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Elizabeth Holmes has been found guilty of four counts of wires fraud after a jury in San Jose found that she deceived investors in her blood-testing device so she could rake in billions of dollars.
The former Theranos CEO was acquitted on four counts and the jury of eight men and four women could not reach a decision on three counts. Prosecutors can choose to retry those counts at a later date, but have not given any indication if they plan to. A conference will be held to decide whether to seek a retrial next Wednesday.
Each count carries a maximum sentence of 20 years, terms that are likely to be served concurrently. Holmes is expected to appeal. She ignored reporters’ questions as she left the courthouse in San Jose on Monday evening after the verdicts were returned. Legal expert Neama Rahmani, a former federal prosecutor, says she thinks Holmes sentence will likely sit closer to the maximum term because of the $945 million sum involved in the fraud.
After seven days deliberating, the jury earlier on Monday said it was unable to reach a unanimous verdict on three of the 11 criminal counts she faces.
The judge told them to press ahead, with the four guilty verdicts and four acquittals later shared with the court.
Holmes, 37, was facing nine counts of wire fraud and 12 counts of conspiracy to commit wire fraud.
Her trial was postponed several times, because of the COVID-19 pandemic and Holmes’s pregnancy.
She gave birth to a boy in July in Redwood City, California – her first child, with San Diego hotel heir Billy Evans, who often accompanied her to trial alongside her mother, Noel Holmes.
During the trial, which began in September, jurors heard testimony from former Theranos employees who said they left the company after witnessing problems with its technology.
Investors testified that Holmes made misleading claims about Theranos, such as that its machines were being used in the field by the U.S. military.
Former patients told jurors that they would not have used Theranos’ tests if they had known the tests were flawed.
Prosecutors said had Holmes been truthful with investors and patients, the venture never would have attracted critical funding and revenue.
‘She chose fraud over business failure. She chose to be dishonest,’ Assistant U.S. Attorney Jeff Schenk said at the start of closing arguments.
‘That choice was not only callous, it was criminal.’
Holmes could face up to 20 years in prison, as well as a fine of $250,000 plus restitution for each of the nine counts of wire fraud two counts of conspiracy.
Earlier on Monday jurors told US District Judge Edward Davila saying they could not reach a verdict on three of her 11 counts, though they did not specify which counts they were unable to reach a verdict for.
Following the announcement, Judge Davila publicly raised the possibility of a partial verdict if the jurors remain conflicted on returning verdicts for any of the charges.
He then ordered them to deliberate further under an ‘Allen charge,’ and instructed the eight men and four women who comprise the jury to do their best to reach a verdict, reminding them that Holmes is presumed innocent ‘unless or until the government proves her guilt beyond a reasonable doubt.’
If the jury was still unable to reach a verdict, Davila said, a mistrial could be declared on those three counts and Holmes could be retried.
The jury sifted through three months of testimony and more than 900 pieces of evidence as they decided whether she intentionally deceived investors, business partners, patients and advertisers in the quest for investments for her blood testing startup.
Holmes founded Theranos in 2003, and dropped out of Stanford the next year as she raised money for her new blood testing device.
She repeatedly claimed that the company’s new testing device could scan for hundreds of diseases and other problems with a few drops of blood taken with a finger prick, instead of a needle stuck in a vein.
The results, she claimed, could come within a matter of minutes.
The concept was so compelling that Theranos and Holmes were able to raise more than $900 million, some of that from billionaire investors such as media magnate Rupert Murdoch and software titan Larry Ellison.
The Palo Alto, California, company also negotiated potentially lucrative deals with major retailers Walgreens and Safeway. Holmes soon began to grace national magazine covers as a wunderkind.
At Theranos’ height, Holmes had amassed a fortune of $4.5 billion on paper and was being lionized as a visionary on cover stories in business magazines.
But unbeknownst to most people outside Theranos, the company’s blood-testing technology was flawed, often producing inaccurate results that could have endangered the lives of patients who took the tests.
After the flaws were exposed by the Wall Street Journal in 2015 and 2016, Theranos eventually collapsed. The Justice Department filed its criminal case in 2018.
Over the course of the trial, prosecutors called 29 witnesses including former Theranos employees, retail executives and even a former US Defense Secretary as they attempted to prove that Holmes ‘chose fraud over business failure,’ as Jeff Schenk, an assistant US attorney said in his closing arguments, according to the New York Times.
The defense, meanwhile, rested much of their case on Holmes’ own testimony.
She said she believed the claims she made about Theranos’ miniLab and did not find out until it was too late that it did not work as promised.
Holmes’s lawyer Kevin Downey told the jury last month that Holmes didn’t realize the scope of the problems with the miniLab until a Theranos laboratory director informed her in March 2016 that the company had to invalidate 60,000 of its past blood tests.
He likened Holmes’ final days at the company to a captain valiantly trying to save a sinking ship, and said that if she had committed any crimes, she would have been scurrying to jump overboard like a scared rat, Downey, told jurors as he wrapped up roughly five hours of closing arguments.
But not only did she never sell a share, Downey said, she continued to try to salvage the company.
Holmes is seen in the lab in a grab from the HBO documentary The inventor: Out for Blood in Silicon Valley
Her turnaround efforts included ousting Theranos’ chief operating officer, Sunny Balwani, who also had been her lover.
Holmes founded Theranos in 2003, and dropped out of Stanford the next year as she raised money for her new blood testing device.
She repeatedly claimed that the company’s new testing device could scan for hundreds of diseases and other problems with a few drops of blood taken with a finger prick, instead of a needle stuck in a vein.
The results, she claimed, could come within a matter of minutes.
The concept was so compelling that Theranos and Holmes were able to raise more than $900 million, some of that from billionaire investors such as media magnate Rupert Murdoch and software titan Larry Ellison.
