SAN FRANCISCO — Fallen American biotech star Elizabeth Holmes was convicted on Monday of defrauding investors of her blood-testing startup Theranos, in a high-profile case seen as an indictment of Silicon Valley culture.
Holmes is a rare example of a tech executive held responsible for a company on fire, in an industry littered with the carcasses of losing companies that once promised untold fortunes.
His case highlighted the blurry line between the frenzy that characterizes the industry and blatant criminal dishonesty.
The jury took seven days of deliberations to reach its verdict and found them guilty on four counts of inducing investors to invest in what they believe to be a breakthrough testing system.
But the panel – which had listened to sometimes complex evidence for weeks – also acquitted her on four counts and failed to rule on three others.
“The guilty verdicts in this case reflect Ms. Holmes’ culpability in this large-scale investor fraud and she now faces conviction for her crimes,” U.S. Attorney Stephanie Hinds said in a prepared statement read by a representative outside the courthouse.
Holmes made no comment as she left the court when asked if she wanted to appeal.
The 37-year-old now faces 20 years in prison for each conviction. She remains free ahead of another bail hearing next week. No date has been set for sentencing.
Holmes had promised to revolutionize health diagnostics with self-service devices capable of performing a series of tests using just a few drops of blood, a vision that attracted high profile supporters and made her a billionaire at the age of 30.
She was hailed as the next tech visionary on magazine covers and raised mountains of money for investors, but it all came crashing down after the Wall Street Journal cover revealed the machines weren’t working as promised.
Prosecutors spent 11 weeks presenting more than two dozen witnesses while carefully arguing that Holmes knew their technology was inadequate and intentionally misleading investors and patients.
She personally affixed the logos of pharmaceutical giants Pfizer and Schering-Plough to reports from Theranos praising the company’s blood-testing technology, which were later shared with investors.
This was done without the companies’ permission and was a key part of the prosecution’s case that they were deliberately trying to inflate Theranos’ credibility in order to gain supporters.
‘FAKE IT TILL YOU MAKE IT’
Although well-known Theranos investors such as Rupert Murdoch and Henry Kissinger were on the witness list, the most prominent supporter who spoke was former Pentagon chief Jim Mattis.
The defense called only one significant witness, Holmes herself, because it argued the fallen entrepreneur truly believed in Theranos’ vision, invested heavily in its success, and simply failed.
Holmes also tried to lay some of the blame on Ramesh “Sunny” Balwani, a friend nearly two decades her senior whom she brought in to run her business.
Fighting back tears, she told jurors that Balwani slandered her and sexually forced himself on her when he was angry – allegations he strongly denied.
He is to stand trial separately for his role in the company’s operations and has pleaded not guilty.
Beyond the masses of corporate documents, very detailed technical questions and sometimes emotional statements from Holmes, the question of the nature of Silicon Valley emerged.
One of the most repeated clichés in the startup world is “fake it till you make it”, where ambitious entrepreneurs with an idea that almost works convince people to invest huge sums of money in the hope that one day they will be.
It is extremely rare that failed Silicon Valley founders – there are many – are sued for broken promises and unpaid investments.
Some tech figures, like former Reddit boss Ellen Pao, said sexism may have been a factor in the accusations, but others argued Holmes went too far in trying to cement his reputation. vision in constant disintegration.
After covering The Wall Street Journal in 2015 questioning whether Theranos’ machines were working as promised — and ultimately bringing the company down — Holmes went on the offensive in the media.
“First they think you’re crazy, then they fight you, then suddenly you change the world,” she said in a TV interview.
