Theranos' Elizabeth Holmes: Who is the disgraced health care CEO, what happened
Michelle Shen, USA TODAY
5 min read
Update: A jury convicted Elizabeth Holmes on two counts of wire fraud and two counts of conspiracy to commit fraud after seven days of deliberation. The verdict followed a three-month trial featuring dozens of witnesses — including Holmes herself. She now faces up to 20 years in prison for each count, although legal experts say she is unlikely to receive anything close to the maximum sentence.
Update: Opening statements for the trial began today for the trial of Elizabeth Holmes. Earlier last week, a jury of seven men and five women were chosen after days of questioning around 200 potential jurors. Holmes plans on citing domestic abuse from former coworker and romantic partner Sunny Belwadi in her defense, according to leaked court documents.
The trial of Elizabeth Holmes, founder and CEO of the failed multi-billion dollar startup Theranos, started Tuesday.
Holmes, and her colleague and former romantic partner Ramesh “Sunny” Balwani, are currently charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.
The charges stem from allegations that the two were involved in a scheme to defraud doctors, patients and investors by marketing faulty blood tests, putting lives at risk and losing billions of dollars of venture capital, according to the U.S. Department of Justice.
Holmes is being tried first. Balwani's trial is set to start in January of 2022.
Elizabeth Holmes: a Silicon Valley visionary and fantasy
Holmes was once known as the youngest female self-made billionaire, who modeled herself after Steve Jobs, adopting his signature black turtlenecks as part of her own style.
Holmes dropped out of Stanford University at 19 to start her own medical diagnostics company.
According to "Bad Blood: Secrets and Lies of a Silicon Valley Startup" – a book written about Holmes by John Carreyrou, the reporter who exposed her – Holmes' winning pitch was that a pinprick of blood could be used to run dozens of tests on the machines they developed, helping people detect life-threatening conditions earlier.
Her vision drew in top talent from Stanford as well as powerful investors such as Larry Ellison, founder of Oracle; Rupert Murdoch, billionaire media mogul; the Walton family, who founded Walmart; and Betsy DeVos, the former education secretary under President Trump.
Elizabeth Holmes at Theranos headquarters in Palo Alto, California on in June 2014.
She rubbed shoulders with tech titans and politicians.
Then-Vice President Joe Biden even visited the startup saying, "I've been threatening Elizabeth for the past year that I'm going to take the opportunity to be shown around. Talk about being inspired!"
In 2015, Arizona lawmakers passed a bill, signed by Gov. Doug Ducey — one of the company's biggest cheerleaders — that allowed people to directly purchase lab tests.
However, Arizona Attorney General Mark Brnovich reached a $4.65 million settlement with Theranos over consumer fraud issues. Arizonans who purchased the faulty tests received refunds of $60.92 on average.
The company first came to Arizona consumers in 2013 as part of a partnership with Walgreen's, eventually locating its testing sites within 40 of its stores in metro-Phoenix.
After Holmes negotiated the Walgreen's deal, Theranos products appeared in thousands of blood testing centers at Walgreens stores. Doctors began using Theranos testing devices to diagnose patients and dispense medical advice.
At the peak of her career in 2015, Forbes estimated her net worth at $4.5 billion.
As it turns out, the technology developed by Theranos didn't work.
An explosive investigation by The Wall Street Journal revealed that employees expressed doubt about the machine's capabilities, but company management and lawyers reportedly silenced and threatened them.
One of Theranos' employees, a British biochemist who repeatedly voiced his concerns, committed suicide in 2013. His widow received letters from Theranos threatening lawsuits if she spoke up.
A whistleblower named Tyler Schultz eventually emerged from Theranos, who worked with Journal reporter Carreyrou to expose Holmes and Balwani, the other individual on trial for fraud as the former president of Theranos.
Schultz started working at Theranos's labs as a fresh graduate from Stanford University. When he raised concerns about quality checks behind Theranos' proprietary technology, he was disregarded by Holmes and insulted by Balwani.
Matters were further complicated by the fact that Tyler's grandfather, George Schultz, former Secretary of State under President Reagan, sat on Theranos's board and vigorously defended Holmes.
Eventually, the truth spilled out.
Employees spoke out. Doctors noticed that the tests were unreliable, and patients were suffering from inaccurate diagnoses. Retail partners like Walgreens and Safeway were beginning to put Theranos devices under a microscope and pulling out of deals.
The house of cards Holmes constructed with her sleek laboratories and invigorating speeches was collapsing.
The Trial of Elizabeth Holmes and Sunny Balwani: A narrative of abuse
In 2018, the United States District Court of San Jose indicted Holmes and Balwani for committing fraud against investors, doctors, patients and media. The indictment states that they lied about the efficacy of the technology, the financial health of the company, and the state of its partnerships with the Department of Defense and Walgreens.
The trial was postponed multiple times due to procedural issues, the coronavirus pandemic, and Holmes' pregnancy.
Recently unsealed court documents reveal Holmes' strategy for the trial. She plans to accuse her former boyfriend and business partner Balwani of what happened at Theranos, claiming that he was asserting his influence and controlling her decision-making capabilities.
The document states that Holmes is going to "introduce evidence that Mr. Balwani verbally disparaged her and withdrew 'affection if she displeased him'; controlled what she ate, how she dressed, how much money she could spend, who she could interact with – essentially dominating her and erasing her capacity to make decisions."
The juror selection process started Tuesday. Opening arguments are scheduled to begin Wednesday. Sept. 8.
Contributing: Michael Liedtke of The Associated Press
Michelle Shen is a Money & Tech Digital Reporter for USA TODAY. You can reach her @michelle_shen10 on Twitter.
