Revolutionary: Holmes claimed her technology could test for disease with a single drop of blood
She was once the world’s youngest self-made female billionaire and was touted as the next Steve Jobs. But entrepreneur Elizabeth Holmes, 37, now faces up to 20 years in prison after she was accused of fraud against patients and investors of her medical technology company.
Rupert Murdoch and former US Secretary of State Henry Kissinger were just some of the backers who bought the extraordinary story of her blood testing start-up, which was valued at £6.6 billion at one point.
The blockbuster trial, which will draw some of the biggest names in American public life to the witness stand, started yesterday in the California city of San Jose. Prosecutors alleged that she lied to investors and patients about its technology, and made claims about the company’s financial performance.
Holmes, who was chief executive before it went bankrupt in 2018, will hit back with claims that her ex-boyfriend and former business partner Ramesh “Sunny” Balwani was controlling, sexually assaulting and hiding the fraud from her. The story has spawned documentaries and podcasts, while the award-winning book Bad Blood: Secrets and Lies in a Silicon Valley Startup is now being made into a movie starring Jennifer Lawrence (pictured below).
Holmes was born in Washington DC to parents who held senior positions at Enron and government agencies. Her company, Theranos, dates back to 2003 when she dropped out of Stanford University, one of the top universities in the US, at age 19 to patent a new blood testing technology. Inspired by her own fear of needles, she vowed to revolutionize the medical industry with a method of testing for disease with a single drop of blood on a microchip, reducing costs and eliminating the need for large blood samples.
She promised a revolution in healthcare—or “a world where no one ever has to say, ‘If only I had known sooner’.” Investors poured in with over £500 million in hopes of capturing some of the £54 billion US diagnostic lab industry. When she started promoting the product from 2013, when she was 29, her youth and apparent brilliance sparked a media frenzy that saw her featured on the cover of business magazines Forbes, Fortune, and Inc. saw appear.
Her choice of a black turtleneck helped spark the myth of the geeky genius, leading one editor to call her “The next Steve Jobs” — a reference to the Apple boss. It was alleged that she lowered her voice to grant gravitas. Her ideas and image gained a following from rich and powerful men, including former US presidents Bill Clinton and Barack Obama, who appointed her as presidential ambassador for global entrepreneurship.
Holmes was once the world’s youngest self-made female billionaire and was touted as the next Steve Jobs
She also won the biggest names in the industry for a while. Boots owner Walgreens showcased the diagnostic machines, named after inventor Thomas Edison, in his shops on the couch of real claims they could diagnose 200 diseases.
Her success brought in more major investors and led to massive wealth as her 50 percent stake grew to £3.3 billion. Holmes enjoyed the super-rich lifestyle of her business heroes, flying a private jet and commanding an entourage of a swarm of executive assistants and a personal chef. But by 2015, cracks began to show. Reports in US newspapers indicated that tests conducted by Theranos’ proprietary technology, the Edison machine, were actually conducted elsewhere, while the machine itself was found to be inconsistent.
Regulators stepped in and forced the company to pull test results and recall its machines. Holmes resigned in September 2018 and the company collapsed three months later, sparking a series of civil and criminal claims in the US. Holmes has already settled for $500,000 with the US Securities and Exchange Commission, the financial regulator, although she has not had to admit any wrongdoing.
Holmes will hit back with claims that her ex-boyfriend and former business partner Ramesh ‘Sunny’ Balwani was in control and hiding the fraud from her
But she now faces two counts of conspiracy to commit wire fraud and ten counts of wire fraud. Prosecutors allege that “Holmes and Balwani knew that Theranos’ technology was unable to produce consistently accurate and reliable results for certain blood tests.” It was also alleged that investors were misled with inflated targets, forecasting £730 million in revenue in 2015, when in fact it only brought in “modest revenue” of “several hundreds of thousands of dollars,” the indictment said.
If found guilty of fraud at trial, she could face up to 20 years in prison and a £1.6 million fine, on top of the money she owes investors. The trial comes just a month after Holmes and her husband – hotel heir Billy Evans, 29, whom she married in 2019 – had their first child. The courtroom showdown promises to unravel the extraordinary story behind the blood queen’s rise and fall, and may even see her take the witness stand in her defense.
John Carreyrou, the Wall Street Journal reporter who broke the story, said there was “something pathological” about Holmes’ coldness. Defense documents revealed she will blame Balwani’s emotional and sexual abuse for what happened. She will claim that her 56-year-old former partner controlled her every move to what she wore and ate, and when she slept, according to court records.
Believing the claims about her products to be true, she added her defense, saying Balwani’s “manipulation” affected her ability to make decisions. He has responded by saying Holmes’s allegations are “outrageous, lecherous and inflammatory.” Yesterday, the court began the arduous task of selecting jurors from a pool of 170. The trial is expected to take several months.
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