Balwani, who is facing trial separately, has denied the abuse allegations that Holmes levelled against him during her evidence.

One of the start-up world's most repeated cliches is "fake it till you make it", where ambitious entrepreneurs with an idea that almost works convince people to invest large sums of money in the hope that one day it will.

It is exceedingly rare for founders of failed Silicon Valley companies to face fraud prosecution over unrealised promises and unreturned investments.

Agencies contributed to this report.

Elizabeth Holmes became emotional as she read romantic texts between herself and ex-boyfriend Ramesh 'Sunny' Balwani as she was cross-examined by prosecutor Robert Leach during her trial in San Jose, California, last month. Reuters
Updated: January 04, 2022, 8:30 AM
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