Elizabeth Holmes was found guilty of criminal fraud after she built her blood-testing startup Theranos into a $9 billion company only to see it collapse in scandal.
A jury in San Jose, California, returned the verdict after hearing three months of testimony that was often technical, heavily contested and, from Holmes herself, shocking. Unless the decision is overturned on appeal, the 37-year-old new mother faces as long as 20 years in prison, though she’s likely to be sentenced to far less than that.
Holmes, wearing a mask in the courtroom as everyone else did, stayed perfectly still and upright while the verdict was read. She looked directly at the jury as they were polled by the judge to determine if the verdict matched their conclusions.
Holmes’s fall from her status as celebrity chief executive to convicted felon marks one of the most dramatic descents in Silicon Valley history. After deliberating for seven days, jurors agreed Monday with prosecutors that Holmes lied to patients and investors over several years about the accuracy and capabilities of Theranos blood analyzers. Holmes was convicted of four out of 11 counts of conspiracy and wire fraud. The jury didn’t reach a verdict on three of the counts.
A parade of witnesses told jurors they were gravely misled by the Stanford University dropout-turned-entrepreneur. They ranged from executives at Walgreens and Safeway Inc. to James Mattis, the former U.S. secretary of defense who served on the Theranos board, as well as advisers to investors who poured hundreds of millions of dollars into the company.
The panel of eight men and four women also heard colorful accounts from several Theranos employees about the company’s lab taking dangerous shortcuts to conceal shortcomings with the analyzers, and from patients who recounted receiving inaccurate test results that left them anxious about their health.
As was the case with the fate of Theranos itself, Holmes’s defense was tethered to her charisma and credibility. She made the risky decision, unusual in white-collar criminal cases, to testify in her own defense.
The move gave Holmes the final voice in the long trial — and served to dampen the testimony of dozens of government witnesses before her — but also forced her to make uncomfortable admissions during a grueling cross-examination.
In seven days on the witness stand, Holmes alternated between deflecting blame, failing to remember certain events and accepting responsibility for mistakes, even while insisting she didn’t intend to deceive anyone.
The most jolting moments in the courtroom were when Holmes testified she was raped as a student at Stanford University and suffered years of verbal and sexual abuse from her former boyfriend, former Theranos President Ramesh “Sunny” Balwani.
By Holmes’s account, the abuse lasted throughout the decade-long relationship with Balwani and had a profound if incalculable influence on her life. Her legal team’s decision not to call a psychiatrist with an expertise in relationship trauma as a witness left it up to jurors how to factor the testimony into their decision.
A prosecutor told the jury in closing arguments that the alleged abuse isn’t relevant to the fraud Holmes was charged with.
Whether jurors find Holmes guilty or not guilty, Assistant U.S. Attorney Jeff Schenk said, “you are not saying we do not believe Ms. Holmes” about the abuse. “You do not need to decide whether that abuse happened.”
Holmes’s defense team tried to convince the jury that she made a sincere effort over 15 years to steer Theranos to success and shouldn’t be punished for failing to achieve her dream.
“Elizabeth Holmes was building a business and not a criminal enterprise,” attorney Kevin Downey told jurors.
Holmes rose to prominence with her promise of a revolution in health care, based on her claims the compact Theranos devices could perform hundreds of diagnostic tests faster, more accurately and cheaper than traditional, bigger machines.
A big selling point was that Theranos analyzers could arrive at the results with just a pinprick instead of vials of drawn blood. Holmes cited her own fear of needles as inspiration for the invention, part of the narrative investors and the public heard over years in her promotion of the technology.
Claims that Holmes made to the news media were a recurring focus throughout Holmes’s trial. Indeed, prosecutors wrapped up their case in mid-November by calling former Fortune reporter Roger Parloff as a witness. Parloff wrote a 2014 Fortune cover story that helped draw national attention to Theranos. A year later, after Theranos was accused of deceiving patients and investors, Parloff wrote a mea culpa about how the company had misled him. On the witness stand, Parloff described how Holmes lied to him about the effectiveness of Theranos’s blood-testing technology.
By 2015 Holmes was dubbed by Forbes as the youngest female self-made billionaire. But that same year, the Wall Street Journal published stories pointing to flaws in Theranos technology, which led regulators the following year to conclude the machines posed a danger to patient health.
The revelations triggered civil lawsuits, including one Holmes settled with the Securities and Exchange Commission, and the Justice Department’s investigation and prosecution. Holmes, Balwani and Walgreens all still face claims over inaccurate blood tests by customers of the drug store chain in an Arizona lawsuit.
Balwani, who faces a separate trial in February on the same fraud charges as Holmes, has pleaded not guilty and has denied her abuse allegations.
