Live Updates: Elizabeth Holmes Found Guilty of Four Charges of Fraud

Elizabeth Holmes, the founder of the blood testing start-up Theranos, faced 11 counts of fraud for lying to investors, patients and others to raise money and the profile for her company. (An additional charge of wire fraud against a patient was dropped during the trial.)

Here’s what jurors decided:

Count one of conspiring to commit wire fraud against investors in Theranos between 2010 and 2015: Guilty.

Count two of conspiring to commit wire fraud against patients who paid for Theranos’s blood testing services between 2013 and 2016: Not guilty.

Count three of wire fraud in connection with a wire transfer of $99,990 on or about Dec. 30, 2013: No verdict.

Count four of wire fraud in connection with a wire transfer of $5,349,900 on or about Dec. 31, 2013: No verdict.

Count five of wire fraud in connection with a wire transfer of $4,875,000 on or about Dec. 31, 2013: No verdict.

Count six of wire fraud in connection with a wire transfer of $38,336,632 on or about Feb. 6, 2014: Guilty.

Count seven of wire fraud in connection with a wire transfer of $99,999,984 on or about Oct. 31, 2014:Guilty.

Count eight of wire fraud in connection with a wire transfer of $5,999,997 on or about Oct. 31, 2014: Guilty.

Count nine was dropped.

Count 10 of wire fraud in connection with a patient’s laboratory blood test results on or about May 11, 2015: Not guilty.

Count 11 of wire fraud in connection with a patient’s laboratory blood test results on or about May 16, 2015: Not guilty.

Count 12 of wire fraud in connection with a wire transfer of $1,126,661 on or about Aug. 3, 2015: Not guilty.

Elizabeth Holmes at the Theranos Lab in 2015.Credit…Carlos Chavarria for The New York Times

It’s Silicon Valley’s trial of the decade.

Since opening statements began on Sept. 8, Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, has been standing trial in federal court in San Jose, Calif., for 11 counts of fraud (a 12th count was removed). If convicted, she faces up to 20 years in prison. She has pleaded not guilty.

Her case has captivated the public — and spawned books, documentaries and even a fan club for Ms. Holmes, 37 — because she was a young female entrepreneur in heavily male Silicon Valley and because she appeared to push the boundaries of start-up culture and hubris to the limit.

Her story initially seemed like the stuff dreams are made of. Ms. Holmes dropped out of Stanford University at 19 and founded Theranos, which promised to decipher people’s health problems with just a drop of their blood. The company raised $945 million from famous venture capitalists and from powerful tech and media moguls such as Larry Ellison and Rupert Murdoch. At its peak, Theranos was valued at $9 billion. Ms. Holmes was lauded as one of the youngest self-made female billionaires.

But it all came crashing down after a 2015 investigation from The Wall Street Journal found that Theranos’s blood-testing technology didn’t work. Theranos shut down in 2018.

Now Ms. Holmes is on trial over a central issue: Did she intentionally mislead doctors, patients and investors as she sought investments and partnerships?

The prosecution spent weeks arguing that Ms. Holmes purposely deceived investors and others while knowing that Theranos’s blood tests were often inaccurate and that the company relied on third-party commercial machines. In opening statements, Ms. Holmes’s lawyers asserted that she was simply a hardworking entrepreneur whose failure to achieve lofty aims did not constitute a crime.

Ms. Holmes vocally defended herself in the media after The Wall Street Journal’s revelations about Theranos. She has continued that stance during her testimony in court. The jusry and the public will also be eager to hear whether she points fingers at others, such as her former business and romantic partner, Ramesh Balwani, who is known as Sunny.

The trial has played out inside a courtroom presided over by Judge Edward J. Davila of the U.S. District Court for the Northern District of California, with no live broadcast of the proceedings. Jury selection began on Aug. 31 and the case is scheduled to finish this month.

Elizabeth Holmes entering federal court in San Jose, Calif., this month.Credit…Justin Sullivan/Getty Images

After more than three months of testimony, a jury of eight men and four women has decided the fate of Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, who faces 11 counts of fraud.

The jury was chosen over three days in September when nearly 200 Northern California residents were winnowed down into a pool of 12 jurors and five alternates. Given the prominence of this case, prosecutors and defense lawyers had a difficult time selecting an impartial jury.

