Theranos CEO Elizabeth Holmes found guilty of fraud: Blood-testing machines were vapourware after all
Fallen Silicon Valley darling defrauded investors, says jury
Elizabeth Holmes, founder of US health-tech firm Theranos, has been found guilty of defrauding investors after a California jury found she had lied about her company's technology.
Holmes, 37, reportedly showed little emotion when the verdicts were read out. The jury found her not guilty of four charges of defrauding the public, though this was cold comfort when set against the other seven charges of defrauding investors and wire fraud. She has denied the charges.
The trial has had significant impact in California's Silicon Valley, where Holmes' company Theranos had been held up as a multibillion-dollar example of tech changing the world for good. Founded in 2003 by Holmes, Theranos advertised itself as a medical company whose technology could detect diseases using a finger-prick blood test.
In fact the company was one of Silicon Valley's more notorious products: a scam. Theranos's Edison testing machines (an in-house design unconnected to the famous lightbulb company) produced results that were inconclusive at best. Nonetheless, a startup founded by Holmes, who wore Steve Jobs-style black turtlenecks, was a convincing enough story for investors and US business media alike, until a 2015 exposé by the Wall Street Journal newspaper.
During Holmes's trial, evidence emerged suggesting that Theranos's demonstrations to would-be corporate partners were rigged to cover up bad results, while Holmes herself admitted to falsely plastering sales presentations in pharma company logos to suggest a link between Theranos and established market players.
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While Pfizer and Schering-Plough had written due diligence reports on Theranos, the company used their logos to suggest its blood-testing machines were better than they really were.
In her defence Holmes claimed her boyfriend-cum-COO had abused her during their relationship, also arguing that the worst thing she did was lead a company that failed, rather than deliberately deceiving anyone. Theranos itself was wound up in 2018 after the US Department of Justice began pursuing its CEO and COO.*
Meanwhile, a vital SQL database that held what prosecutors described as incriminating evidence of fraud was deleted. Named the Laboratory Information System, the database contained details of Theranos's test accuracy and failure rates.
Holmes faces a maximum of 20 years in prison when she is sentenced. At the moment she is reported to be awaiting a sentencing hearing later this year while on unconditional bail. ®
*Ex-Theranos COO Ramesh "Sunny" Balwani, 56, is due to stand trial next month.