Fraud accused biotechnology founder Elizabeth Holmes, 37, was convicted in a federal court in San Jose late Monday night.
SAN JOSE (E24): The jury convicted Elizabeth Holmes on four of the eleven charges.
She is convicted of defrauding investors of over $ 140 million through the blood test company Theranos, which she founded in 2003, just 19 years old.
On four charges, the jury has ruled that Holmes is not guilty. The last three points, which are about fraud by some investors, the jury has not agreed on a verdict.
Elizabeth Holmes was indicted in 2018, and the spectacular trial in Silicon Valley has lasted for over three months, since the beginning of September.
Milliardfallet i Silicon Valley
Holmes’ goal with Theranos was to revolutionize the blood testing industry and allow patients to be tested for over 200 diseases, using just a few drops of blood.
Eventually, the young entrepreneur was compared to greats like Steve Jobs. Pictures of her graced the covers of magazines such as Forbes and Fortune, and she was hailed by Bill Clinton and Joe Biden, among others.
The board had heavy profiles such as former Secretary of State Henry Kissinger and James Mattis, who later became Trump’s Secretary of Defense.
At the same time, high-profile investors had pumped hundreds of millions of dollars into the company, which was valued at over nine billion dollars at the height of 2015.
The challenge was that the technology did not work as it should.
In 2018, Theranos collapsed, three years after the first revealing newspaper coverage.
Used Pfizer logo
During the trial, two quite different pictures of Elizabeth Holmes have been drawn. The prosecution has tried to hammer in a message about an entrepreneur who deliberately lied and cheated to get the company more money in a desperate pursuit of success.
These have been some of their main arguments in the case:
- Theranos portrayed that 10-15 large drug companies, such as Pfizer, had confirmed that their technology worked, but that was not true. Theranos employees wrote a study with the logos of Pfizer and Schering-Plow, which was sent to investors. It gave the impression that the two pharmaceutical companies had approved of the technology.
- Theranos claimed to partners Walgreens and Safeway that they had developed machines that could run any blood sample in real time, with the highest degree of accuracy, with just a few drops of blood. That was not true.
- In most tests, they used commercially available devices developed by others and thinned the blood, so the results were incorrect.
- Elizabeth Holmes said the US military used their devices in remote locations around the world. That was not true.
- The entrepreneur inflated the company’s results to investors. Among other things, she claimed that the company had a turnover of over 100 million dollars in 2014, while the real number was around 100,000.
Prosecutor John Bostic believes Elizabeth Holmes knew exactly what the company’s technology was capable of – and where it was failing.
– It confirms that she knew that the statements she gave were false, he said on the last day in court.
The challenge for the prosecution is to show that the accused acted deliberately, and they have brought 29 witnesses to support their version of the case.
Both former employees, investors and partners have appeared in the courtroom on the fifth floor, in addition to doctors and three patients.
The defense team believes the story is far more complicated than the prosecution should have it.
They have portrayed Elizabeth Holmes as an idealistic, hard-working entrepreneur who invested everything in the dream of saving the world.
Yes, she was wrong.
– But making a mistake is not a crime, said defense attorney Lance Wade in his introductory speech.
Defendants have also consistently tried to place some of the responsibility on investors, and they have pointed out that the company carried out around eight million blood tests, while the prosecution has only had a few patients on its witness list. Three of them appeared in court.
The lack of statistical evidence is one of the defenders’ complaints.
“There alone is a basis for deciding that this indictment is not justified,” said defense attorney Kevin Downey in his closing proceedings.
The database with the results – the results from all the blood tests – has disappeared. It deleted the company after giving the authorities an encrypted copy without a password. Something the authorities discovered too late.
Witnessed six days
Elizabeth Holmes nevertheless believed that the technology worked, according to the defenders. She was surrounded by people who were far more competent in laboratory activities, and they gave her the impression of this, they have claimed.
Defendant expressed the same during his seven-day testimony.
– I understood that our series 4 machines could perform any blood test, Holmes said from the witness box.
The founder also told the court about several studies conducted in collaboration with large pharmaceutical companies.
She admitted that she had put the logos on the controversial reports that were sent to investors, but said she did not think it should look like they were written by Pfizer and Schering-Plow.
She just wanted to show that they had collaborated on the groundwork, she claimed.
– I wish I had done it differently.
Cheating and deception in Silicon Valley
From the witness box, Holmes also claimed that she was physically and mentally abused by her longtime boyfriend, Ramesh “Sunny” Balwani, who was operations manager at Theranos. It affected everything she did, she said in court.
This part of the testimony was not mentioned in the closing proceedings of defense counsel Kevin Downey.
Balwani has denied all allegations. He must appear in court himself, accused of fraud in the same case complex, but denies criminal guilt, like Holmes. The trial against Balwani is scheduled to begin on February 15.
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