U.S. prosecutors are about to ask for blood (or, more accurately, 20 years in prison and a $ 3 million fine) for Elizabeth Holmes, the disgraced former CEO of Theranos, a new technology company that claimed that changed the world of health one drop of blood at a time.
In his heyday, Holmes, who had a turtle neck, was hailed as a disruptive genius and beloved investor who claimed that Theranos had created a proprietary technology (a machine called Edison) that used a small drop of blood. to filter various drugs. conditions, which are presented as the future of laboratory testing technology.
Theranos claimed that Edison could perform life-saving tests at an affordable price almost anywhere using just a damn blood instead of a full vial of a vein.
The machine would save money for patients and doctors and potentially provide an early diagnosis of more than 200 conditions in places as convenient as grocery stores and pharmacies.
That is, if it really worked. In 2015, the Wall Street Journal broke history based on informant reports and deep dives into data that showed Theranos ’proprietary technology was working inconsistently, or not, and that tests were being run on the traditional closed-door laboratory equipment. .
In 2018, the company closed. Holmes and former Theranos president and chief operating officer Ramesh “Sunny” Balwani are now facing criminal charges.
Jury selection at Holmes’ trial is scheduled to begin Tuesday, years after the scandal. This is what you need to know.
Elizabeth Holmes (right) faces two conspiracy to commit bank fraud and nine counts of bank fraud [File: Nina Riggio/Bloomberg]Wait, once you weren’t called Steve Jobs, the woman?
Yes. Holmes was known for her fascination with the founder of Apple and imitated him in many ways, including the turtle neck itself and its Edison machine as “the iPod of health.”
Theranos also used sleek marketing materials designed by the same company that Apple used for its iconic ads.
Holmes was also influenced by other Silicon Valley icons. According to John Carreyrou’s report in The Wall Street Journal, one of Holmes’ first mentors was Oracle co-founder Larry Ellison, who allegedly told Holmes to boost his team, even when the team left him. to say that expectations were unfeasible.
Investors were also drawn to the Holmes prodigy: he left Stanford University at 19 years old. Many also wanted to get to the ground floor of what they believed could be a billion-dollar business with a woman at the helm working to help people.
Before falling out of grace, Elizabeth Holmes, then identified as a multimillionaire, was invited to speak at keynote meetings such as the Fortune Global Forum 2015, which brings together Global 500 CEOs and innovators, builders and technologists from some of the companies larger emerging. [File: David Paul Morris/Bloomberg]So what is Holmes accused of?
Holmes and Balwani are charged with two counts of conspiracy to commit cable fraud and nine counts of felony misconduct for allegedly participating “in a multi-million dollar scheme to defraud investors and a separate scheme to defraud doctors and patients,” according to the indictment. .
The two are being tried separately, with Balwani’s day in court set for January 2022.
Earlier, Holmes’ trial was delayed due to her pregnancy. She gave birth to a child in July.
What did the alleged fraud entail?
Holmes and Balwani are accused of using “a combination of direct communications, marketing materials, statements to the media, financial statements, models and other information to defraud potential investors.”
And they were pretty shocking investors. Theranos had a wide range of A-list followers, including Oracle co-founder Ellison, Walmart founders, the Walton family, media mogul Rupert Murdoch and former U.S. Secretary of Education. Betsy DeVos. Among Theranos’ board members was former United States Secretary of State Henry Kissinger.
At the time, many brilliant people thought that the Holmes machine would change the world. But it was not so.
Holmes (right) even attended a state dinner for former Japanese Prime Minister Shinzo Abe at the White House in 2015, three years before she was formally charged with fraud [File: Andrew Harnik/AP Photo]How did the world know that the machine was not working?
As Theranos attracted media attention during its meteoric rise, it also attracted media scrutiny.
Carreyrou broke the story of The Wall Street Journal with the help of certain Theranos whistleblowers, including Tyler Shultz.
Shultz, grandson of former U.S. Secretary of State George Shultz, a board member of the company, had a job as a research engineer. He began talking to Carreyou confidentially when he noticed “quality control failures” with the Edison machine.
The first attempts to correct internal problems were not taken into account, which caused Shultz to leave Theranos and record the worrying things he had seen at work.
Has anyone been harmed by the machine?
In 2018, nine people who had used Theranos blood testing technology filed as part of a class action lawsuit against the company and Walgreens Pharmacy, which had offered tests in collaboration with Theranos.
One patient claimed to test positive for the Theranos team to detect an autoimmune disease, which prompted a series of tests from her doctor, who eventually determined she did not have the disease.
Another woman who used Theranos equipment said tests determined she was positive for Hashimoto’s disease, a thyroid disease that caused her to change her lifestyle, take medication and make medical appointments while seeking treatment. additional that he did not need.
Elizabeth Holmes (center) and her legal team have not commented much on her defense to the public [File: Nina Riggio/Bloomberg]What kind of defense is Holmes expected to make?
It remains to be seen, as his legal team has not commented on it in the press.
A common defense strategy employed during cable fraud cases may be what is known as “good faith defense,” which the company’s founders did not want to mislead investors into. But this can be difficult to assemble given the depth and breadth of information discovered by Carreyrou and others about the company.
There has also been speculation as to whether Holmes’ mental health can be favored.
How long is the trial expected to last?
The selection of the jury begins on August 31.
However, the elimination of potential jurors who claim to have read, seen, or heard the numerous books, series, and podcasts on Theranos has become a topic of debate between Holmes’ attorney, Kevin Downey, and Judge of Thermes. district of the United States Edward Davila.
Has Silicon Valley changed as a result of the Theranos scandal?
Yes, just ask women entrepreneurs, who say they are always questioned about Holmes and face exaggerated investor control.
But the long-term increase for investors, as well as for the founders of start-ups, could be more regulatory and controlling and balances in the old world of Silicon Valley, which was the Wild West.
With so much at stake, new companies can choose to create more open jobs to listen to employee concerns, as well as encourage more transparent communication with their investors and board members.