He was found not guilty of three additional charges of defrauding patients. The jury returned no verdict on three charges related to defrauding investors, and Judge Edward Davila, who is presiding over the case, is expected to prove false on those charges.
Holmes pleaded guilty to one count of conspiracy to defraud investors as well as three wire fraud charges involving specific investors. Holmes faces up to 20 years in prison as well as a $250,000 fine for each count.
Holmes left the courthouse hand-in-hand with his partner, Billy Evans, his mother, and his father. She was met with cameras and a sea of reporters, but did not comment in response to shouted questions from reporters.
US Attorney Stephanie Hinds hailed the decision in a statement.
“In this 15-week trial, jurors navigate a complex case amid a pandemic and scheduling constraints,” she said in a statement, which was read aloud by a spokesperson outside the courthouse. “The guilty verdicts in this case reflect Ms. Holmes’ culpability in this massive investor fraud, and she will now face punishment for her crimes.”
Specifically, a jury of eight men and four women determined that Holmes was guilty of cases relating to investors, but not of any cases involving defrauding patients. During its 11-week case, the government called only three patient witnesses to the stand, two of whom were personally linked to wire fraud cases.
The jury deliberated for more than 50 hours before returning a verdict on eight of the 11 charges. Earlier on Monday, the jury returned a note indicating they could not reach a unanimous verdict in three cases. In response, Judge Davila issued what became known as the Allen Charge, directing them to continue deliberations to try to reach a verdict.
However, hours later, the jury returned another note indicating that it was unable to reach a verdict on those cases. These cases pertain to three investor wire fraud charges.
The decision comes after a trial that lasted more than three months in a federal court in San Jose. More than 30 witnesses testified during the trial, which culminated with Holmes taking a stand for seven days in his defense.
The Holmes case led to a rare criminal fraud trial against a Silicon Valley entrepreneur. The jurors were tasked with determining whether Holmes was a well-meaning founder who made mistakes as he built his startup, as his defense did, or whether he intentionally defrauded investors and patients. He had cheated so that he could help himself and his company succeed, as alleged by federal prosecutors.
While Holmes was one in the trial, the outcome of his case could have served as a cautionary tale for others in Silicon Valley.
“This is a decision that matters not only to Silicon Valley but also to those who celebrate, invest in and use its products,” said Margaret, a tech industry historian and professor at the University of Washington. O’Mara said. “That was made possible by a Valley business culture that celebrated and encouraged the very young, moderately experienced.”
George Demos, a former Securities and Exchange Commission prosecutor and assistant law professor at the UC Davis School of Law, called the decision “a significant victory for the government and sent a powerful signal to Silicon Valley that fraud cannot be masquerading as innovation.” “
O’Mara said most people in Silicon Valley have tried to distance themselves from Theranos for a variety of reasons, including that the startup was a medical device maker, a tech company under Holmes’s power and control over Theranos. Had all the qualities, O’Mara said.
“She wasn’t just the CEO,” O’Mara said, “she was a very powerful CEO in the Silicon Valley model.”
The rise and fall of Elizabeth Holmes
Holmes, now 37, started Theranos in 2003 at the age of 19 and dropped out of Stanford shortly thereafter to pursue it full-time. After a decade under the radar, Holmes began presenting to the press with the claim that Theranos had invented a technology that was accurate and precise for a range of conditions, using a few drops of blood taken from a finger prick. Could test reliably. The unveiling coincided with the company’s announcement of a major retail partnership with Walgreens in 2013.
Theranos raised $945 million from an impressive list of investors, including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family and the billionaire family of former education secretary Betsy DeVos.
At its peak, Theranos was worth $9 billion, making Holmes a paper billionaire. He was praised on magazine covers, often wearing a signature black turtleneck that invited comparisons with the late Apple CEO. (She hasn’t worn that look to the courtroom.)
O’Mara said that Holmes was particularly beloved by the media as a fearless entrepreneur working on a product that aimed to make the world better — and a rare female founder at that.
But dominoes began to fall after a Wall Street Journal investigation in 2015 had performed only a dozen of the hundreds of tests the company had offered, using its proprietary blood testing equipment and with questionable accuracy. Instead, Theranos relied on third-party manufactured equipment from traditional blood testing companies.
In 2016, Theranos annulled the results of two years of blood tests. In 2018, Holmes and Theranos settled allegations of “large-scale fraud” with the Securities and Exchange Commission, but did not admit or deny any allegations as part of the deal. Theranos soon disbanded.
The scene inside and outside the courtroom
First indicted in 2018, Holmes’ trial was delayed due to the pandemic and the birth of her child. But public interest in Holmes has remained strong since then, with documentaries, podcasts, an upcoming TV miniseries and a planned feature film.
That attraction was clearly visible outside the courtroom. Members of the public and the press gathered at 2 a.m. local time on key days of the trial, to make up for one of the 34 courtroom seats available. About 45 people were seated in a ticketed overflow room. Otherwise there was no way to watch the events as audio and video recording was restricted.