The Palo Alto, California, company also negotiated potentially lucrative deals with major retailers Walgreens and Safeway. Holmes soon began to grace national magazine covers as a wunderkind.
At Theranos’ height, Holmes had amassed a fortune of $4.5 billion on paper and was being lionized as a visionary on cover stories in business magazines.
But unbeknownst to most people outside Theranos, the company’s blood-testing technology was flawed, often producing inaccurate results that could have endangered the lives of patients who took the tests.
After the flaws were exposed by the Wall Street Journal in 2015 and 2016, Theranos eventually collapsed. The Justice Department filed its criminal case in 2018.
Over the course of the trial, prosecutors called 29 witnesses including former Theranos employees, retail executives and even a former US Defense Secretary as they attempted to prove that Holmes ‘chose fraud over business failure,’ as Jeff Schenk, an assistant US attorney said in his closing arguments, according to the New York Times.
The defense, meanwhile, rested much of their case on Holmes’ own testimony.
She said she believed the claims she made about Theranos’ miniLab and did not find out until it was too late that it did not work as promised.
Holmes’s lawyer Kevin Downey told the jury last month that Holmes didn’t realize the scope of the problems with the miniLab until a Theranos laboratory director informed her in March 2016 that the company had to invalidate 60,000 of its past blood tests.
He likened Holmes’ final days at the company to a captain valiantly trying to save a sinking ship, and said that if she had committed any crimes, she would have been scurrying to jump overboard like a scared rat, Downey, told jurors as he wrapped up roughly five hours of closing arguments.
But not only did she never sell a share, Downey said, she continued to try to salvage the company.
Her turnaround efforts included ousting Theranos’ chief operating officer, Sunny Balwani, who also had been her lover.
Taking the stand in November, Holmes acknowledged some of the government’s points about the failures of the miniLab and the company’s lofty goals, she maintained she never intended to deceive anyone.
She alleged that she was the victim of a decade-long abusive relationship with Balwani, who, she testified, had been secretly controlling her diet, her friendships and more while claiming it would help her succeed in the business world.
Balwani, who is also facing fraud charges and will stand trial next month, has denied the allegations.
Near the end of her testimony, CNN reports, she also testified that while she was not aware about everything that happened at Theranos, she ‘never’ took any steps to mislead anyone who invested in the company.
‘They were people who were long-term investors and I wanted to talk about what this company could do a year from now, five years from now, 10 years from now,’ she claimed.
‘They weren’t interested in today or tomorrow or next month,’ she said.
‘They were interested in what kind of change we could make.’
The line of journalists and spectators hoping to get a seat in the courtroom began forming on many days in the pre-dawn darkness outside the federal courthouse in San Jose, the heart of Silicon Valley.
Some people reportedly were paid to save spots in line for the limited number of tickets, which were handed out by court workers and guaranteed entrance to their bearers.
The crowd rushed to get pictures of Holmes as she walked to the courthouse entrance, usually hand-in-hand with her mother.
The gathered crowd included journalists and curious members of the public, but also on at least one occasion look-alikes, complete with blond ponytails and black clothes considered the disgraced entrepreneur’s trademark look.
Some of those waiting shouted support for Holmes on her way in, which prompted Judge Edward Davila to note concern it could influence jurors.
In late November the waiting masses snapped pictures for Twitter of seeming performance art by a woman selling blond wigs, black turtleneck tops and cans of ‘blood energy drink’ from a suitcase.
In a risky move, 37-year-old Holmes testified in her own defense, pitting her word against the testimony of more than three dozen witnesses called by the prosecution.
Holmes aimed to convince jurors that she believed in her technology, and that it was on the cusp of living up to its promise when the startup crashed.
She fought back tears as she recounted alleged abuse by then boyfriend Ramesh ‘Sunny’ Balwani, whom she’d brought in to help run her company.
Holmes said Balwani denigrated her and forced himself on her sexually when angry — accusations that he has forcefully denied.
The prosecutor challenged Holmes’s testimony of being bullied by Balwani, having her read message exchanges between the two in which they declared their love.
‘You are God’s tigress and warrior. You are extraordinary. I love you,’ Balwani wrote in one note to Holmes.
Holmes’s trial became a battlefield for the debate about whether a woman entrepreneur was being prosecuted for the kind of ‘fake it til you make it’ tactics regularly seen in male-dominated Silicon Valley.
Her defenders and fans, sometimes called ‘Holmies’, were able to display their backing with an extensive array of merchandise featuring her image.
T-shirts, stickers, posters, coffee mugs and cell phone cases were all available for purchase online in support of Holmes, some bearing the title ‘Girlboss’.
As Holmes’s trial opened in September, dozens of listings were online as part of a cottage industry in honor of the fallen biotech star.
One seller, under the name WeAreElizabethHolmes on ecommerce site Etsy, had a Twitter account with images of T-shirts, coffee mugs and even a throw pillow.
The account cites its favorite entrepreneur: ‘First they think you’re crazy, then they fight you, then you change the world.’
Holmes spoke those words in a 2015 interview as she fought against the Wall Street Journal reporting casting doubt on Theranos’s technology, and which would induce the firm’s collapse.
Holmes testified that she dropped out of California’s elite Stanford University and started Theranos at the age of 19, using money set aside to pay for college.
In the years after Theranos was founded in 2003, Holmes gathered some $700 million from investors. She held the majority stake in the startup, valued at $10 billion at its peak in 2015.
Her wealth on paper made her the first woman to reach such financial heights by building her own business.
Holmes testified during trial that she never sold a share of her stake in Theranos, leaving her with nothing after the company’s collapse.
She was, however, paid more than a million dollars overall in salary during her years as chief, Holmes testified.
