Elizabeth Holmes, the former Theranos CEO who promised to revolutionize medicine but whose company collapsed under the weight of its many misrepresentations, was found guilty of fraud on Monday, capping a years-long saga that came to symbolize Silicon Valley hubris.
After seven days of deliberations, a federal jury found Holmes, 37, guilty of defrauding investors while raising money for Theranos. Holmes was convicted of conspiracy to defraud investors and three counts of wire fraud. The jury found her not guilty of conspiring to defraud patients and cleared her on two individual patient-related charges and one count of lying in paid advertisements. The jury couldn’t reach a unanimous verdict on three counts of defrauding individual investors, possibly leaving the door open for a retrial on those specific charges.
The nearly four-month trial was at times a referendum on the culture of Silicon Valley, where sweeping promises and large investments have made billionaires out of ambitious entrepreneurs. Under Holmes, Theranos claimed it could provide quick, accurate medical test results from just a few drops of blood pricked from a finger. In reality, the company’s devices could do no such thing.
advertisement During the trial, held in San Jose, Calif., Holmes’ attorneys portrayed her as a true believer whose mistakes stemmed from overconfidence rather than deliberate fraud. To prosecutors, however, Holmes was a grifter who exploited the hype cycle to bilk investors out of hundreds of millions of dollars. A jury of eight men and four women agreed. Each of the four counts of wire fraud carries a maximum sentence of 20 years in prison, but they will likely be served concurrently. The court is yet to schedule a sentencing hearing for Holmes.
advertisement The trial hinged on whether Theranos’ demonstrably false statements constituted fraud. In order for that to be the case, Holmes’ dishonesty had to be a deliberate effort to convince investors to part with their money. Elizabeth Holmes was once the darling of Silicon Valley. Her promise of a revolutionary blood-testing device that could run quick and cheap tests on a single drop of blood captured the imaginations of many. But that turned out too good to be true. Hyacinth Empinado/STAT Dozens of witnesses, including former Theranos employees, testified that Holmes knew about the company’s many deficiencies and repeatedly concealed the information from investors and board members. Holmes, who testified over the course of seven days, argued that Theranos was simply protecting trade secrets.
Ramesh ‘Sunny’ Balwani, Theranos’ second-in-command and Holmes’ former romantic partner, faces identical charges in a trial slated for February. In her testimony, Holmes said Balwani was psychologically and sexually abusive, accusations he has denied. The Holmes verdict could have a chilling effect on the blustery world of tech startups, where hyper-optimism and massive ambition are often rewarded with venture capital dollars and glowing media coverage. Holmes’ conviction suggests founders can stretch the truth only so far, and that egregious cases could lead to prosecution. This name will appear with your comment
https://www.statnews.com/2022/01/03/elizabeth-holmes-theranos-verdict-guilty/