The test attracted outspoken friends of Holmes, some of whom on the day of the opening statement dressed in a look that resembled the former CEO at Theranos’ summit – in black dresses with blonde hair pulled down the back of his neck. Were. It also attracted an artist who set up a performing arts display outside the courtyard, selling a very limited number of golden wigs, black turtlenecks and “blood energy” drinks. She said she wanted to see “what it was like to experience her energy.”
During jury selection, the father of Holmes’ partner showed up early to snag a seat inside the courtroom. He assumed a surname and claimed to be a concerned citizen, but on the first day of trial he accompanied Holmes to the courtroom. After his identity was publicly revealed, he was not seen again at trial.
For his part, Holmes – wearing a work dress and jacket or skirt suit in greys, blues or greens with a green or blue mask – went hand-in-hand with his mother, Noel, or his partner on each court day. Arrived for , Billy Evans, or both. When Holmes took the stand, the group of friends and family seated in the reserved seat grew. His father was seen in the courtroom as the arguments closed.
As the trial went on, the three jurors were dismissed. One jury member was reported by another for playing Sudoku during the proceedings. Another was pardoned after experiencing anxiety stemming from the prospect of Holmes being sent to prison, and cited his Buddhist beliefs. The alternate jury member chosen to replace her expressed some concern about the sentencing of Holmes because she is too young. She remained on the jury that determined the fate of Holmes.
The government's 11-week case against Holmes
In their closing arguments, prosecutors allege that, facing a business running out of money, Holmes “choose fraud” rather than “failure”.
During the trial, federal prosecutors called 29 witnesses to testify, including former Theranos employees, retail executives and a former US Secretary of Defense. Through these witnesses, the government attempted to reveal layers of alleged fraud, including that Theranos concealed the use of third-party-manufactured machines to test patient’s blood, exacerbating its financial situation, drug companies and the military. Misrepresented his work with, and used the media to spread untruths.
In his final remarks, prosecutor John Bostic said that Holmes was “particularly” fond of using half-truths, which he described as “arguably technically correct”, but nonetheless conveyed the truth to the listener. Leaves you with an unmistakable misconception about.
As an example of this, he pointed to the recording of journalist Roger Parloff’s interview with Holmes, done in conjunction with a 2014 Fortune magazine cover story, which ran in court during the reporter’s time on the stand. Was. Holmes is heard arguing why the blood of some patients was taken only through venipuncture, and not simply from its marketed fingerstick blood. “During that conversation she never told Mr Parloff that the reason … was that the company’s own technology could not perform the range of tests she was offering,” Bostic said.
“It doesn’t matter whether Ms. Holmes intended the lie to be true or to evade detection. The problem lies in the misrepresentation on the day it was made,” he said.
Bostic also said that Holmes “borrowed the credibility” of others through his startup’s high-profile retail partnerships, his magazine cover pieces and his board with powerful names including former defense secretaries and two former secretaries of state. Stocked up.
“Associating himself with these individuals and organizations,” he continued, “he increased his credibility of Theranos, and by exaggerating those references, he convinced others that Theranos had the legitimacy of those other entities. Needed.”
Holmes testified in his defense for 7 days
The defense called three witnesses, concluding with Holmes. Known for her charm and charisma while still CEO, Holmes’ testimony ranged from speaking emphatically about her belief in the company’s technology to pointing fingers at others—in particular, her ex-boyfriend and former COO of Theranos. Ramesh “Sunny” Balwani.
While Theranos’ origin story is well known, Holmes sheds more light on his decision to drop out of Stanford. She testified that she was raped as a student and was having trouble attending classes. She said she dropped out of school to become Theranos herself, seeking business advice from Balwani, a 20-year senior whom she met after graduating from high school and whom she saw as a successful tech executive. .
Holmes testified that he and Balwani had a decade-long abusive relationship. She said that Balwani tried to control almost every aspect of her life because he wanted to help her succeed. Balwani has denied allegations of misconduct through court filings. (Balwani faces similar charges as Holmes and will be tried earlier this year. He has pleaded not guilty.)
Holmes also testified that Balvani, with whom she lived, served as her most important advisor during her time in Theranos. He testified that he had no control over what he said to investors, board members, retail partners and the media while at the helm of Theranos. But his influence on his life was immense.
Holmes testified, “It affected everything about me, and I don’t fully understand it.”
Holmes’ defense team did not call an expert to testify about the potential effects of the alleged abuse on her role as CEO, despite indications that she may do so. In his closing arguments, Prosecutor Jeffrey Schenk told jurors that they did not need to determine whether abuse had occurred to reach a verdict.
“The matter is about false statements given to investors and false statements given to patients,” he said.
Asked if he ever convinced patients that Theranos could offer accurate and reliable blood tests, Holmes testified: “Absolutely not.”