Guilty of Four Counts Including Wire Fraud and Conspiracy to Commit Wire Fraud: Elizabeth Holmes of Theranos Blood-Testing Start-Up Faces up to 20 Years of Jail Time
A jury of four women and eight men deliberated for more than fifty hours and returned with a unanimous guilty verdict convicting Elizabeth Holmes, 37, founder of biotech company Theranos, of three counts of wire fraud and one count of conspiracy to commit wire fraud. In total, she had been charged with 11 counts of fraud.
The jury did not find Holmes guilty of four other charges concerning patients.
Homes also faced three more charges of investor fraud. In those three other investor fraud charges, the jury could not come to a unanimous decision. US District Judge for the Northern District of California in San Jose, Edward Davila, is now expected to declare a mistrial for those three counts of investor fraud that the jury could not agree on during their deliberations.
California prosecutors can indict her again under federal law if they choose for those three charges, though no decision has been forthcoming.
The long-awaited verdict against Holmes cemented the dramatic end of a brilliant career for the scandal-mired Silicon Valley executive, once a golden child, who launched her firm at the age of nineteen.
The trial went on for four months, with about thirty witnesses taking the stand for the prosecution. The witnesses described the defendant as a brilliant, charming business leader who raised hundreds of millions of investment dollars for a medical device that did not materialize. Witnesses said Holmes hid the ineffective technology and kept telling investors and others that blood tests would be radically simplified by the new device.
Holmes took the stand and testified for about twenty hours, accusing her Theranos Deputy Ramesh “Sunny” Balwani, also her ex-boyfriend, of sexual abuse. She claimed the sexual abuse “clouded” her judgment. Balwani is appearing in court on separate charges of fraud in February.
Holmes also blamed the fraud on a lab director and Balwani, who she said lied about the company’s financial forecast.
The government’s case prevailed, as prosecutors painted Holmes as a charismatic liar who continued to spread lies and also controlled Theranos closely.
Holmes was found guilty of the four charges related to lying to investors about the efficacy of her firm’s biotech devices. The jury found Holmes had defrauded numerous investors out of hundreds of millions of dollars after she lied about a fake, new cutting-edge technology that would revolutionize the amount of blood samples needed for screening and diagnosis of illnesses.
Holmes had promised investors that a new Theranos breakthrough would result in patients undergoing just a small prick of blood from a finger for testing, instead of the numerous blood samples currently taken in doctors' offices, clinics and hospitals required to identify a patient’s disease, health and other medical conditions.
Walgreens placed Theranos devices in stores in California and Arizona, and patients received false or flawed results. On the stand, a patient said the device made her believe she was having a miscarriage when her pregnancy was healthy. In court documents, another patient said the device made her believe her cancer had returned when it had not.
The jury, however, did not convict Holmes of deliberately deceiving patients.
Some of the investors who became victims of the almost $1 billion fraud include Rupert Murdoch, the Walton family of Walmart, former Secretary of Education Betsy Devos, and others.
Holmes faces a maximum penalty of 20 years in jail. No sentencing date has been announced yet.
