Former Theranos CEO Elizabeth Holmes arrives at federal court (Getty Images)
A judge has denied a bid for a new trial by disgraced entrepreneur Elizabeth Holmes. The founder of the blood-testing startup Theranos, which had a multibillion dollar valuation, was found guilty of fraud in January after it came to light that the technology behind the company does not work.
The 38-year-old was found guilty on four out of 11 counts of fraud after a seven days of deliberation by the jury. The one-time billionaire and darling of Silicon Valley was convicted alongside her former boyfriend and executive Ramesh "Sunny" Balwani, who was found guilty at a separate trial in July.
Who is Elizabeth Holmes?
Elizabeth Holmes, 38, was considered a rising star in Silicon Valley for years after setting up Theranos when she was 19. Holmes is the daughter of successful businessman Christian Holmes, who was a vice president of the energy firm Enron, which would later collapse under the weight of a high-profile accounting scandal.
Before an investigation by the Wall Street Journal in late 2015 questioning the tech behind Theranos’ blood-testing method, Holmes received a number of awards and accolades for her work with the firm. She was named one of the Time magazine 100 most influential people and Glamour’s woman of the year in 2015.
At its height, the company had a multi-billion dollar valuation, meaning Holmes as a major shareholder was thought to be one of the richest women in the US. Between 2003 when she first launched the firm and 2012, Holmes managed to attract high profile backers from the world of venture capital, plus investments from Australian media tycoon Rupert Murdoch.
What was Theranos?
Holmes launched the company which would later become Theranos in 2003, after studying chemical engineering and working in a role which involved blood testing at a laboratory in Singapore. The now-disgraced entrepreneur has claimed that she wanted to develop an accurate method of testing blood which did not require large samples of blood to be taken using a needle, driven by her own phobia of them.
Her idea, to use a finger-prick blood sample which would yield enough information to accurately screen for diseases and other issues, was initially criticised by a number of experts including one of her professor’s at Stanford University, who said it was ‘impossible’.
Holmes eventually found a partner and immediately set to work pitching the idea to influential figures in Silicon Valley, including venture capitalist Tim Draper, the father of a childhood friend, who provided $1m as Holmes’ first major investor. The firm operated in secret for several years, only going public in 2013, by which time it had amassed more than $90m in funding.
Over the next few years, Holmes kept amassing funding and built up Theranos’ board of directors until it included a number of former secretaries of state and former senators. In 2015, with the company valued at $9bn and being heralded as a revolutionary force in tech and healthcare, questions began to emerge about the firm’s blood-testing technology, prompting the Wall Street Journal to investigate.
Following the explosive investigation, which included whistleblower testimony from former Theranos workers and company documents backing up its claims, a number of government agencies including the Centers for Medicare and Medicaid Services and the U.S. Securities and Exchange Commission launched their own investigations.
What happened at the trial?
After being charged with eleven counts of fraud leading to a trial which lasted four months plus seven days of deliberation, Holmes was found guilty of four charges, including wire fraud and conspiracy to defraud investors. The court heard that Holmes knowingly lied about the technology which she claimed could detect diseases using only a few drops of blood.
A number of lab directors told the court that they had warned Holmes about the problems with Theranos’ technology but that Holmes nevertheless told investors the method worked as intended. The jury eventually reached a split verdict, with Holmes found not guilty on four counts of defrauding the public, after deliberations went on for seven days.
Each guilty count carries a possible 20-year maximum sentence, although it is thought unlikely that the full tariff will be applied. US Attorney Stephanie Hinds said the jurors had navigated a "complex case" over 15 weeks in the process of reaching a verdict. In a statement, she said: "The guilty verdicts, in this case, reflect Ms Holmes’ culpability in this large-scale investor fraud and she must now face sentencing for her crimes.