Elizabeth Holmes, the 37-year-old founder of failed blood testing start-up Theranos, is facing decades in prison after being found guilty by a jury in California of conspiring to defraud her investors.
In one of Silicon Valley’s most high-profile criminal fraud cases, the jury convicted Holmes of three counts of wire fraud and one count of conspiracy to commit wire fraud.
It found her not guilty on four further counts relating to defrauding patients. The jurors failed to reach a verdict on three remaining charges relating to investors. Holmes can appeal her conviction in federal appeals court.
The end of the 15-week trial was a landmark moment for Silicon Valley, where Holmes’ chutzpah was widely celebrated as she raised nearly a billion dollars to chase the dream of diagnosing health conditions from a few drops of blood.
While Silicon Valley is experiencing an unprecedented boom as investors rush to back start-ups, there have been few high-profile prosecutions over the sometimes blurry line between optimism and fraud at freewheeling tech start-ups.
After a dramatic day of deliberations in a federal courthouse in San Jose, California, Holmes expressed little emotion as the verdict was read and left the courtroom with her lawyers after briefly hugging her partner and parents, according to US wire reports. She had pleaded not guilty to the charges, each of which carries up to 20 years in prison.
The verdict marked the culmination of an almost two-decade saga that started in 2003, when Holmes, now 37, founded Theranos after dropping out of Stanford University. At its zenith, the company was valued at $9bn, and Holmes became a media darling who was profiled in multiple magazine cover stories.
But Theranos ended up being subjected to a barrage of critical media reports, most notably by former Wall Street Journal journalist John Carreyrou, whose reporting in 2015 sparked additional scrutiny of the company.
A number of regulatory investigations followed, sending the company into a tailspin that resulted in its break-up in 2018.
While Holmes claimed that Theranos’s novel technology could perform a wide range of tests using just a few drops of blood, the company mainly relied on commercially available machines.
Prosecutors presented reams of documentary evidence and testimony from 29 witnesses, who detailed problems at Theranos’s laboratories and its evasive communications with investors.
The evidence provided the most detailed account of how Theranos operated, revealing multiple instances in which Holmes appeared to promote misleading information.
Holmes admitted to placing the logos of pharmaceutical groups including Pfizer on Theranos documents she sent to investors, even though they had not endorsed the company’s technology.
“She chose fraud over business failure,” prosecutor Jeff Schenk said during closing arguments. “She chose to be dishonest. This choice was not only callous, it was criminal.”
The defence team had tried to cast Holmes as an earnest entrepreneur who failed to deliver on promises to transform the blood testing industry. They also attempted to shift blame to others at Theranos, including Ramesh Balwani, who oversaw its finances as its president and chief operating officer.
Testifying in her own defence, Holmes accused Balwani, with whom she had a romantic relationship, of mental and sexual abuse, allegations his attorney has previously denied. Balwani will face similar fraud charges in a separate trial expected to begin in February.
“Elizabeth Holmes was building a business and not a criminal enterprise,” Kevin Downey, her attorney at Williams & Connolly, said during closing arguments.