Long-Awaited Trial of Elizabeth Holmes Set to Begin Today
Elizabeth Holmes is finally having her day in court. After a year-long delay due to COVID-19, the Theranos founder and chief executive officer heads to court today to face multiple criminal fraud charges that could land the former billionaire in prison for more than a decade.
Holmes, who founded the blood-testing company Theranos after dropping out of Stanford University at 19, and former Theranos president Ramesh “Sunny” Balwani, were charged with multiple counts of fraud in 2018. Holmes and Balwani have been accused of what the U.S. Securities and Exchange Commission called “years-long fraud.” According to the charges that the government brought against the duo, from 2013 to 2015, Holmes and Balwani, who was her boyfriend at one time, raised more than $700 million from investors for falsely claiming their single-drop blood-testing technology would revolutionize the medical industry.
The government charged that the Theranos Edison technology “was not capable of consistently producing accurate and reliable results for certain blood tests, including the tests for calcium, chloride, potassium, bicarbonate, HIV, Hba1C, hCG, and sodium.”
Over the course of the two-year period, Theranos became a golden unicorn in Silicon Valley, amassing a valuation of $9 billion. During this time, Holmes and Balwani lied and exaggerated the efficacy of the blood-testing technology and made false claims about its regulatory status with the U.S. Food and Drug Administration (FDA) and a supposed relationship with the U.S. Department of Defense. Theranos promised a miraculous diagnostic ability to screen for multiple disease indications with a single drop of blood but never produced supporting data to the public. The criminal indictment alleges that Holmes and Balwani used a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information in order to defraud potential investors.
In 2016, an investigation into the company’s Newark, Calif., blood testing laboratory revealed egregious practices, which led to the company voiding two years’ worth of data sent to customers. Theranos shut down that site, and the investigation also led to Theranos shuttering its lab facilities across the country. The government said the tests “were so inaccurate, it was essentially a coin toss whether the patient was getting the right result. The data was devastating.”
“The defendants delivered to doctors and patients blood results that were inaccurate, unreliable, and improperly validated. The defendants also delivered to doctors and patients blood test results from which critical results were improperly removed,” the government said in the charges it brought against Holmes and Theranos.
The voided data and the inaccurate results sparked multiple lawsuits against the company.
Leading up to today’s trial start, Holmes denied destroying evidence related to the company’s blood tests. The government alleged that she and her company destroyed a database called the Laboratory Information System (LIS) in 2018. The LIS contained three years’ worth of accuracy and failure rates of Theranos tests.
Since her fall, Holmes, who always wore a black turtleneck as she cultivated the image of Apple’s Steve Jobs, has become the subject of multiple documentaries, films and books. A long-awaited documentary will soon air on the streaming service Hulu following the start of the trial. The documentary series, titled “The Dropout,” does not have a release date yet. In addition to “The Dropout,” a feature film on Holmes is in the works. At one time, Jennifer Lawrence was attached to the project in the role of Holmes. That film had been titled “Bad Blood” and was based on the book of the same name written by The Wall Street Journal’s Pulitzer Prize-winning investigative journalist John Carreyrou. It was Carreyrou who first broke the story about Theranos and the problems with its diagnostics development equipment.
If convicted, Holmes and Balwani face a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution for each count of wire fraud and for each conspiracy count.