from the the-harder-they-fall dept.
Elizabeth Holmes Found Guilty on 4 of 11 Charges
Elizabeth Holmes was convicted today of three counts of criminal wire fraud and one count of criminal conspiracy to commit wire fraud. The jury delivered its verdict after six days of deliberation.
The government's victory in the case is a rare rebuke for tech startups, which often pitch investors on their technological prowess and business acumen using wildly optimistic assumptions.
Theranos was, perhaps, an extreme example, raising over $900 million on the back of claims that its proprietary tests were better, cheaper, and less invasive than the competition. None of those claims was true, and unlike many other Silicon Valley startups, the health and safety of patients was on the line.
Holmes was found guilty of defrauding Lakeshore Capital Management (the family office of the DeVoses) of $100 million, PFM Healthcare (a hedge fund) of $38 million, and an LLC connected to Daniel Mosley (Henry Kissinger's former estate attorney) of $6 million. She was also convicted of conspiracy to commit wire fraud against Theranos investors more generally. On three charges, all alleging wire fraud against investors, the jury returned no verdict. Holmes was acquitted of all other charges, including those that involved defrauding patients. She faces up to 20 years in prison.
With the guilty verdict, Holmes, the founder of the company, is the first Theranos executive to be held criminally responsible for her actions, though she may not be the last.
While she is likely to receive prison time for defrauding investors, she will be able to spend the next eight and a half months out on bail. She faces a maximum sentence of 20 years in prison for each of the four counts she was convicted of, though it’s unlikely that she’ll be sentenced to all 80 years.
Holmes has been out on bail since June 2018, when she and alleged co-conspirator Ramesh “Sunny” Balwani were charged. Both were released after posting $500,000 bonds and surrendering their passports. Now that Holmes has been convicted and is awaiting sentencing, her bond will have to be secured by property. Their trials have been repeatedly pushed back, first because of the COVID pandemic and then later because Holmes gave birth.
Part of the reason Holmes’ sentencing has been postponed is because the government still has to prosecute its case against Balwani.
2022/01/04 - Elizabeth Holmes Found Guilty on 4 of 11 Charges
2020/09/13 - Judge in Theranos Fraud Case Orders 14-Hour Psychological Test for Holmes
2019/07/01 - Theranos Founder Elizabeth Holmes to Face Trial Next Year on Fraud Charges
2018/09/06 - Theranos to Dissolve in a Pool of Blood
2018/06/17 - Elizabeth Holmes Steps Down as Theranos CEO as DoJ Levels Charges
2018/03/15 - Blood Unicorn Fairy Tale: Theranos Founder Charged With Fraud
2017/12/24 - Theranos Given Indirect Lifeline From Softbank
2016/10/06 - Theranos Lays Off 340, Closes Labs and "Wellness Centers"
2016/08/03 - Theranos Introduces New Product to Distract from Scandal