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Theranos CEO Elizabeth Holmes, convicted of fraud

After a month-long landmark trial in California, Theranos founder Elizabeth Holmes has been found guilty of defrauding investors. Holmes allegedly lied about her technology which she claimed could diagnose diseases with just a few drops of blood, according to prosecutors.

At the age of 30, Elizabeth Holmes’s firm, Theranos, had earned her a multimillionaire and been heralded as the next US tech visionary, but it all vanished in a whirl of lawsuits, utter humiliation, and, eventually, criminal prosecution.

In a market filled with the carcasses of money-losing enterprises that once promised great riches, Holmes is a rare case of a tech executive being brought to book over a company flaming out. Her case highlighted the hazy line that exists between the hustle that defines the sector and downright criminal dishonesty. After seven days of deliberation, a jury found Holmes guilty of two charges of wire fraud and two counts of conspiracy to conduct fraud. Wire fraud is a relatively broad federal felony in the United States that involves making false assertions to obtain something from another person – usually money – via electronic communications, such as emails.

Holmes was the company’s CEO throughout its troubled 15-year history. The 37-year-old was found not guilty on four other counts of fraud and conspiracy, alleging that she defrauded patients who paid for Theranos blood testing. The decision came after the jury of eight men and four women sat through a three-month trial including reams of evidence and 32 witnesses, including Holmes herself. She now faces a maximum term of 20 years in prison for each count.

However, legal experts believe she will not receive the full penalty. The jury was deadlocked on the final three charges, which a federal judge is expected to dismiss as part of a mistrial ruling as soon as next week.

Journalists in the courtroom stated Holmes, who gave birth to her first child last year, was unfazed as the judgments were read out and hugged her husband, Billy Evans, and her parents before leaving the courtroom.

According to David Ring, a lawyer who has carefully watched the case, the split convictions are “a mixed bag for the prosecution, but it’s a loss for Elizabeth Holmes since she is going away to prison. Theranos was once the darling of biotech and Silicon Valley, valued at $9 billion (£6.5 billion) at one point. Holmes was able to gather more than $900 million from billionaires such as Rupert Murdoch, the media tycoon, and Larry Ellison, the IT mogul. With a test that could detect illnesses like cancer and diabetes with just a few drops of blood, the company promised to revolutionize the healthcare business.

However, in 2015, these promises began to fall apart after a Wall Street Journal investigation revealed that the company’s fundamental blood-testing technology was ineffective. Prosecutors claim that her company used publicly available machines to conduct the testing in secret. Multiple lab directors testified at trial that they told Holmes about Theranos’ technology issues but were told to suppress their concerns. At the same time, they said, Holmes assured investors that the system was working well. ‘Holmes’ is a “Choosing fraud over company failure was a wise decision. She decided to deceive investors and patients “In closing remarks, prosecutor Jeff Schenk stated, “Not only was that decision insensitive, but it was also criminal.” The defence countered with descriptions of a hardworking and determined businesswoman who was making waves in a male-dominated field.

 

 

For a three-block walk from the courtroom to the nearby hotel where she has remained during jury deliberations, Holmes did not reply to questions about the verdict. She was to be released on bond while awaiting the judge’s decision on her sentence. The court indicated that he will likely defer sentencing until a separate trial involving similar fraud allegations against Balwani, who served as Theranos’ chief operations officer from 2009 to 2016, is completed. Balwani’s trial will begin next month in the same San Jose courtroom where Holmes’ legal drama played out.

U.S. Attorney Stephanie Hinds praised the jury for guiding the case through the crisis in a written statement, saying Holmes must now be held “culpable” for her crimes.

The background story of Theranos
According to Wikipedia, Theranos was an American privately held corporation that was touted as a breakthrough health technology company, with claims of having devised blood tests that required only very small amounts of blood and could be performed very quickly using small automated devices the company had developed. It was founded in 2003 by 19-year-old Elizabeth Holmes. These statements, however, were later revealed to be erroneous. At its peak in 2013 and 2014, Theranos raised more than US$700 million from venture capitalists and individual investors, culminating in a $10 billion valuation.

Theranos’ science was called into question by medical research academics John Ioannidis and Eleftherios Diamandis, as well as investigative journalist John Carreyrou of The Wall Street Journal, in 2015. The company faced a string of legal and commercial issues from the Medical authorities, investors, the US Securities and Exchange Commission (SEC), the Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners, and patients.

By June 2016, Holmes’ net worth was reported to have plummeted from $4.5 billion to almost nothing. What remained of the corporation was dissolved on September 4, 2018, after several years of struggle, lawsuits, and CMS sanctions. The SEC charged Theranos, Holmes, and former company president Ramesh “Sunny” Balwani with fraud on March 14, 2018. The United States Attorney for the Northern District of California announced Holmes’ indictment on wire fraud and conspiracy charges on June 15, 2018.

Balwani was also charged with the same offences. The trial was meant to start in August 2020, but due to the COVID-19 pandemic and Holmes’ pregnancy, it was postponed. The trial of Holmes began on August 31, 2021, while the trial of Balwani was postponed until January 11, 2022.

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