Elizabeth Holmes Found Guilty On Wire Fraud Charges

Topline

Elizabeth Holmes, the former Theranos CEO who was accused of defrauding investors, doctors and patients who used her company’s blood testing machines, was found guilty on four counts of wire fraud and conspiracy to commit wire fraud Monday, according to the Associated Press. 

Key Facts

Jurors in federal court in San Jose, California, also found the 37-year-old not guilty on four additional counts, and they could not agree on a verdict on a final three counts after seven days of deliberation.

The four guilty counts were tied to wire fraud and conspiracy against investors, the not-guilty counts were related to wire fraud and conspiracy against patients and doctors, and the three deadlocked counts concerned specific wire transfers.

Holmes pleaded not guilty to two counts of conspiracy to commit wire fraud and nine counts of wire fraud, which carry a maximum 20-year sentence behind bars and a $250,000 fine plus restitution for each count. 

In the three-month-long trial, prosecutors argued that Holmes was “well aware” Theranos’ machines could not perform dozens of tests using only a few drops of blood despite claiming so, misrepresented her company’s revenue and used modified third-party machines to mislead investors and partner organizations in an attempt to gain money and fame.

Prosecutors can bring a new trial on the three deadlocked counts, according to the Wall Street Journal.

Key Background

Holmes became well-known after she dropped out of college at 19 and started Theranos, which she claimed would revolutionize the healthcare industry. Her high-profile backers included Rupert Murdoch and Henry Kissinger. Modeling herself after Steve Jobs, Holmes became known for her trademark black turtlenecks and deep voice. As one of the few female founders in Silicon Valley, she was hailed as an aspirational figure for other women entrepreneurs and women in STEM. She was widely-considered to be a game-changing leader, making the cover of Forbes, Fortune, Inc. and the New York Times’ T magazine. Holmes was even named by former President Barack Obama as an ambassador of global entrepreneurship. Her alleged misdeeds were first exposed in a Wall Street Journal series in 2015 and 2016, and were made well-known through the popular 2019 HBO documentary The Inventor: Out for Blood in Silicon Valley. During the trial, Theranos’ former corporate controller said that the company was recording record losses, but Holmes overstated revenue projections to some investors. The defense team argued Holmes made mistakes, but did not knowingly mislead patients. Holmes took the stand in her own defense, and admitted to some wrongdoing. When questioned about why she applied Pfizer and Schering-Plough logos to investor reports, she said, “I wish I had done it differently.”

What To Watch For

Holmes’ former business partner and ex-lover Sunny Balwani was charged with the same counts as her, and he also pleaded not guilty. He will be tried separately starting February 15. During her trial, Holmes painted Balwani as an abusive partner, claims which he has denied, and said he clouded her judgement. 

Further Reading

Elizabeth Holmes Jury Deadlocked On 3 Of 11 Counts (Forbes)

Elizabeth Holmes Was ‘Well Aware’ Of Theranos Problems But Went To Great Lengths To Deceive Investors, Prosecution Says (Forbes) 

‘Total Confidence In Myself’: What We Learned From Elizabeth Holmes’ Private Text Messages (Forbes) 

Theranos Was Losing Hundreds Of Millions As Elizabeth Holmes Talked Up Prospects To Investors, Ex-Employee Says (Forbes) 

Elizabeth Holmes’ Lawyer Says She Made ‘Mistakes,’ But ‘Failure Is Not A Crime’ (Forbes) 

Elizabeth Holmes’ Defense Rests In Theranos Criminal Fraud Trial (Forbes)