Potential jurors were quizzed about their familiarity with Theranos and its rise and fall, which had been widely covered by the news media and had spawned a book, a documentary and two podcasts. One potential juror, who was a producer at a radio news show, was excused because his job exposed him to the news, while another was excused for having seen a Theranos documentary.

Lawyers also screened out jurors whose experiences with domestic abuse could sway their view of Ms. Holmes’s case. The defense had indicated in pretrial filings that Ms. Holmes would accuse Ramesh Balwani, Theranos’s former chief operating officer and her former boyfriend, of emotionally and physically abusing her.

The final jury was made up of seven men and five women. But once the trial began, that composition changed.

One juror was excused on the second day of the trial because she was not able to change her work schedule. Another was excused in the fifth week because she said her Buddhist faith would not allow her to vote to convict Ms. Holmes. A third was excused after another juror reported her for playing Sudoku while the court was in session.

All three dismissals were women. That left the jury at eight men and four women.

The largely male composition could work in Ms. Holmes’s favor, legal experts said. That dynamic may be compounded by Ms. Holmes’s testimony of domestic abuse, the experts said.

“Women tend to be more judgmental of other women,” said Christina Marinakis, a jury consulting adviser at the trial services firm IMS Consulting & Expert Services. “The men, especially given her age and young appearance, may take more of a fatherly approach.”

Elizabeth Holmes and her partner, Billy Evans, leaving court after she testified last month.Credit…Jim Wilson/The New York Times

For seven days, Elizabeth Holmes took the stand to defend herself.

Nearly three months into her fraud trial, Ms. Holmes, the founder of the blood testing start-up Theranos, got the chance to testify, starting on Nov. 19. Her defense boiled down to two major themes: Her actions were misunderstood, she said. Others around her — most notably Ramesh Balwani, Theranos’s former chief operating officer and her former boyfriend — were responsible for the company’s failure, she said.

And finally, she implied, just because Theranos failed did not mean she had committed fraud.

Ms. Holmes’s testimony was among the first times she had told her side of the story about Theranos’s rise and fall. The Silicon Valley company raised $945 million from investors by touting supposedly revolutionary blood-testing technology, but collapsed after those claims were shown to be false. Ms. Holmes, 37, was charged with 11 counts of wire fraud and conspiracy to commit wire fraud.

Under direct examination, Ms. Holmes reframed what prosecutors had said were examples of fraud. She said she had personally added the logos of pharmaceutical companies to reports that seemingly validated Theranos’s devices, when in reality the drug makers had recommended against using Theranos’s technology. But she said she had added the logos “because this work was done in partnership with those companies” and had not tried to deceive anyone.

She also said she had concealed Theranos’s use of third-party blood-testing devices — but to protect the modifications her company had made to them, so other companies could not copy them.

Ms. Holmes also blamed others for Theranos’s problems. She said others had overseen Theranos’s clinical lab and its commercial partnerships. She highlighted positive reports from her senior scientists, saying she had thought the devices “performed well.” Ms. Holmes could not have deceived others about the technology’s shortcomings because she herself believed it worked, her lawyers implied.

She especially pointed the finger at one person: Mr. Balwani, who faces trial on similar charges next year. Ms. Holmes said he had emotionally and physically abused her during their decade-long secret relationship, allegations that he has denied. Ms. Holmes said he had controlled her schedule and diet, kept her from her family and forced her to have sex.

Ms. Holmes conceded that Mr. Balwani had not controlled her interactions with investors or others she is accused of defrauding, but said his influence over her had been so deep that she did not know how to quantify it.

“He impacted everything about who I was, and I don’t fully understand that,” she said.

Sunny Balwani leaving federal court in San Jose, Calif., in 2019.Credit…Stephen Lam/Reuters

Who is Sunny Balwani, Elizabeth Holmes’s former right hand at Theranos and her former boyfriend? In her testimony, Ms. Holmes has accused Mr. Balwani of emotionally abusing her and controlling her, suggesting that she was manipulated.

Very little is known of Mr. Balwani, including why he is called “Sunny.” His given name is Ramesh, which was what he was called in a handful of stories and news releases in 1999, when he was a dot-com guy. It was also on his divorce papers from a Japanese artist in 2002. By the time he was co-authoring patents at Theranos a decade later, he was simply Sunny.

Mr. Balwani’s early career was in software. He was a Northern California sales manager for Microsoft, selling the company’s products to executives at other firms. On Oct. 4, 1999, when the dot-com boom was roaring, he joined a start-up called CommerceBid.com as president.

