Theranos founder Elizabeth Holmes (left of centre) departs from federal court in San Jose with, from left, husband Billy Evans, and parents Noel Holmes and Christian Holmes
Credit: David Paul Morris/Bloomberg
Fallen tech star Elizabeth Holmes was convicted of fraud and conspiracy on Monday for turning her blood-testing start-up Theranos into a sophisticated sham, ending a lengthy trial that has captivated Silicon Valley.
Holmes was found guilty on four counts of fraud and conspiracy after a dramatic day in court when jurors, who had already deliberated for seven days, cleared her of four other felonies but said that they were unable to reach a unanimous verdict on three remaining charges.
US district judge Edward Davila had encouraged them to deliberate further, but the jury returned a final decision later in the afternoon.
Among the charges they cleared her of were one conspiracy to defraud patients and two charges related to patients who received inaccurate test results.
Holmes could now face up to 20 years in prison for each guilty count, but is likely to get a much lighter sentence.
The 37-year-old remained seated and expressed no visible emotion as the verdicts were read. She bowed her head several times before the jury was polled by Judge Davila, and then got up to hug her husband, Billy Evans, and her parents before leaving with her lawyers.
Mr Evans later emerged in the hallway outside the courtroom, looking visibly shaken and emotional.
The verdict marked the culmination of a trial that charted one of the most dramatic careers in the history of Silicon Valley and could have major implications for a "fake it till you make it" culture that critics say dominates the US tech industry.
Bill Clinton and Elizabeth Holmes attend the 2015 Clinton Global Initiative Closing Plenary
Credit: Taylor Hill
When she was nine years old, Holmes told family members she wanted to be a billionaire. By 31, she had appeared to reach her goal.
In 2015, Forbes Magazine crowned her the world’s youngest self-made female billionaire, with a net worth of $4.5 billion. Theranos, her Silicon Valley blood testing start-up, boasted a string of high-profile investors and directors including Rupert Murdoch and Henry Kissinger.
Feted as the female Steve Jobs, down to the black turtleneck and elite security, Holmes had promised to redefine healthcare by testing for dozens of potential diseases with just a drop of blood.
Holmes tended to dress in all black with a black turtleneck, just like Steve Jobs
Credit: HBO/Television Stills
But then it all unravelled.
Holmes, born in Washington DC to a Congressional staffer and Enron executive, started Theranos in 2003 and soon dropped out of a chemical engineering degree at Stanford University, in the heart of California’s Silicon Valley.
Elizabeth Holmes Theranos timeline
She toyed with various ideas but, inspired in part by her own fear of needles, the squeamish Holmes settled on a device that could screen for diseases from cancer to diabetes with just a drop of blood. She called the microwave-sized machine the Edison and planned to sell it to pharmacies and healthcare providers.
She aimed to upend an industry dominated by giant testing companies such as Quest Diagnostics and Labcorp, starting with setting up "mini-labs" in Walgreens and Safeway stores across the US that would use the small Theranos device.
There was also – so Holmes told investors – a deal with the US army. In late 2014, the company claimed to be valued at $9 billion, making it one of Silicon Valley’s most valuable start-ups.
July 23, 2015: Holmes guides Joe Biden, then Vice President, on a tour of a Theranos production facility in Newark, California
This would prove the company’s high point. In 2015, an investigation from the Wall Street Journal claimed that Theranos was secretly not using the Edison machines in commercial deals due to a lack of reliable results, and raised questions about its technology.
The claims prompted a string of investigations, further questions, and cancelled deals that ultimately led to Theranos declaring bankruptcy in September 2018, months after Holmes and fellow company executive Sunny Balwani were charged with fraud.
Holmes’ trial was repeatedly delayed, by the pandemic and by her pregnancy. She and her husband Mr Evans had a son, William Holmes Evans, in July. She married Mr Evans, the heir to a US hotel chain, in 2019, and he has sat with her family during the trial in San Jose. Holmes’ parenthood was not disclosed to the jury during the trial.
