Theranos Founder Elizabeth Holmes Found Guilty Of Fraud 
Posted 6,January

By Chaveendra Dunuwille

In Articles

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Following an intense legal proceeding carried out over several months, Elizabeth Holmes, founder of Theranos, was convicted of defrauding investors. 

A total of 11 charges were filed against the former Silicon Valley tech entrepreneur, of which she was found guilty of four charges, including conspiracy to commit fraud and three charges of wire fraud. Each of these charges carries a maximum sentence of 20 years in prison. However, the Theranos founder was held to be not guilty of charges of defrauding the public. 

As a 19-year old Stanford College dropout, Elizabeth Holmes created Theranos with the promise of revolutionizing the healthcare industry. Her machine named the “Edison,” which Holmes herself described as the “iPod of Healthcare,” was presented as capable of detecting medical conditions such as cancer and diabetes with a single drop of blood, effectively removing the $60 million lab testing industry from healthcare. 

She managed to raise $900 million from investors, including the likes of Media magnate Rupert Murdoch and tech mogul Larry Elison. The company’s board of directors included recognizable names such as former US foreign secretary Henry Kissenger and former defense secretary James Maddox. At the high of its popularity, the company held a market valuation of over $ 9 billion. 

However, the company would come crashing down as a Wall Street Journal investigation conducted in 2015 with the help of disillusioned former employees revealed that the entire premise of the company was a sham. While Holmes vigorously defended her company in the media, the information to the contrary kept piling up, ultimately forcing the company to cease operations in 2018. 

In the trial, the defense presented Holmes as a rising tech entrepreneur fighting to succeed in a primarily male-dominated field. The defense blamed Holmes’ former boyfriend and partner Ramesh “Sunny” Balwani and accused him of emotional and sexual abuse. Mr. Balwani had denied all accusations of wrongdoing and stated that he would fight these allegations in court. 

On the other hand, the prosecution showed Holmes as a fraud who jeopardized the health and safety of thousands of people and stated, “Holmes chose fraud over business failure. She chose to be dishonest with investors and patients”, said prosecutor Jeff Schenk in closing arguments. “That choice was not only callous, it was criminal.” 

After a week of deliberation, the jury decided to hold Holmes guilty on conspiracy to commit fraud and three counts of wire fraud. Due to the difficulty of prosecuting White collar fraud cases, the government seems happy with the verdict reached during the trial.