CommerceBid built platforms that enabled businesses to pit suppliers against each other to drive down costs. That idea seemed to have unlimited potential, and CommerceBid did not even make it to its first birthday before it was bought by another company in the space, called Commerce One, for $225 million. A few weeks later, Commerce One, whose shares were publicly traded, was worth $20 billion.

Then the collapse came. A recession forced businesses to cut spending, and executives wondered if maybe the technology did not work well in any case. By 2004, Commerce One was worth nothing. It was a routine dot-com rags-to-riches-to-rags story, hardly even remembered among the bigger flameouts of the era.

Failure in Silicon Valley has been considered a virtue because it teaches valuable lessons. But it often can be rewarding in its own right. Mr. Balwani made it out with a reported $40 million.

He later became the chief operating officer at Theranos and had a romantic relationship with Ms. Holmes, which has been detailed in emails submitted to the court. Mr. Balwani also faces fraud charges, and his case is scheduled to go trial next year. Like Ms. Holmes, he has pleaded not guilty.

The government’s case against Elizabeth Holmes, the founder of Theranos, featured several key pieces of evidence that showed she intentionally deceived doctors, patients and investors in the blood testing start-up.

They included:

A fraudulent report

In 2010, Theranos created a 55-page report that prominently displayed the logos of the pharmaceutical companies Pfizer, Schering-Plough and GlaxoSmithKline. Investors such as Lisa Peterson, who manages investments for the wealthy DeVos family, and Walter Mosley, whose clients include the Walton family, testified that the report had helped persuade them to invest in Theranos.

The problem? Pfizer, Schering-Plough and GlaxoSmithKline had not prepared or signed off on the report. While prosecutors did not establish that Ms. Holmes created the report, witnesses like Daniel Edlin, a former Theranos senior product manager, testified that she had signed off on all investor material.

A Theranos report implied endorsements from pharmaceutical companies including Schering-Plough and Pfizer.

An investor letter and a shareholder call

Theranos spent years discussing with the Department of Defense the possible deployment of its technology in the battlefield, but no partnership materialized.

Yet Ms. Holmes told potential investors in a letter that Theranos had signed contracts with the U.S. military — claims that helped persuade them to invest, the investors testified.

“We really relied on the fact that they had been doing work for pharma companies and the government for years,” Ms. Peterson said.

Jurors got to hear those claims for themselves in a taped shareholder call.

“We built the business around our partnerships with the pharmaceutical companies and our contracts with the military,” Ms. Holmes said in the recording.

A Theranos letter about the start-up’s work with pharmaceutical companies and the military.

Internal emails

Emails between Theranos employees made up the bulk of the prosecution’s exhibits. Some of the emails showed when Theranos hid device failures, removed abnormal results from test reports and fudged demonstrations of its blood testing.

In one case, Mr. Edlin asked a colleague for advice on how to demonstrate Theranos’s technology for potential investors.

Michael Craig, a Theranos software engineer, recommended that Mr. Edlin use the demo app, a special setting on Theranos’s devices that said “running” or “processing” if an error had taken place, rather than display the mistake.

The app would hide failures from the client, Mr. Craig wrote in an email.

“Never a bad thing,” Mr. Edlin replied. “Let’s go with demo, thanks.”

Emails between Theranos employees as they prepared to show the company’s technology.

Adam Rosendorff, former lab director at Theranos, left, arriving at court in October.Credit…David Paul Morris/Bloomberg, via Getty Images

From the start, prosecutors have argued that Elizabeth Holmes intentionally deceived investors, doctors and patients as she sought investments and partnerships for Theranos, her once highflying blood testing start-up.

In opening statements on Sept. 8, Robert Leach, the assistant U.S. attorney who is a lead prosecutor in the case, laid out the government’s central thesis: that Ms. Holmes courted investors and commercial partners with false claims about her company’s technology and its relationships with pharmaceutical companies and the military.

“Out of time and out of money, Elizabeth Holmes decided to lie,” he repeatedly declared.

To make that case, prosecutors called 29 witnesses to the stand. They included eight former Theranos employees, six investors, three commercial partners, two doctors and three patients. From a star-studded list of nearly 200 people the government had listed as potential witnesses, the highest-profile person to appear was former Defense Secretary James Mattis, who had served on Theranos’s board.

