Elizabeth Holmes found guilty on 4 of 11 counts

Theranos founder and former CEO Elizabeth Holmes and her partner Billy Evans, right, leave the Robert F. Peckham Federal Building on November 23, 2021 in San Jose, California.
Enlarge / Theranos founder and former CEO Elizabeth Holmes and her partner Billy Evans, right, leave the Robert F. Peckham Federal Building on November 23, 2021 in San Jose, California.

Ethan Swope / Getty Images

Elizabeth Holmes was convicted today of three counts of wire fraud and one count of criminal conspiracy to commit wire fraud. The jury returned its verdict after six days of deliberation.

The government’s victory in this case is a rare rebuke to tech startups, which often put investors on their technological prowess and business acumen using overwhelmingly optimistic assumptions.

Theranos was perhaps an extreme example, raising more than $ 900 million on the back of claims that its proprietary tests were better, cheaper, and less invasive than the competition. Neither claim was true, and unlike many other Silicon Valley startups, patient health and safety was at stake.

Holmes was convicted of defrauding Lakeshore Capital Management (the family office of DeVoses) of $ 100 million, PFM Healthcare (a hedge fund) of $ 38 million and an LLC linked to Daniel Mosley (the former real estate lawyer Henry Kissinger) of $ 6 million. She was also convicted of conspiring to commit wire fraud against Theranos investors more generally. On three charges, all alleging wire fraud against investors, the jury returned no verdict. Holmes was acquitted of all other charges, including those involving defrauding patients. She faces up to 20 years in prison.

With the guilty verdict, Holmes, the founder of the company, is the first Theranos executive to be held criminally responsible for her actions, though she may not be the last.

The very personal involvement of Holmes

Holmes was on trial for defrauding investors and Theranos patients. She founded the company after dropping out of Stanford University in hopes of changing the way diagnostic medical tests are performed, primarily by reducing the amount of blood needed for a single finger prick. Over the years, Holmes has raised more than $ 900 million from a range of wealthy families and individuals, most of whom had no experience of investing in biomedical startups.

Theranos, of course, never could deliver on its promise to be able to perform over 1,000 tests. In reality, that could make 12. The company’s proprietary devices, first the Edison, then the MiniLab, were unreliable and had to be rigged with “null protocols” during investor demos to avoid harm. trigger alarm signals. During the trial, the jury heard how Holmes personally approved the investor presentations, including these fraudulent demos.

The court also heard how Holmes tampered with reports that Theranos wrote with the logos of various drug companies, giving the impression that the companies had endorsed the content. In fact, some contracts Theranos had with these companies expressly prohibited the startup from using their logos. That didn’t stop Holmes, however, who said she was “just trying to pass on” the partnership between the two companies.

In its lawsuit against Holmes, the government called 29 witnesses, ranging from investors and lawyers to doctors and their patients. Although the testimony focused primarily on the investors as they made up the bulk of the criminal charges, the jury heard from two patients who had received questionable results from Theranos. One was a woman who was told she had tested positive for HIV when in fact she had not. The other was a pregnant woman who, in a series of Theranos tests, learned that she was having a miscarriage. As it turned out, for one of her pregnancy tests, Theranos probably misplaced a decimal point. She was going to give birth to a healthy baby.

Failed defense

Holmes’ defense relied on blaming other people – many of whom were scientists – and allegations that she had been abused and controlled by her ex-boyfriend Ramesh “Sunny” Balwani, who was director of operating in Theranos for much of its existence. Holmes claimed that she had been raped by Balwani and that he sought to control all facets of her life.

Defense lawyers, however, did not attempt to put this testimony into context and did not call Mindy Mechanic, an expert witness on intimate partner violence, to testify. It is not clear whether the defense felt that Mechanic’s testimony would not be beneficial or that Holmes’ presence on the stand was sufficient.

The jury apparently did not buy into Holmes ‘version of Theranos’ story, which differed from almost everyone else called to the stand. Holmes will return to court at a later date for sentencing. Balwani faces the same charges in a trial set to open next year.


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