Theranos founder Elizabeth Holmes convicted of fraud

4 Jan 2022

Elizabeth Holmes. Image: Steve Jennings/Getty Images for TechCrunch

Holmes was the chief executive of the failed blood-testing start-up that was once a darling of Silicon Valley.

Elizabeth Holmes has been convicted of defrauding investors in her blood-testing start-up Theranos.

After a months-long trial in California and more than 50 hours of jury deliberations, she was found guilty of four charges including wire fraud.

Holmes faced a total of 11 charges in the trial, which began in September. She was found not guilty on four charges relating to defrauding patients and there was no verdict on the other three.

As founder and CEO of Theranos, Holmes became a darling of Silicon Valley and was hailed as the next Steve Jobs. Her start-up promised a revolutionary blood-testing technology, with devices that could detect diseases using just a few drops of blood.

At its peak, Theranos was valued at $9bn and Holmes became a billionaire by the age of 30. The company secured investment from backers including media mogul Rupert Murdoch, Oracle founder Larry Ellison, Walmart’s Walton family and the family of US billionaire Betsy DeVos.

But Theranos’ success story began to unravel in 2015 when the Wall Street Journal’s John Carreyrou published reports featuring a number of company whistleblowers who claimed the tech didn’t work as promised.

In 2019, whistleblower Erika Cheung told Silicon Republic’s Inspirefest event about her role in revealing the truth behind the company.

“The technology didn’t work,” she explained at the time. “The devices were nothing more than wishful thinking.”

Theranos dissolved in 2018 after civil and criminal probes, and Holmes and COO Ramesh ‘Sunny’ Balwani were indicted.

Holmes’ case shook Silicon Valley and could have significant implications for the tech world, with the jury having to determine whether she was a well-meaning founder or deliberately deceiving people with her start-up.

In her testimony at the trial, Holmes said she genuinely believed in her company and that she didn’t mean to deceive investors or patients.

But prosecutors said she deliberately tried to inflate Theranos’ credibility to win backers and continued raising money on false claims despite employees telling her that the technology didn’t work.

She now faces up to 20 years in prison.

Elizabeth Holmes speaking at TechCrunch Disrupt in 2014. Image: Steve Jennings/Getty Images for TechCrunch via Flickr (CC by 2.0)

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Sarah Harford was sub-editor of Silicon Republic