Who is Elizabeth Holmes and what was she found guilty of? What is Theranos?
Elizabeth Holmes has reported to prison today, May 30, 2023. Who is the former Theranos leader and what crimes was she found guilty of?
The mother of two living a quiet life in San Diego, Elizabeth Holmes, has seen her life change significantly over the last decade. Once hailed as “the world’s youngest self-made female billionaire,” according to Forbes, with a net worth of $4.5 billion, next week, Holmes is likely to start an eleven-year prison sentence in Bryan, Texas.
Holmes got her start in Silicon Valley after dropping out of Stanford University and starting Theranos, a health technology company that investors were told was developing breakthrough technology to diagnose diseases. The Theranos leader managed to convince influential people with deep pockets to invest in her company and attracted big names to sit on its board. However, it came to light that the products the company “the next Steve Jobs” had founded was making were all smoke and mirrors and that its flagship testing device could not deliver on her promises. Holmes claimed that Theranos had developed a machine that could take one drop of blood and run dozens of medical tests on the small sample.
Who is Elizabeth Holmes founder of Theranos?
Holmes was born in 1984 in Washington, DC, into a well-off family. Her paternal great, great, great grandfather was the founder of Fleischmann’s Yeast, which revolutionized America’s bread industry. She had ambition from a young age, which has been put down to maintaining the family heritage of greatness.
She went to Stanford University to study chemistry in 2002, where she came up with the idea of creating a patch that could scan the wearer for infections and also release antibiotics as needed. She founded what would become Theranos in 2003, at age 19, to “democratize healthcare.” Despite being told that her invention wouldn’t work, a device that could detect a range of diseases with just a few drops of blood from a finger prick, she pushed forward. Amanda Seyfried brought the story to life in the Hulu miniseries, ‘The Dropout.’
With the help of Channing Robertson, Dean at the Stanford School of Engineering, she was introduced to venture capitalists. Holmes cobbled together a board of directors full of bigwigs like George Shultz, Henry Kissinger, and General James Mattis. By 2014 Theranos was valued at $9 billion, according to Forbes, and she had attracted $400 million in venture capital. Investors included media tycoon Rupert Murdoch and the Walton family, the owners of Walmart.
What was Elizabeth Holmes found guilty of?
In 2015, everything began to unravel after an investigative report by Wall Street Journal reporter John Carreyrou. He started secretly digging into the company after receiving a tip from a whistleblower. Despite strong-arm tactics to squash his report by threatening him, the whistleblower, and the paper with legal actions, his “bombshell” article was published.
The company faced a series of challenges when regulators from the Centers for Medicare and Medicaid Services (CMS) prohibited Holmes from owning or operating a certified clinical laboratory, as well as owning, operating, or directing a blood-testing service for two years in 2016. This was further compounded by legal action from the state of Arizona and a revolt from shareholders the following year.
In 2018, the SEC charged her and Ramesh Balwani, the former president of Theranos, with fraud. Financial regulators said that the company had taken over $700 million from investors while making false claims. As part of the settlement, she was banned from holding an officer or director position in a public company for ten years.
That same year the US District Court for the Northern District of California indicted Holmes and Balwani on multiple charges of wire fraud and conspiracy to commit wire fraud. Both were found guilty in 2022. Whereas Holmes was found guilty on four of eleven counts, Balwani was convicted on twelve counts related to the fraud.
Holmes landed with an eleven-year sentence that the court has recommended she serve at a slow-security federal prison in Bryan, Texas. Lawyers for Holmes have appeared to the Ninth Circut Court, but the case made before a US District Judge was rejected, leading many to believe the Holmes will be unable to avoid entering prison before 30 May.