Prosecutors presented evidence to show that Ms. Holmes perpetrated deceit, including that she knew of technology demonstrations that hid Theranos’s failures and was aware the company made false claims of working with the military. They also showed that Theranos had used a report with a pharmaceutical company’s logo to imply it had that company’s backing, even though the firm had not signed off on the report. Investors and partners testified that those claims had helped persuade them to give Theranos their business and money.

The prosecution also detailed the dysfunction within Theranos’s lab, which handled the blood tests. Theranos had trumpeted its claim that its tests could discern various illnesses in patients with just a drop of blood.

But Adam Rosendorff, one of Theranos’s former lab directors, spent six days on the stand explaining that the tests repeatedly produced inaccurate and irregular results. Other lab directors testified that they had essentially been figureheads; one spent just five to 10 hours at Theranos over his tenure.

Daniel Edlin, a former senior product manager and Holmes family friend, testified that Ms. Holmes had signed off on Theranos’s marketing and investor materials. He also said Ramesh Balwani, the chief operating officer and Ms. Holmes’s onetime boyfriend, who is known as Sunny, had deferred to her when the two of them disagreed.

“Generally, she was the C.E.O., so she had the final decision-making authority,” Mr. Edlin said.

Theranos’s headquarters in Palo Alto, Calif., in 2015.Credit…Jim Wilson/The New York Times

The fraud trial of Elizabeth Holmes, who founded the failed blood testing start-up Theranos, has plenty of implications for Silicon Valley.

Her rise and fall has been held up as the ultimate test of Silicon Valley’s fake-it-until-you-make-it culture. At some hot start-ups, it is not uncommon for founders to inflate their revenue or hype their company’s products to raise money and secure deals, even if their products may not quite do what was advertised, said Margaret O’Mara, a University of Washington professor who has written a book on the history of Silicon Valley.

Ms. Holmes also wrapped herself in the mythology of the tech industry. The Stanford University dropout styled herself after the late Apple co-founder Steve Jobs, headquartered her company in Palo Alto, Calif., and benefited from a laudatory media.

The outcome of Ms. Holmes’s trial may be a referendum on that behavior, lawyers and others said. If Ms. Holmes is found guilty, start-up entrepreneurs may be more careful with the claims they make to investors and partners, knowing that they could be charged with fraud, said Neama Rahmani, president of the West Coast Trial Lawyers and a former federal prosecutor.

But a “a non-guilty verdict will vindicate a Silicon Valley culture of celebrating aggressive innovation at the expense of the complete and whole truth,” said Jeffrey M. Cohen, an associate professor at Boston College Law School.

Still, some in Silicon Valley have pushed back against the idea that Ms. Holmes and Theranos represented the typical start-up. That’s because Ms. Holmes raised the bulk of her money from investment firms that represented wealthy families, and not traditional venture capital firms that generally invest in fast-growing tech start-ups. Ms. Holmes was also building medical devices, not software as with many other start-ups.

For that reason, Ms. O’Mara said, some Silicon Valley insiders might dismiss the importance of the outcome.

Ms. Holmes leaving the courthouse on Monday.Credit…Jim Wilson/The New York Times

The trial of Elizabeth Holmes has everything: a charismatic, attractive and youthful female defendant; celebrities; sex; vast sums of money; the long shadow of Steve Jobs; lives of real people at risk.

If it’s one of the most famous criminal cases ever to come out of Silicon Valley, it also sometimes seems like the only one. Prosecutors in Northern California brought 57 white-collar crime cases in fiscal year 2020. Even after accounting for the effect of Covid, cases have plunged from the peak of 350 in 1995.

Not every white-collar case is a tech case or related to start-ups, which means there are only a handful of times each year when someone in Silicon Valley is accused of a crime.

There are a lot of complicated reasons for this shortage of courtroom action.

A frequent explanation is that it is the fault of a lackluster U.S. attorney’s office in San Francisco. Few prosecutors come to the Bay Area to make their reputations, and those that do — like Robert Mueller 20 years ago — soon move on to better jobs. Mr. Mueller took over the F.B.I.

It’s not just a local issue. Fighting white-collar crime has been less of a priority for the Department of Justice since the Sept. 11 attacks brought fears of widespread terrorism.

And for all the growing awareness of the power of tech companies, there is little public demand to hold them accountable. When David Anderson stepped down as U.S. attorney for the Northern District of California early this year, he did an interview with a radio station. None of the questions from the host or from callers dealt with Silicon Valley.

