Holmes convicted of defrauding investors
Theranos exec guilty of 4 out of 11 counts, faces 20-year term
Elizabeth Holmes was found guilty of criminal fraud for her role building the blood-testing startup Theranos Inc. into a $9 billion company that collapsed in scandal.
A jury in San Jose, California, returned the verdict after hearing three months of testimony that was often technical, heavily contested and, from Holmes herself, shocking. Unless the decision is overturned on appeal, the 37year-old faces as long as 20 years in prison, though she’s likely to be sentenced to far less than that.
Holmes, wearing a mask in the courtroom as everyone else did, stayed perfectly still and upright while the verdict was read. She looked directly at the jurors as they were polled by the judge to determine if the verdict matched their conclusions. There was little reaction in the courtroom to the verdict, beyond the sound of fluttering of keyboards from the press. Holmes’ partner, her mother and father sat still in the front row.
Holmes was convicted of four out of 11 counts of conspiracy and wire fraud and acquitted of four counts. The jury didn’t reach a verdict on three of the counts. Holmes was found not guilty of all charges pertaining to defrauding patients.
Holmes’ fall from her status as celebrity chief executive to convicted felon marks one of the most dramatic descents in Silicon Valley history. After deliberating for seven full days, jurors agreed Monday with prosecutors that Holmes lied to investors over several years about the accuracy and capabilities of Theranos blood analyzers. A parade of witnesses told jurors they were gravely misled by the Stanford University dropoutturned-entrepreneur. They ranged from executives at Walgreens and Safeway Inc. to James Mattis, the former U.S. secretary of defense who served on the Theranos board, as well as advisers to investors who poured hundreds of millions of dollars into the company.
The panel of eight men and four women also heard colorful accounts from several Theranos employees about the company’s lab taking dangerous shortcuts to conceal shortcomings with the analyzers, and from patients who recounted receiving inaccurate test results that left them anxious about their health.
Taking the stand
As was the case with the fate of Theranos itself, Holmes’ defense was tethered to her charisma and credibility. She made the risky decision, unusual in white-collar criminal cases, to testify in her own defense.
The move gave Holmes the final voice in the long trial — and served to dampen the testimony of dozens of government witnesses before her — but also forced her to make uncomfortable admissions during a grueling cross-examination.
In seven days on the witness stand, Holmes alternated between deflecting blame, failing to remember certain events and accepting responsibility for mistakes, even while insisting she didn’t intend to deceive anyone.
The most jolting moments in the courtroom were when Holmes testified she was raped as a student at Stanford University and suffered years of verbal and sexual abuse from her former boyfriend, former Theranos President Ramesh “Sunny” Balwani.
By Holmes’ account, the abuse lasted throughout the decadelong relationship with Balwani and had a profound if incalculable influence on her life. Her legal team’s decision not to call a psychiatrist with an expertise in relationship trauma as a witness left it up to jurors how to factor the testimony into their decision.
A prosecutor told the jury in closing arguments that the alleged abuse isn’t relevant to the fraud Holmes was charged with.
“In the absence of any evidence linking that experience to the charged conduct, you should put it out of your mind,” Assistant U.S. Attorney John Bostic told jurors.
Holmes’ defense team tried to convince the jury that she made a sincere effort over 15 years to steer Theranos to success and shouldn’t be punished for failing to achieve her dream.
“Elizabeth Holmes was building a business and not a criminal enterprise,” attorney Kevin Downey told jurors.
No verdict on 3 charges
The judge allowed the jury to deliver a verdict on only eight of the 11 charges she faced, after they said they were unable to reach a unanimous decision on all of the counts.
Abraham Simmons, a spokesman for the U.S. Attorney in San Francisco, had no comment on whether prosecutors would seek to retry Holmes on the three counts for which the jurors were unable to reach a verdict. Prosecutors proposed a court hearing next week and a defense attorney didn’t object.
After the verdict Holmes walked out the front door of the court and was trailed by media for a block to the Marriott hotel in San Jose. She ignored all questions posed to her. Holmes’ attorneys declined to comment.
U.S. District Judge Edward Davila said Holmes will remain free on bond for the time being.
Holmes, Balwani and Walgreens all still face claims over inaccurate blood tests by customers of the drugstore chain in an Arizona lawsuit.
Balwani, who faces a separate trial in February on the same fraud charges as Holmes, has pleaded not guilty and has denied her abuse allegations.