In a stunning climax to Silicon Valley’s most dramatic and closely watched startup crash, Theranos founder Elizabeth Holmes was found guilty Monday of four of 11 counts of criminal fraud, while being acquitted of another four counts. A mistrial was declared on three additional counts.
The verdict caps a trial that lasted a four-month trial in which jurors were presented with a mountain of damning evidence against the failed startup founder, but also heard Holmes’ own side of her story for the first time publicly. The proceedings captivated the nation and drew throngs of early-rising spectators to the federal courthouse in San Jose for a glimpse of the charismatic founder accused of lying to patients and investors in her failed Silicon Valley blood-testing startup.
The jury’s decision came at the end of the seventh day of deliberations by the eight men and four women on the panel. Earlier Monday, jurors had told the judge that they were deadlocked on three of the counts against Holmes, before being instructed to continue deliberations. Four hours later, they returned with a unanimous verdict.
Their decision follows a nearly two-decade saga that started when Holmes launched her purportedly revolutionary biotechnology firm at age 19 in 2003 and dropped out of Stanford University to build it. Her rise — and subsequent fall — drew breathless media coverage, as Holmes shattered ideas about Silicon Valley’s glass ceiling, attracted investors among America’s wealthiest families, and pulled an array of high-profile dignitaries onto her company’s board.
For 12 years her star grew brighter, and her on-paper wealth larger — $4.5 billion at its peak, when Theranos was valued at $9 billion — before a 2015 newspaper exposé sent Holmes crashing down. Lawsuits followed, and a federal regulator forced Holmes to agree to a $500,000 fine and a 10-year ban on serving as an officer or director of a public company. In 2018, the U.S. Department of Justice charged her and former company President Sunny Balwani with felony fraud and conspiring to commit fraud.
Holmes was accused of bilking investors out of hundreds of millions of dollars and misleading patients by claiming her company could conduct all the tests of a major lab with just a few drops of blood from a finger stick, though Theranos’ machines could in reality only perform a dozen tests and suffered from serious accuracy problems.
For the past 15 weeks, Holmes has walked into the courtroom holding onto her mother Noel’s hand, or that of her partner Billy Evans, a hotel heir and the father of their baby born in July. Many days, Holmes passed through a gauntlet of news cameras, photographers and reporters, always wearing a business skirt suit and blouse — her Steve Jobs-esque black turtlenecks long banished.
As the prosecution and Holmes’ defense team laid out their cases, jurors were given a stark choice: Federal lawyers painted Holmes as a reckless, fame-seeking schemer whose “lying and cheating to get money” robbed investors and threatened patients’ health. Her defense team, meanwhile, presented Holmes as a true believer in Theranos’ technology who trusted others in the company too much but “worked herself to the bone” to deliver on her promises.
For two months, federal prosecutors called to the witness stand former Theranos employees and business partners, patients and investors. Their statements — plus emails and other correspondence displayed on courtroom screens — corroborated prosecutors’ claims, building walls of testimony and evidence around Holmes.
Jurors heard from patients and a doctor about blood test results that falsely indicated a pregnant woman was miscarrying, that another woman might have had HIV and that a man may have had prostate cancer. Former Theranos lab workers and directors told jurors of problematic test results from the firm’s machines, its use of other companies’ devices for the many tests its own analyzers could not perform, and the voiding of all 50,000-plus patient test results from the only Theranos machine ever used for clinical testing. Prosecutors highlighted Holmes’ awareness and control of issues with the technology.
A parade of investors testified that Holmes claimed to them that her technology was in use on military helicopters, after the jury heard from Theranos insider Daniel Edlin, who spent five years at the company in management roles close to Holmes, that he was not aware of the company’s technology being used clinically in war zones or military aircraft. Former U.S. Secretary of Defense James Mattis, an investor who served on the Theranos board with former U.S. Secretaries of State Henry Kissinger and the late George Shultz, testified that he was not aware of the U.S. Defense Department using Theranos machines.
Investors also testified that Theranos had sent them reports they believed were from pharmaceutical giants validating Theranos’ technology in glowing terms, when they were actually created by Theranos and emblazoned with stolen pharma-firm logos.
Holmes’ 10-lawyer team sought to distance her from lab operations and highlight the sophistication of the company’s investors. And in a twist that defied common legal convention, Holmes herself took the stand as the principal witness in her defense.
Speaking confidently and with a frequent small smile, Holmes spoke directly to the question of intent, claiming she believed her company had developed technology that could perform any test, and later suggesting that the allegedly misleading statements she had made about her technology were forward-looking, describing her vision of what Theranos would ultimately become.
Over seven days on the stand, Holmes blamed others, particularly laboratory directors and her ex-lover, former Theranos Chief Operating Officer Balwani, for problems with the technology, while also expressing regret for some of her actions and acknowledging that she was ultimately responsible for what occurred in her company.
But it was Holmes’ bombshell claim of forced sex and coercion by Balwani, with whom she had a romantic relationship for more than a decade, that catapulted the proceedings from facts and allegations into the realm of emotion. Balwani, she claimed tearfully, controlled how she worked, what she ate and when she saw friends. Holmes also testified that Balwani had increasingly taken over aspects of the business from her, including management functions in the lab.
A lawyer for Balwani, who is scheduled to be tried next year, has declined to comment on Holmes’ allegations.
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