A jury found Elizabeth Holmes guilty of defrauding investors out of hundreds of millions of dollars. The verdict on Monday capped the downfall of one of Silicon Valley’s most dynamic and scandal-plagued young executives who promised to revolutionize blood testing with an innovative technology that required just a small sample of blood pricked from a patient’s finger.
After more than 50 hours of deliberations over seven days, the jury of eight men and four women convicted Holmes of three counts of wire fraud and one count of conspiracy to commit wire fraud for lying to investors about devices developed by Theranos, the once high-flying biotech company that she started at the age of 19.
The jury found Holmes not guilty on four other fraud-related charges connected to allegations that she duped patients who received false or faulty results from tests conducted by Theranos, which collapsed in 2018.
The jury could not reach a unanimous verdict on three other counts tied to investor fraud. U.S. District Judge for the Northern District of California in San Jose, Edward Davila, is expected to declare a mistrial for those three counts. It is unclear whether prosecutors intend to indict her again for those charges, a possibility allowed under federal law.
“The guilty verdicts in this case reflect Ms. Holmes’ culpability in this large-scale investor fraud and she must now face sentencing for her crimes,” said U.S. Attorney Stephanie Hinds in a statement.
Holmes’ sentencing date has not yet been set. But she faces the maximum penalty of 20 years behind bars, though legal experts say she will likely be sentenced to a lesser punishment.
When the verdict was read, the court was eerily quiet.
Holmes, who sat masked in the courtroom, had no visible reaction.
She later hugged members of her family in the front row of the court one by one.
Holmes, who is 37 years old, walked out of the courtroom clasping the hands of family members and stared straight ahead with laser-like focus as a phalanx of cameras flashed around her.
During the nearly four-month federal trial in San Jose, Calif., jurors heard from nearly 30 witnesses called by prosecutors. Together, they painted Holmes as a charismatic entrepreneur who secured hundreds of millions of dollars in investment for a medical device that never delivered on her promises. When Theranos’ technology fell short, the government argued, Holmes covered it up and kept insisting that the machines would transform how diseases are diagnosed through blood tests.
Holmes took the witness stand for more than 20 hours to defend herself. She accused her ex-boyfriend and former deputy at Theranos, Ramesh “Sunny” Balwani, of sexual abuse, saying that this abuse clouded her judgment. (Balwani faces a separate fraud trial in the same court in February.)
The move was seen by legal experts as dicey, since accusations of abuse is not a legal defense in a white-collar criminal trial.
The jury’s guilty verdicts on Monday show that this tack did not persuade jurors that she should be exonerated for hoodwinking investors out of millions.
Among those were lost large sums of money were media mogul Rupert Murdoch, former Secretary of Education Betsy Devos and Walmart’s Walton family. In all, Holmes, a skilled and charismatic pitchwoman, raised nearly $1 billion from investors based on a mountain of lies and coverups.
Holmes showed remorse on the stand. She said she wished she had handled some key business matters differently. But she blamed others for the downfall of Theranos. She said lab directors whom she had trusted were the ones closest to the technology. And she said Balwani, not her, oversaw the company’s financial forecasts, which were later discovered to be grossly inflated.
Yet the government offered evidence that Holmes had an iron grip on Theranos’ operations. Prosecutors argued she did not stop — and even helped spread —falsehoods about the company that misled investors into pouring millions of dollars into the startup.
A Stanford University dropout, Holmes dazzled Silicon Valley when she founded Theranos at age 19. She promised its technology could screen patients for hundreds of diseases with just a tiny sample of blood, a notion that left longtime biotech experts befuddled.
She cultivated a mystique that included a signature black turtleneck like Apple co-founder Steve Jobs, whom she greatly admired.
When Theranos’ machines were rolled out to Walgreens stores in California and Arizona, they gave patients false or flawed results. One patient testified that she was led to believe she was having a miscarriage after taking a Theranos test, when indeed her pregnancy was viable. Another patient thought her cancer had returned when it had not, following a test. But in the end, jurors did not believe that Holmes intentionally deceived patients.
Big names from former President Bill Clinton to former Secretary of State Henry Kissinger to Mexican billionaire Carlos Slim believed in the company, helping it attract global investment and a valuation of more than $9 billion before its fall from grace in 2015, when the Wall Street Journal began publishing a series of exposes that set government investigations into the company in motion.
Among the discoveries that emerged about Theranos was that it relied mostly on altered commercially available blood analyzer machines, not its miracle technology, to conduct tests. Holmes fiercely protected this activity, saying it was a “trade secret” that even the company’s closest investors would not be briefed about.
It is unusual for tech executives to face criminal changes when their startups collapse under the weight of unrealized promises.
Former prosecutors have said that the egregiousness of the fraud at Theranos, as well as the fact that the startup was in the closely regulated health care industry, where the health of private citizens is on the line, distinguished this startup failure from that of other once hyped startups that also flamed out.
The spectacular rise and fall of Holmes and Theranos has been examined in a documentary, podcast series, and a best-selling book. In March, a Hulu series is scheduled to be released on Holmes. There is also a feature film underway on Theranos in which actress Jennifer Lawrence will play Holmes.