Elizabeth Holmes Convicted of 4 of 11 Counts of Theranos Trial - TechCrunch
Elizabeth Holmes has been found guilty of misleading investors as the founder and CEO of Theranos. After four months of trial and seven days of deliberation, the jury has reached a verdict that will have a lasting impact in Silicon Valley and beyond.
The youngest and richest self-made billionaire was tried for two counts of conspiracy to commit wire fraud and nine counts of wire fraud. Holmes was found guilty of conspiracy to defraud investors, as well as defrauding investors from the DeVos family, hedge fund manager Brian Grossman and former estate and trust lawyer Dan Mosely. He was not found guilty of charges related to cheating patients.
The jury did not reach a conclusion on three wire fraud accounts involving Chris Lucas, Hall Group executive Bryan Tolbert and money manager Alan Eisenman, who testified in the lawsuit. Judge Edward Davila sought a mistrial on all three accounts. Prosecutor Jeffrey Schenk said he would contact the Department of Justice, then tell the court next week how the government wants to proceed.
Holmes founded Theranos in 2003 after his retirement from Stanford. It involved investors and partners in technology that would change the health care system - instead of drawing blood through and waiting days for test results, its technology would push a little. blood and do dozens of tests right away. She soon became the CEO of a company valued at $ 10 billion, but there was one problem: the technology did not work.
Theranos has been incapacitated since 2022, but Holmes' trial began only this fall after a delay due to the pandemic and the birth of a Holmes baby. Over 11 weeks, prosecutors raised the allegation that Holmes had knowingly deceived investors, questioning witnesses such as former U.S. Secretary of Defense James Mattis, spy of Erika Cheung, Theranos patients, hackers museums, medical professionals and journalists.
Even though Theranos' technology did not live up to what the company said it had done, Holmes said she thought she was telling the truth - she even said that the slideshows presented to investors made by scientists and engineers. But the prosecutors ruled out some accounts to convince the jury that Holmes was knowingly misleading investors and participants - one piece of evidence showed that Theranos used the Pfizer brand in an unauthorized manner while ' in which they negotiated a partnership with Walgreens. Daniel Edlin, former senior product manager at Theranos, confirmed that Theranos sometimes put down displays of their technology in front of investors. When a blood test was carried out on billion-dollar investor Rupert Murdoch, Theranos removed abnormal results before releasing the reports, Edlin said.
In a major turnaround for the high-profile test, Holmes she took her own stand to argue that her failure as a founding founder does not mean that she has committed fraud. In a key moment, Holmes said she was abused by Balrani's COran Ramesh "Sunny" Theranos.
Balwani, who faces a separate trial next year, was Holmes' secret lover. They met when Holmes was 18 and Balwani 37 - she moved in with the year after she dropped out of Stanford. She also said during the trial that she was raped as a Stanford student, which is part of the reason she did not complete her degree. “She decided [she] going to build a life by building this company. ” She explained Balwani's disciplined behavior, including a written document confirming her daily schedule, including what she ate, when she slept and how she dressed. She said, “I was so disappointed and he was trying to teach me how to be better. ”
The jury deliberated for seven days, viz asking if they were allowed to bring home a jury instruction for review. They also called for a rehearing of some audio clips of Holmes' calls by investors, which were presented as evidence, but talks continued into the new year.
On the seventh day of deliberations, The jury sent their third note to the judge, stating that they could not reach a unanimous judgment on three of the 11 counts. The indictment recommended that Judge Davila read a guidance document to the jury on what to do with a jury without a lock. Holmes' s defense did not agree, saying they did instructions may have been seen as coercive, but the judge went on to deliver the direction. It is too remembered the jury that Holmes would be found not guilty until he was found guilty. Four hours later, the jury submitted another note stating that their members could not reach a unanimous verdict on three charges. Shortly afterwards, they gave their judgment on the other eight accounts.
It is not inconceivable that the conversations in a white collar test will take this long. The jury deliberated for five days before reaching a decision in Gislaine Maxwell's recent four-week trial; she was found guilty of five out of six charges. In 2007, former news tycoon Conrad Black of fraud was convicted after 12 days of jury deliberation in a 14-week trial.
The test decision sends a message to tech founders that it's not right to lie about your technology - especially not when it affects the health of real people. But it sends a mixed message that he has been found not guilty of the counts of defrauding patients. Beyond that, the issue highlighted the importance of due diligence for investors and partners collaborating with startups. In particular, Theranos investors were not the usual venture capital firms under suspicion. Instead, its funding came from individuals such as former Education Secretary Betsy DeVos, billionaire media mogul Rupert Murdoch, former Secretary of State Henry Kissinger and the Walton family, among other wealthy elites. Some evidence showed that these investors were willing to lend money to Theranos even when Holmes dismissed their most interesting questions.
But the false credit of the investors in Holmes was not the only thing driving the faulty Theranos technology. Theranos and other review companies have exploited regulatory loopholes that allow devices not yet FDA approved to enter the market.
Theranos is not very similar to the past. Balwani is awaiting its own criminal fraud case next year.