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Bad Blood: the Notorious Elizabeth Holmes Goes on Trial for Fraud

Elizabeth Holmes Theranos
Elizabeth Holmes, the disgraced CEO of blood testing company Theranos, is heading to trial. Credit: Fortune, CC BY-NC-ND 2.0

Elizabeth Holmes, the former CEO of the blood testing company Theranos, is headed to trial  three years after being indicted on federal fraud and conspiracy charges. The charges allege that she purposefully misled investors and consumers with regards to her company’s blood testing technology.

In 2003 — when Holmes was just 19 — she dropped out of Stanford University and created Theranos. Holmes started up the company out of the desire to transform blood testing, telling the public that her technology would be able to test for serious conditions like cancer with only a single drop of blood.

The blood samples were gleaned from a finger prick and transferred to a miniaturized vessel dubbed the “nanotainer.” The blood was then analyzed by a machine called the “Edison.” The patent for the Edison claimed the technology would take the sample and run blood tests on it based off of instructions it received from the internet, cycling the results back through the internet and comparing them to other medical data.

After Holmes began a retail partnership with Walgreens in 2013, Theranos caught the eye of a slew of high profile political figures, including former Secretaries of State Henry Kissinger and George Shultz, and future Defense Secretary James Mattis. Holmes was quickly embraced as an innovator, gracing the cover of Forbes’s 2014 “Forbes 400” with a headline that read “Elizabeth Holmes Leads the Class of 2014.”

Holmes was wearing a black turtleneck, a reference to Apple’s founder and former CEO Steve Jobs, a figure to whom she quickly garnered comparisons. At one point, Theranos was valued at $9 billion.

But Holmes’ fall was as sudden as her rise.

In 2015 the Wall Street Journal had published a bombshell investigation shattering the visionary image of Theranos that Holmes and its board had cultivated. The report alleged that the technology was faltering, and that the Edison was highly inaccurate. The technology had not been peer reviewed, and Theranos claimed it had its own data that justified the company’s claims about its blood testing ability.

The exposé led to an avalanche of backlash. One of the company’s investors, Partner Fund Management, sued them for their $96 million investment. The U.S. government then revoked the company’s blood-testing license and banned Holmes from owning or operating a laboratory for two years. Theranos ultimately settled charges of massive fraud with the Securities and Exchange Commission before its dissolution in 2018.

Theranos CEO Elizabeth Holmes, COO Ramesh Balwani to fight charges at trial starting Tuesday

The U.S. government has charged Holmes with two counts of conspiring to commit wire fraud and 10 counts of federal wire fraud. The jury selection for her trial starts on Tuesday, and the trial is anticipated to be ongoing for the next few months.

Holmes and Theranos’ former COO Ramesh Balwani are accused of defrauding investors from 2010-2015, as well defrauding doctors and patients who paid to use Theranos’ blood testing services between 2013 and 2016. The Department of Justice claims that the company never actually implemented the technology it said it developed with the Edison machines and nanotainer, as well as failing to run the necessary clinical tests on their products. Despite this, Theranos continued to promote their blood testing by misleading consumers and investors.

Both Holmes and Balwani have pled not guilty, but if they are convicted they could each face 20 years in prison, a fine of $250,000, and have to pay restitution for their counts of wire fraud and conspiracy.


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