Tuesday, December 7

Elizabeth Holmes: From Silicon Valley Female Icon to Disgraced CEO on Trial | Theranos

The rise and fall of blood testing startup Theranos revolutionized the tech world and captured the attention of millions beyond Silicon Valley, inspiring multiple books, documentaries, and a T.V. series.

Theranos set out to revolutionize the medical testing space, reaching a valuation of $ 10 billion before it was revealed that the capabilities of its core technology were largely fabricated. Now its founder and former leader, Elizabeth Holmes, is about to take on music.

Holmes, 37, faces a trial in a California court, accused of defrauding Theranos patients and investors. He could spend up to 20 years in prison and has pleaded not guilty.

“This is a landmark case,” said Jason Mehta, a Florida attorney with experience in federal fraud cases in the healthcare industry. “It has emerging technology and typical startup marketing bravado, all in the crosshairs of the federal criminal justice system.”


Holmes dropped out of Stanford University in 2003 at the age of 19, and filed a patent for a technology that could perform a wide range of tests with only a small amount of blood, such as from a finger prick. Supposedly inspired by a fear of needles, the young founder claimed she wanted to revolutionize the medical industry and eliminate the need for large blood samples for diagnosis.

Holmes began promoting the technology publicly around 2013 and quickly became a media favorite, finding herself on the covers of magazines such as Forbes and Fortune. The company attracted renowned board members, including former US Secretary of Defense James Mattis, former US Secretary of State George Shultz and former US Secretary of State Henry Kissinger, lo That contributed to the hype and gave the company an air of legitimacy.

Holmes became the world’s youngest self-made billionaire woman in 2015 and at the time she was compared to Apple co-founder Steve Jobs, whom she idolized and tried to emulate in his black turtleneck uniform.

“Here was a photogenic and telegenic young woman posing as the Steve Jobs woman,” recalled Margaret O’Mara, a Silicon Valley historian who holds a professorship at the University of Washington. “It was an incredibly engaging narrative that everyone wanted to believe.”

The ruse began to unravel when, in 2015, a Wall Street Journal article series revealed that most of the tests Theranos claimed it was conducting with its proprietary Edison machines were taking place elsewhere. Meanwhile, the tests that were being carried out on the Edison machines returned inconsistent and often inaccurate results.

After scrutiny from regulators, Theranos began to retract its tests, recall its machines, and eventually collapsed. Holmes resigned as CEO in June 2018 and the company was dissolved in September 2018.

Theranos and Holmes reached a settlement with the United States Securities and Exchange Commission (SEC) after the agency accused her of “years of elaborate fraud.” She paid a $ 500,000 fine in an agreement that did not force her to admit or deny the charges.

But Holmes and her former business partner Ramesh “Sunny” Balwani, with whom she was romantically involved, also faced criminal charges brought by the United States.

‘Limits to shit’

Holmes and Balwani were accused of defrauding investors and patients alike, making false claims about the efficacy of the company’s blood test technology between 2010 and 2015.

“Despite telling physicians and patients that Theranos could provide accurate, fast, reliable and inexpensive blood tests and results, Holmes and Balwani knew that Theranos technology, in fact, was not capable of consistently producing accurate results. and reliable for certain blood tests, ”the prosecution said.

The government also alleged that the couple defrauded investors by presenting ambitious revenue projections of $ 1 billion in 2015. “In truth, Holmes and Balwani knew that Theranos had only generated and would generate modest income, roughly a few hundred thousand dollars. dollars in 2014 and 2015, ”the indictment said.

Elizabeth Holmes in a 2015 interview.
Photograph: CNBC / NBCU Photo Bank via Getty Images

Theranos’ rise and spectacular fall have been seen as a wake-up call for an industry that has long lived in a “pretend until you get it” spirit, said John Carreyrou, an investigative reporter who published the first articles. of casting. doubted about Theranos in 2015 and now presents a podcast called Bad Blood: The Final Chapter.

“If she is found guilty and spends a significant amount of time in prison, it will be an opportunity for venture capitalists and startup founders in the Valley to know that there are limits to the amount of nonsense that can be done.” said. “There is a limit to the amount of hype and hype you can do, and the number of rules you can break.”

The ’empty chair’ defense

Holmes was initially scheduled to face a jury in March 2021, but the trial continued to be postponed. It was rescheduled first because of the pandemic, then because Holmes had to give birth. (She welcomed her first child with his partner, Hotel Heir Billy Evans, on August 5).

Slated to take place in San Jose, just 20 miles from where the glitzy Theranos headquarters once stood in nearby Palo Alto, it is now scheduled to begin on August 31.

Observers are already preparing for the fireworks. According to the filings, potential witnesses to be called include high-profile investors such as former Theranos board members Henry Kissinger and Jim Mattis, Fox Corp president Rupert Murdoch, and Riley Bechtel, former Bechtel Corp president.

Jurors can expect to hear from doctors who used the tests on their patients and from patients misled by Theranos results. Those include a woman whose test results falsely indicated a miscarriage despite a healthy pregnancy, a man who was falsely indicated to have prostate cancer, and two others who received false positive HIV test results.

The government has to prove its intent, a huge burden, said Barbara McQuade, a former prosecutor and law professor at the University of Michigan. Holmes’ attorneys could attempt to confuse the jury or question his intent to defraud. He said creating confusion can be a “useful tactic” in cross-examination to try to trip up witnesses and attack the government’s arguments.

“If the jury cannot understand the case, then it cannot enter a guilty verdict, because it is the government’s responsibility to prove each and every element of each crime beyond a reasonable doubt,” he said.

Balwani, 56, faces his own trial in February 2022. And that could benefit Holmes, too, some experts say.

Holmes’s attorneys have presented witnesses in Domestic violence and mental health and will argue that she was influenced by an abusive Balwani.

“There is a real advantage to having defendants separated in this way, which is that attorneys can point to the ’empty chair,'” McQuade said. “In that strategy, they can say that it was all Sunny, and the jury could acquit Elizabeth Holmes.”

Balwani’s lawyers have called Holmes’s accusations “scandalous, lewd and inflammatory.” Holmes’ attorneys did not respond to a request for comment.

‘She is rolling the dice’

Holmes is likely to take the stand, according to court documents. Criminal defense attorneys generally advise their clients not to do so, but this is anything but a typical case, Carreyrou said. He guesses what she probably will “Go against the grain” and testify.

“Holmes has an extraordinary tolerance for risk, because to do what he did, to get a blood test device that didn’t work to work, that takes nerve,” he said. And now, when most people would have pleaded guilty, she decided to take this trial to court. She is rolling the dice. “


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