Mr. Anderson, a Trump appointee, had talked about making Silicon Valley a priority for his prosecutors. His first public appearance was on a panel titled “White Collar Crime in a High-Tech World.” But he was in office for two years, too few to really make an impact. The district has had an acting U.S. attorney, Stephanie Hinds, since March.

Yet another reason is that Silicon Valley is a very rich place. That does not make government prosecutions impossible. But it ensures that top-flight defense attorneys can be brought in, making cases like Ms. Holmes’s neither short nor simple.

Finally, there is a sense in Silicon Valley that failure — whether a company that went under or an investment that was lost — is best kept in the family, far away from prosecutors, regulators and the media. Investors are supposed to be sophisticated, and a case like Ms. Holmes’s can reveal just how foolish and na?ve they were. The same is true of employees.

Better to just forget about anything suspicious than allege fraudulent activity. After all, you wouldn’t want to miss out on the next opportunity.

Elizabeth Holmes, the founder of the failed blood testing start-up Theranos, surrounded herself with a constellation of moguls, four-star generals, venture capitalists and others during her time running the company. Ultimately, Theranos was undone after whistle-blowers who were concerned that the company was lying about its technology spoke to the media and to regulators.

Here are some of the central figures in the rise and fall of Theranos and Ms. Holmes’s fraud trial.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and nine counts of wire fraud.

Here are some of the key figures in the case ->

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Stephen Lam/Reuters

Holmes founded Theranos in 2003 as a 19-year-old Stanford dropout. She raised $945 million from investors and was crowned the world’s youngest billionaire, but has been accused of lying about how well Theranos’s technology worked. She has pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Justin Sullivan/Getty Images

Ramesh Balwani, known as Sunny,was Theranos’s president and chief operating officer from 2009 through 2016 and was in a romantic relationship with Holmes. He has also been accused of fraud and may stand trial next year. He has pleaded not guilty.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Jefferson Siegel for The New York Times

David Boies, a prominent litigator, represented Theranos as its lawyer and served on its board.

He tried to shut down whistle-blowers and reporters who questioned the company’s business practices.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Getty Images

The journalist John Carreyrou wrote stories exposing fraudulent practices at Theranos.

His coverage for The Wall Street Journal helped lead to the implosion of Theranos.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Jeff Kravitz/FilmMagic, via Getty Images

Tyler Shultz and Erika Cheung are former Theranos employees and were whistle-blowers. They worked at the start-up in 2013 and 2014.

Shultz is a grandson of George Shultz, a former secretary of state who was on the Theranos board.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Eric Thayer for The New York Times

James Mattis, a retired four-star general, was a member of Theranos’s board.

He went on to serve as President Donald J. Trump’s secretary of defense.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo?Reporting from San Jose, Calif.

Edward Davila, a federal judge for the Northern District of California, will oversee the case.

Kevin Downey, a partner at the Washington law firm Williams & Connolly, is the lead lawyer for Holmes.

Robert Leach, an assistant United States attorney for the Northern District of California, will lead the prosecution for the government, along with other prosecutors from the U.S. attorney’s office.

Read more about Elizabeth Holmes:

Nov. 15, 2021

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Theranos’s blood testing machine at the company’s headquarters in 2015.Credit…Jim Wilson/The New York Times

In 2018, the United States charged Elizabeth Holmes and her business partner, Ramesh “Sunny” Balwani, with nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

The indictment accuses the pair of engaging in a “scheme, plan and artifice to defraud investors as to a material matter.”

In other words, they are accused of lying about Theranos’s business and technology to get money. The lies outlined in the indictment include claims Theranos made about its relationship with the military and the status of its partnership with Walgreens. Prosecutors also say that Theranos faked demonstrations of its technology and falsified validation reports from pharmaceutical companies and the financial health of its business.

Wire fraud is a felony that carries a maximum penalty of 20 years and potential fines. Theranos also paid a $500,000 fine to settle civil securities fraud charges with the Securities and Exchange Commission in 2018. It also settled multiple lawsuits with investors and partners before dissolving that year.

Since the criminal indictment, the cases of Ms. Holmes and Mr. Balwani have been separated. Mr. Balwani faces trial next year. Further, some of the charges against Ms. Holmes have been dropped and others added.As of today, Ms. Holmes faces 11 counts of fraud and conspiracy to commit fraud.

She has pleaded not guilty.

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