At 19, Elizabeth Holmes became known to the world not as a promising young woman, but as a charismatic leader who could revolutionize the health sector. For a recent graduate of Stanford University, where she studied chemical engineering, success came with a bang, including luxury investor rights, landmark magazine covers, and comparisons in which she praised Steve Jobs as a woman.
The reason for all the fuss? The promise of new technology for laboratory testing, the raison d’être of the startup Theranos, which he founded in 2003 (initially called Real-Time Cures) and whose premise was based on the company’s capabilities, in just a few drops. blood tests, authorities perform over a hundred tests, from cholesterol detection to cancer cases.
Years later, Holmes’s fall was just as drastic, and it turned out to be damaging to the culture of Silicon Valley. The disgraced former CEO is expected to stand trial this week, accused of multiple federal fraud and deliberate misrepresentation of technology’s ability to defraud investors and customers. You face 20 years in prison.
In retrospect, the truth is that Elizabeth Holmes has never produced effective results that validate the value of the company she created. But he had “timing” in his favor and the advantage of making him grow in line with the size of the promise he was selling, in a way that analysts even valued Theranos at around $ 9 billion.
It was self-evident. No one seemed to have seen an advanced diagnostic device that could get rid of the needles and huge vials of blood, but the idea was reiterated that Edison’s hardware was far ahead of any other option available from the competition. When doubts arose and Theranos became synonymous with fraud, Holmes was already the youngest billionaire in the world, as the owner of 50% of the company’s shares, and managed to raise about $ 700 million from investment funds.
If things got more complicated when regulators asked for more data on the technology developed and the quality of the research being carried out, the opening of the startup’s first test lab in 2013 raised new suspicions. Among them is that Holmes will conduct exams on unapproved equipment and using technology from competing companies, not the one he claimed to have created.
Banned from the sector and held accountable
Theranos was ranked from bad to worse. A former employee confirmed that the company was unable to conduct accurate tests on its own equipment, and an October 2015 Wall Street Journal study questioned not only the machine’s blood testing capabilities, but also the testing methods it used.
When the truth became inevitable, Holmes was ultimately banned from working in the health sector, banned from owning or operating any laboratory for two years. If, as a young leader, in the image of the success that laid the foundation for the Sillikon Valley, the Theranos founder brought in a powerful squad of prominent politicians (including former Secretaries of State Henry Kissinger and George Schultz, or James Mattis, who will become US Secretary of Defense between 2017 and 2019) on the board of the company ), the truth is that investors sued Theranos for fraud and eventually dissolved it in September 2018.
The former visionary, now 37 years old, is now preparing for an ordeal. After months of delays due to the pandemic and the birth of her first child, she will take the dock in federal court in San Jose and face two counts of conspiracy to commit electronic fraud and ten federal counts of fraud. Jury selection will begin on Tuesday and the trial is expected to last for several months, according to the American press.
Like Holmes, her ex-boyfriend Ramesh “Sunny” Balwani, with whom she had a romantic relationship when they both worked at Theranos, is accused. They are accused of developing a multi-million dollar scheme to defraud investors between 2010 and 2015, as well as another scheme to defraud doctors and patients who paid for their services between 2013 and 2016.
Although both pleaded not guilty, the punishment could be up to 20 years in prison, with potential fines and damages in the thousands and thousands of dollars at stake.
Which way will the defense go? For lawyers, the focus of the litigation will be questions about what Elizabeth Holmes knew when and whether she was going to cheat. According to them, the most difficult thing to prove is the issue of intentionality.
As for the strategy to be followed by Holmes’ attorneys, the first steps involve trying to make Balwani the bad guy. The two will be tried separately, and recently released court documents reveal the reason: the goal would be to make Holmes a victim of psychological, emotional and sexual abuse, detailing the tactics her boyfriend allegedly used to control her and the psychological impact of such violence. insults, writes CNN.
Nothing is known yet. Elizabeth Holmes can only be put in the position of one who genuinely believes in the potential of the technology she has created, the only crime being overly optimistic, with no intent to cheat, not rejecting the possibility of a plea agreement, as they point out. other analysts. It is not even clear yet whether Holmes testifies or prefers silence. The first hypothesis is seen as a risk, but there are those who remember the ability to be convincing – a favorable start to his career proves this.
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