Elizabeth Holmes, founder of the biotech startup Theranos, is accused of defrauding investors and hundreds of thousands of patients in the United States. In California, the trial began in her case.
Elizabeth Holmes
Tempting promises that the American entrepreneur Elizabeth Holmes ultimately failed to fulfill led to the meteoric rise and even more dramatic fall of the biotech company she founded, Theranos.
As Holmes told investors in numerous presentations, just a few drops of blood are enough to carry out numerous tests using the device developed by the company, to detect hormonal abnormalities, viral infections and cancers. The main problem: This device, which Holmes called Edison, did not work, but it hid the truth from investors and the general public for years.
The defendants face up to 20 years in prison
The trial of 37-year-old Holmes began on August 31 in San Jose, California, with a jury selection. She is accused of abusing the trust of investors, doctors and patients. Also in the dock is Ramesh Balwani, ex-CEO of Theranos and former common-law husband of Holmes. If convicted, both defendants face up to 20 years in prison.
Ramesh Balwani
Whether the entrepreneurs acted deliberately is one of the main questions that the court will have to answer. Holmes and Balwani's lavish lifestyles are also in the spotlight. Therefore, the prosecution demands that details of their personal and, in part, intimate life be disclosed in court. These include the use of a private jet, expensive shopping tours and frequent stops at luxury luxury hotels.
Holmes has twisted many powerful and wealthy men around her finger
In 2015, Elizabeth Holmes was exposed by Wall Street Journalist John Carreiro, who had previously been contacted by a former Theranos employee. Prior to that, for 12 years, Holmes managed to convince investors and managers that the Edison analyzer is so effective and cost-effective that it will not only eliminate the burdensome donation of blood from a vein, but also the time-consuming and expensive standard tests in conventional laboratories.
Holmes managed to negotiate with Walgreens, an American chain of cosmetics and pharmaceutical stores, which offered this service in 40 branches in Arizona and California. As a result, hundreds of thousands of patients could receive inaccurate and possibly life-threatening test results.
Theranos headquarters in Palo Alto, California
Elizabeth Holmes has managed to fool many powerful and wealthy men. The supervisory board of Theranos included, among others, Henry Kissinger, former head of the State Department George Schultz, and former Pentagon chief James Mattis. Investors included such giants of American business as Rupert Murdoch, Tim Draper and the Walton family, who founded the Walmart hypermarket chain. They were all fascinated by the charisma of the former Stanford University student who dropped out shortly after the founding of Theranos.
Blinded by promises and not going into details, they invested more than $ 700 million in the startup. At its peak in 2014, Theranos had an estimated value of $ 9 billion. In 2015, Time magazine included Elizabeth Holmes among the 100 most influential women in the world.
Elizabeth Holmes does not consider herself guilty
To critics, including WSJ journalist John Carreiro, it was obvious that many did not notice or did not want to see: the Edison analyzer was too simple. In fact, it consisted of a manipulator and a plurality of pipettes arranged in rows in a letterbox-sized instrument body. With it, it was impossible to conduct up to 240 different tests, as stated in the Edison datasheet. For this reason, Theranos, as it turned out later, began to secretly use devices from other manufacturers.
Elizabeth Holmes
However, Holmes did not show that the analyzer was not working properly. Publicly, she has always assured that she is on the way to a big breakthrough and therefore cannot reveal many details. From her answers to questions about the primitive design of the device, it was noticeable how little Holmes knew about technology. “It sounded like a schoolgirl's answers in chemistry class, not like an ambitious scientist who works in a scientific laboratory and invented something new,” writes John Carreiro in his book Bad Blood, dedicated to his journalistic investigation of the Theranos scandal.
Holmes does not consider himself guilty. With the help of the best lawyers in the United States, she put pressure to the last on everyone who testified against her or her company. Holmes described many of the witnesses in the case as envious, while emphasizing that she still believes in her ideas. “This happens when you work to change the state of things. First they think that you are crazy, then they fight with you, and then you suddenly change the world,” Holmes said in a 2018 interview with CNBC.
At the trial, Holmes intends to appear as a victim of an ex-partner
In the course of the trial that has begun, Holmes and her lawyers are also betting on confrontation. Over the past few days, the number of jury applicants has been drastically reduced after lawyers complained that the majority of candidates formed a preconceived opinion, since they “received a lot of information about the case and the defendant from non-procedural sources.”
Holmes intends to actively defend herself during the trial. Recently it became known that she decided to play in court the story that for many years she was a victim in a relationship with her former common-law husband and business partner Ramesh Balvani. Holmes plans to bring in an expert to speak in court about her psychological, emotional and sexual exploitation by Balwani. According to Holmes, Balwani controlled and manipulated her. Experts doubt this tactic will be successful.
Elizabeth Holmes has been embroiled in Theranos litigation several times in recent years. So, in 2018, in order to avoid a lawsuit, she agreed with the US Securities Commission (CES) to pay a fine in the amount of $ 500 thousand and an obligation not to be a member of the management of joint-stock companies for the next 10 years. The federal agency accused Holmes of “making many false and misleading statements in public product launches and in investor meetings.”
A mitigating circumstance in the current trial may be that Holmes gave birth to a child a few weeks ago. Regardless of whether it was planned or not, many consider the incident to be a circumstance in the defendant's favor. “It could draw sympathy from the jury,” said NBC News, a legal expert.
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