‘Blood-testing’ start-up founder faces decades in prison over ‘fraud of the century’

Elizabeth Holmes, the founder and former CEO of blood-testing company Theranos, is now facing decades in prison after a jury found her guilty of four fraud charges in a US court.  

Miss Holmes has been found guilty of fraudulently obtaining hundreds of millions of dollars from investors and luring them to her company and its failed technology.

It all started seven years ago when Miss Holmes graced magazine covers as one of the richest women in the United States. Her company, which she founded at the age of 19 after dropping out of Stanford University, gained a valuation of approximately $9 billion. But in 2015, her empire began to crumble after whistleblowers shared tales of rampant failures of the company’s blood-testing technology, which promised significant amounts of health data from a single drop of blood.

In what is being regarded as the fraud case of the century, the jury, however, concluded that she was not guilty on four other charges that were connected to allegations of patient fraud related to false tests results that had been sent to them.

This comes after in 2016, Theranos invalidated results from thousands of tests it had conducted through its partnership with Walgreens, prompting several lawsuits from patients who used the false results to schedule medical procedures.
 
According to Edward Davila, the U.S. district judge for the Northern District of California in San Jose who has presided over the case, the jury is expected to declare a mistrial on those charges. If that does occur, the prosecution could seek to retry Holmes on those counts but as of this time, the intentions of the government legal team are unclear.

Miss Holmes has been on trial for four months, with the  first two months  including a testimony from investors and Theranos whistleblowers who testified about  data manipulation at Theranos while whistleblower Erika Cheung, a former  lab worker at the company , testified that the company manipulated data to pass quality control and that Theranos employees would delete up to two of six data points in a test to achieve a desired result.  
 
Tyler Shultz, the other whistleblower, raised concerns about the failures of the company’s blood-testing device.

The jury was also told that Theranos also used logos from two pharmaceutical companies to mislead investors into thinking the California biotech was collaborating with them. Theranos included logos from Pfizer and Schering-Plough (now part of Merck) in reports it sent to investors, which would make it appear as if those companies had validated the Theranos technology.

This saw Miss Holmes raise approximately $1 billion from wealthy investors that included the family of former US Secretary of Education Betsy Devos that sank $100 million into Theranos, the Walton family of WalMart fame that invested $150 million, media mogul Rupert Murdoch who is executive chairman of News Corp and invested $125 million, among others.

While taking the stand , Miss Holmes admitted to  what she described as ‘ mistakes made while at the helm of the company,  saying that, as CEO of Theranos, she should have been more aware of what was going on and that the responsibility for all activities at the company was hers and hers alone.

However, her defense put blame on her former partner and lover, Ramesh “Sunny” Balwani as well as subordinates who Miss Holmes claims misled her.  

Both Holmes and Balwani have been charged with multiple counts of fraud with Balwani’s trial is expected to begin next year.

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