© Reuters. Theranos founder Elizabeth Holmes (middle) arrived in San Jose, California, USA on January 3, 2022 to participate in her fraud trial. REUTERS/Brittany Hosea-Small
Authors: Jane Lanhee Lee and Jody Godoy
San Jose, California (Reuters)-On Monday, a U.S. jury found Theranos founder Elizabeth Holmes guilty of conspiracy to defraud investors in blood testing startups, and 4 of 11 charges against her Guilty.
Holmes was convicted of defrauding three other investors and conspiring to do so. She was acquitted of three cases of fraudulent patients paying Theranos testing fees and a related charge of conspiracy. The jury was unable to make a decision on the three allegations related to individual investors.
After the verdict was read, Holmes, wearing a gray suit jacket, appeared calm and composed. The verdict date was not confirmed immediately.
When the U.S. District Judge Edward Davila sentenced her to up to 80 years in prison, her sentence could be much lower.
Prosecutors said that between 2010 and 2015, the 37-year-old Holmes deceived private investors into believing that Theranos’ small machine could perform a series of tests with a few drops of blood pierced by a finger.
Holmes was also accused of misleading patients regarding the accuracy of the test.
Holmes became famous in Silicon Valley after he founded Theranos in 2003.
Wealthy private investors, including media mogul Rupert Murdoch, invested millions in the company after meeting with the founder known for his Steve Jobs-style black turtleneck sweater.
This case reveals that Theranos failed to completely change laboratory testing efforts. Prosecutors said the company secretly relied on traditional machines made by Siemens to conduct patient tests.
After the Wall Street Journal published a series of articles indicating that its equipment was defective and inaccurate, Theranos went bankrupt. Holmes was sued in 2018 along with Ramesh “Sunny” Balwani, the former COO of Theranos.
She pleaded not guilty to nine counts of fraud and two counts of conspiracy. Balwani also pleaded not guilty and will face trial later.
During the San Jose, California trial that began in September, jurors heard testimony from former Theranos employees who said they had left the company after witnessing a technical problem with the company.
Investors testified that Holmes made misleading statements about Theranos, such as the use of its machines by the US military in this area. The former patient told the jurors that if they knew the test was flawed, they would not use Theranos test.
Prosecutors stated that if Holmes was honest with investors and patients, the joint venture would never attract critical capital and revenue.
“She chose fraud instead of business failure. She chose dishonesty,” Assistant U.S. Attorney Jeff Schenk said at the beginning of her closing statement. “This choice is not only ruthless, but also criminal.”
Holmes testified for her defense during the trial that she never intended to deceive anyone, and that Theranos’ laboratory director was responsible for the quality of the tests.
In the closing statement, defense attorney Kevin Downey stated that the evidence did not show that Holmes was motivated by Theranos’ cash crunch, but that she was “building a technology that could change the world.”
“You know, as soon as there are signs of trouble, the liar will cash out,” but Holmes stayed, Downey said. “When the ship sank, she also sank with it.”