Tech&Innovation

Theranos Founder Found Guilty

What is Theranos?

Theranos was once one of the most hyped up healthcare technology startups, valued before at $10B USD with promises of forever changing the blood-testing industry. CEO Elizabeth Holmes and former company president Ramesh Balwani proudly stated they possessed a new technique for analyzing blood samples without substantive proof. However, they hoodwinked investors and were charged by the US Security and Exchanges Commission (SEC) for massive fraud. They had raised ~$724M from venture capitalists and other private investors.

The hypothetical Theranos breakthrough technique involved the use of a ‘nanotainer’, which was a small device designed to draw, store, and analyze a blood sample obtained from the fingertip of a patient. Additionally, there was the proprietary “Edison” testing technology, with claims that the ‘nanotainer’ could run a variety of different tests on the patient’s physiology at a rapid rate while greatly reducing costs. This theory was debunked by press skeptics, with a New Yorker profile calling Holmes’ descriptions of the proprietary technology as ‘comically vague’. Additionally, the Wall Street Journal released an intensive critical report on Theranos based on interviews with ex-employees who displayed management incompetence throughout the company and that Theranos had greatly exaggerated the current state of their technology. 

What Happened to Elizabeth Holmes?

The Decline of Elizabeth Holmes started back in 2016. After the exposure of Theranos’ fraudulent claims, her net worth had dropped from the billions straight down to 0. With the conclusion of her criminal fraud trial, 37 year old Elizabeth Holmes has been found guilty of four charges. After a long deliberation process, the jurors convicted Holmes of one count of conspiracy to commit wire fraud and three counts of wire fraud against specific investors. While each wire fraud count carries a maximum sentence of 20 years in prison and the conspiracy count carries a maximum sentence of 5 years, it’s unlikely she will be sentenced for this time. 

During the trial proceedings, the arguments against Holmes were her dishonesty with investors and patients, as not only a callous choice, but also a criminal one. However, Holmes’ main defense was her claims that her then-boyfriend Ramesh Balwani was the cause for this through abuse and manipulation. This was somewhat disproven by private text messages showing their extravagant lifestyle and the fact that this didn’t change the reality of Holmes’ wrongdoings. 

Sources:

https://www.cnbc.com/2022/01/03/jurors-in-holmes-trial-remain-deadlocked-on-three-of-11-fraud-counts.html

https://www.investopedia.com/articles/investing/020116/theranos-fallen-unicorn.asp

Categories: Tech&Innovation