Elizabeth Holmes faces up to 20 years in prison at her sentencing on Friday for defrauding Theranos investors. Here's a recap of the rise and fall of Silicon Valley's former golden girl.
Holmes, founder of the health-technology company Theranos, was convicted in January on four counts of defrauding investors in her blood-testing startup and now faces up to 20 years in jail. Her sentencing is scheduled for Friday.
In the early 2000s, Holmes captured the imagination of Silicon Valley with her self-made story. After dropping out of Stanford to create a groundbreaking blood-testing system, she attracted high-profile investors, graced magazine covers and was dubbed the next Steve Jobs. Holmes’s company, Theranos, promised a revolutionary system for diagnostic medical tests that required only a few drops of blood and cost a fraction of the price of existing blood-testing technology. Theranos was valued at $9 billion and secured contracts with Walgreens and the Department of Defense, according to case filings. Holmes became a media darling, giving a TEDMED talk and appearing on the cover of magazines such as Forbes, Fortune, Inc. and New York Times Style. But her meteoric rise came to a halt following a series of investigative pieces from The Wall Street Journal in 2016. Those investigations led to criminal charges for Holmes and former Theranos executive Ramesh “Sunny” Balwani. The two had kept a romantic relationship private from investors, board members and employees for years. The saga has inspired a book, an HBO documentary, a podcast, a film and the Hulu limited series “The Dropout.”Holmes will be sentenced on Friday, Nov. 18, after being found guilty on fraud and conspiracy charges in January. Balwani was convicted on 12 felony counts of fraud and conspiracy against Theranos investors and patients in July, and his sentencing is scheduled for Dec. 7.Who is Elizabeth Holmes? Elizabeth Holmes grew up in Washington, D.C., and was a top student in high school. She dropped out of Stanford University in 2004 at age 19 to found what would become Theranos. Holmes said she had lost an uncle to cancer when she was young and that his death inspired her to create the Theranos testing system. That claim, among others, has been debunked. “I believe the individual is the answer to the challenges of healthcare. But we can’t engage the individual in changing outcomes unless individuals have access to the information they need to do so,” Holmes said in a now-deleted 2014 TEDMED talk. Theranos was supposed to do just that by making blood testing as routine a part of healthcare as diet and exercise. Holmes, now 38, became known for her distinctive black turtlenecks — consciously modeled after Steve Jobs, some thought — and her baritone voice. She wore the turtlenecks “like a uniform,” telling Glamour magazine in a 2015 interview, “I probably have 150 of these.” In 2015, at age 31, she was crowned the youngest self-made female billionaire by Forbes, with a net worth of $4.5 billion. What was Theranos? Holmes kept the Palo Alto, Calif.–based Theranos in “stealth mode” for its first 10 years as it developed a proprietary technology that the company claimed could run tests using only a few drops of blood. “One tiny drop changes everything,” a Theranos slogan went. The blood was stored in a “nanotainer,” and the company’s stated goal was to create a second device that could quickly and accurately test that blood. That device was, at various times, called the “Theranos Sample Processing Unit ,” “Edison” and “miniLab.” Blood tests that used only a few drops of blood would be especially helpful for elderly people with collapsed veins, people who required frequent blood tests due to chronic illness and anyone with a fear of needles, Theranos said. And, the company claimed, all of this could be done at a fraction of the cost of existing technology. The company drew the attention of big-name investors including Betsy DeVos, who went on to serve as education secretary under President Donald Trump, and the heirs of Walmart WMT, -0.34% founder Sam Walton. Holmes also put together a highly unusual board of directors for a healthcare startup, including two former U.S. secretaries of state, George Shultz and Henry Kissinger, as well as William Perry and Gen. James Mattis, former and future secretaries of defense, respectively. What did Holmes do at Theranos that got her into trouble? Questions about the accuracy of Theranos’ claims arose as early as 2015, with The Wall Street Journal reporting that the company’s keystone product was only handling a small fraction of the 240 blood tests it advertised. In truth, Theranos was using traditional technology to run a majority of patient tests. In 2015, employee Tyler Shultz — grandson of board member George Shultz — reported Theranos to New York state’s public health lab. That is the first known complaint against the company.Theranos scaled back its testing in late 2015 at the behest of the FDA, which at that time had only approved one of the company’s tests. Walgreens terminated a partnership it had formed with Theranos and closed the 40 testing centers it had opened inside its California and Arizona stores. The Securities and Exchange Commission filed civil securities-fraud charges against Holmes in 2018. She settled and paid a $500,000 fine. After federal prosecutors filed criminal charges against Holmes and Balwani, Theranos was dissolved in 2018. What charges did Holmes face? Both Holmes and Balwani, who is now 57, were charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud. The indictment, filed in the U.S. attorney’s office for the Northern District of California, alleged that Holmes and Balwani defrauded two groups: investors and patients. Holmes and Balwani “engaged in a scheme, plan and artifice to defraud investors,” prosecutors claimed. Between 2010 and 2016, the two told investors that Theranos could provide accurate, fast, reliable and cheap blood tests and results when they knew their technology was not capable of doing so, prosecutors allege. Prosecutors also alleged that the pair told investors that Theranos would generate over $100 million in revenue in 2014, when Holmes and Balwani knew the company would only generate a few hundred thousand dollars that year. Prosecutors said investors were also told that Theranos had lucrative contracts with the Pentagon and that its technology was already being used on the battlefield — when, in actuality, the company only had limited revenue from military contracts. Patients were defrauded between 2013 and 2016 because the tests weren’t as fast, accurate or reliable as advertised, prosecutors alleged. Holmes’s trial was delayed several times, first due to the pandemic and then due to her pregnancy; her son with partner Billy Evans , was born in July 2021. Her trial, at which no cameras were allowed, began in September 2021. Where is Holmes now? A jury convicted Holmes on two counts of wire fraud and two counts of conspiracy to commit fraud in January, following a trial that featured dozens of witnesses — including Holmes herself. She now faces up to 20 years in prison, although legal experts say she is unlikely to receive the maximum sentence. Her sentencing is scheduled for Nov. 18. Holmes has been free on a $500,000 bond for the months leading up to her sentencing. She was reportedly living at Billy Evans’s $135 million Silicon Valley estate. Vanity Fair reported that Holmes was holding meetings with filmmakers for a potential documentary that would tell her “real” story. She also reportedly wants to write a book. As for her former partner, a federal jury convicted Balwani on all 12 charges that he helped perpetuate a yearslong fraud scheme at Theranos. He also faces up to 20 years in prison, and his sentencing is scheduled for Dec. 7. This article was originally published in August 2021 and has been updated ahead of Elizabeth Holmes’s sentencing .
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