Elizabeth Holmes has already lost her company in court. Now she must fight for her personal freedom. Theranos founder Elizabeth Holmes, who became the world’s youngest billionaire seven years ago, faces up to 20 years in prison for fraud and misleading investors.
Her company was developing a universal device for diagnosing diseases, but after many years of anticipation, it turned out to be just a pretty box. Today, August 31, the trial of Elizabeth Holmes and her partner Ramesh Balwani begins in federal court in California. The trial has already been postponed four times: three times because of the coronavirus pandemic and then because of Holmes’ pregnancy. The trial is expected to last about three months.
37-year-old Elizabeth Holmes, who was dubbed “Steve Jobs in a skirt” in the early 2010s, faces up to 20 years in prison. In fact, the company’s business ended in 2015 after a series of articles by Wall Street Journal journalist John Carreyrou. He spent several years investigating Theranos’ activities, and was able to prove that the company was developing a fake product under extreme secrecy and harsh treatment of its own employees. In 2018, Carrere wrote a book, Bad Blood, about Theranos’ activities, which became a bestseller. HBO, one of the major players in the industry, produced a documentary based on it. In the production of a fictional movie about the history of Theranos, Elizabeth Holmes will be played by “The Hunger Games” star and Oscar winner Jennifer Lawrence.
Holmes grew up in Washington, D.C., in the family of a federal civil servant and a U.S. congressional staffer. According to her official biography, she dreamed of “changing the world” from an early age. “All I really want is to discover something new,” she wrote in a letter to her father when she was nine years old. Elizabeth Holmes graduated with honors from high school, attended prestigious Stanford University, but dropped out at the age of 19.
In 2003, she founded a startup called Theranos (a combination of the words “therapy” and “diagnostics”). Her idea was ambitious: to create a device that could diagnose a wide range of diseases with a single drop of blood. The thing is, Holmes said she was very afraid of shots and injections, so she set herself the task of diagnosing a disease from a drop of blood from her finger.
Holmes has always emphasized that her role model is Apple founder Steve Jobs. Holmes never hid the fact that she considered Apple founder Steve Jobs to be her idol. She called the Theranos system she was developing “the iPod of medicine” and claimed it would soon be in every home. We explain quickly, simply, and clearly what happened, why it matters, and what happens next. The number of offers should remain: episodes. End of story. Podcast Advertising.
In 2007, she invited several people from Jobs’ company to work at Theranos and charged them with designing a blood-analysis device. Holmes wanted the device to have a touchscreen similar to the iPhone, and she brought in a well-known Silicon Valley industrial designer, Yves Behar, to design the case. The company has already been widely discussed in the market; Holmes completely changed her image. She started wearing black turtlenecks, which Steve Jobs often wore in public, and tight black pants. In her interviews, she claimed that the analysis system she developed could detect HIV infection and various forms of cancer at an early stage. In 2013, Holmes signed contracts for the installation of “Edison” devices in Walgreens pharmacies and Safeway supermarkets in the USA. And in negotiations with their owners, she for the first time seriously went against the truth, claiming that the diagnostic system had already been used in the United States Army, while they were only familiarizing themselves with it. She also claimed that this unique development would make it possible to diagnose deadly diseases before doctors could – again, Holmes had no proof.
The most influential people in America have attended Theranos presentations. “We will create a world where no one says goodbye too soon,” she said then. The long list of investors in Theranos has included media mogul Rupert Murdoch, former U.S. President Bill Clinton, and Betsy DeVos, who later became Secretary of Education in Donald Trump’s cabinet. Former U.S. secretaries of state George Shultz and Henry Kissinger, as well as General James Mattis, who led the Pentagon under President Trump, joined the company’s board of directors.
Former U.S. President Bill Clinton was an investor in Theranos. The DeVos family invested $100 million in the company, with total investments at the time exceeding $900 million. In 2009, businessman Ramesh Balwani became the head of the company Theranos. As it later became known, Holmes entered into an intimate relationship with him, but investors were not informed about it. After signing deals with Walgreens and Safeway, the startup’s valuation reached $9 billion. Holmes became the youngest woman in history to earn more than $1 billion independently. She has been featured on the covers of the nation’s leading business publications – Forbes and Fortune magazines. Time magazine named her one of the 100 most influential people in the United States.
The Wall Street Journal’s John Carreyrou has been investigating Theranos’ activities since the 2000s. At first with curiosity, then with growing astonishment, as he later wrote in his book Bad Blood (the title plays on the Theranos slogan – True Blood – real or native blood). From interviews with former and current employees (some of whom were so scared that meetings were organized at the highest levels of secrecy), Carrere found that key employees at Theranos were intimidated, manipulated, and directly threatened into committing fraud. They were fired – and their contracts were terminated on such terms that any disclosure would ruin them. But most importantly, Theranos failed. Just one drop of blood was too little to make an accurate diagnosis. The research was manipulated, and the investor materials contained more and more blatantly false information. On May 23, 2013, 67-year-old biochemist Ian Gibbons, the chief developer of Theranos’ technology, committed suicide in his own home. The next day, he was scheduled to testify in court to defend his technology against the first plaintiffs. According to a Wall Street Journal investigation published in the fall of 2015, Theranos’s developments produced false results that led to mass misdiagnoses. Patients were falsely diagnosed with HIV and cancer, among other diseases. New lawsuits followed.
One of the politicians who became very interested in Theranos’ technologies was Joe Biden, then the Vice President of the United States. One of the sources for the publication was the grandson of former U.S. Secretary of State George Shultz, Tyler Shultz, who was a member of the company’s board of directors – he was the first to declare that the technology offered by Theranos simply did not work. In November 2016, supermarket chain Walgreens filed a lawsuit against Theranos, accusing the company of breaching the terms of its contract and demanding a return of its $140 million investment. In 2017, the case was settled through a global agreement that required Holmes to pay slightly less than $30 million. In March 2018, Elizabeth Holmes announced the closure of the company and reached a global agreement with the US Securities and Exchange Commission (SEC). It cost her $500,000 and a ten-year ban from serving as an officer of a public company. But already in the summer of 2018, the Northern District Attorney’s Office in the state of California brought fraud charges against Holmes and her partner, Balwani, after conducting its own investigation into Theranos’ activities. By this time, the couple had separated and both voluntarily surrendered to the FBI. They were released on bond. Holmes and Balwani do not admit guilt, and according to Bloomberg agency sources, Holmes intends to claim during the trial that Balwani coerced her into the fraud by putting moral and even physical pressure on her.