Elizabeth Holmes with her partner Billy Evans
Credit: Tony Avelar/AP
Throughout proceedings, prosecutors sought to present Holmes as a trickster obsessed with fame and fortune who chose to deceive patients and investors instead of accepting the limitations of her company’s technology.
Jeff Schenk, the prosecutor, said in his closing arguments that “she chose fraud over business failure.”
“She chose to be dishonest with investors and patients. That choice was not only callous, it was criminal,” he said.
Her lawyers, meanwhile, said she had believed in Theranos’ abilities, and painted her as a victim of manipulation and abuse from Mr Balwani, who was also her former boyfriend.
During her seven days of testimony, Holmes occasionally expressed contrition for her handling of a variety of issues, but often contended that she’d forgotten the circumstance surrounding some of the key events spotlighted by the prosecution.
Holmes and Balwani addressing the company’s staff in 2015 at the company’s then-headquarters in Palo Alto
Instead she blamed Mr Balwani for failing to fix the laboratory problems as he had promised and, in the most dramatic testimony of the trial, alleged he had turned her into his pawn through a long-running pattern of abuse while exerting control over her diet, sleeping habits and friendships.
Mr Balwani has denied the abuse allegations and all charges that he defrauded patients and investors.
Holmes and Mr Balwani met in China while she was in high school, and became romantically involved after he joined the company in its early days.
Mr Balwani was made the company’s chief operating officer and effective number two despite a lack of clear medical expertise, and the couple maintained a secret relationship for 12 years until Holmes forced him out of the company in 2016.
The judge indicated that he is likely to hold off on the sentencing until the completion of a separate trial involving similar fraud charges against Mr Balwani that is scheduled to start next month in the same San Jose courtroom where Holmes’ legal saga unfolded. He has pleaded not guilty.
Five key moments in the trial
1. The high-profile witness
The most prominent backer to take the stand was former secretary of state and Marine general Jim Mattis, who personally put $85,000 in Theranos. He said he and other investors were discouraged from scrutinising the company closely. “There came a point where I didn’t know what to believe about Theranos any more,” he said.
Among the other former investors on the witness list were Rupert Murdoch and Henry Kissinger.
Neither were called in the end.
2. The insiders
Theranos employees described realising that the Edison devices the company was built on did not work. One said the devices were simply "unsuitable for clinical use."
Former staffer Erika Cheung said she eventually became so concerned she began to refuse to run blood samples on them. “It was starting to get very, very uncomfortable and very stressful for me working at the company,” she said.
3. The faked logos
The prosecution accused Holmes of fraudulently adding the logos of other blue-chip firms such as Pfizer, Schering-Plough and GlaxoSmithKline to Theranos documents sent to investors in a bid to suggest its technology had been vetted by them.
“Pfizer did not write this,” prosecutor Robert Leach said, presenting one such paper. “Pfizer did not put its logo on this. Pfizer did not give its permission to put its logo on this. Pfizer did not make the conclusions in this report.”
Holmes admitted the manipulation, the first time she acknowledged any personal involvement in the documents, which were arguably one of the biggest smoking guns in the case.
4. Holmes takes the stand
In a shock decision, the defense called only one significant witness, Holmes herself. It was a risky move that she presumably hoped would garner the jury’s sympathy.
Over seven days on the stand, she was grilled for several days about inconsistencies in her story. In response, she claimed to have always believed in her company and blamed Balwani for letting her down.
5. Balwani’s role
Holmes’s personal life was picked over in detail, including memos she wrote to herself, journal entries and hundreds of text messages with Balwani. She was a strict dieter, and wrote notes to herself to be "never a minute late," "call bullshit immediately," and "show no excitement."
The prosecution presented a picture of a strict, power-hungry manipulator. The defence said it showed she was a driven entrepreneur abused by her lover.
But the most dramatic moment came when she accused Balwani of raping, abusing and controlling her in an effort to "kill the old Elizabeth" and create the perfect CEO. He denies the allegations.