US jury finds Theranos founder Holmes guilty in fraud trial

Theranos founder Elizabeth Holmes (right) arriving at the federal court in San Jose on Jan 3, 2022, after being accused of fraud. PHOTO: BLOOMBERG

SAN JOSE, CALIFORNIA (REUTERS) - A US jury on Monday (Jan 3) found Theranos founder Elizabeth Holmes guilty of defrauding investors in the blood testing startup, convicting her on four of 11 counts.

Holmes was convicted of investor fraud and conspiracy, but acquitted on three counts of defrauding patients who paid for tests from Theranos, and a related conspiracy charge.

The jury could not reach a decision on three counts related to other, individual investors.

Holmes, wearing a gray suit, appeared poised after the verdict was read. 

A sentencing date was not immediately set.

Prosecutors said Holmes, 37, swindled private investors between 2010 and 2015 by convincing them that Theranos’ small machines could run a range of tests on just a single drop of blood from a finger prick.

Holmes rose to Silicon Valley fame after founding Theranos in 2003 at age 19 and became known for her penchant for wearing Steve Jobs-like black turtlenecks. 

She attracted both high-profile wealthy investors including media mogul Rupert Murdoch and high-profile board members. Her net worth was estimated at US$4.5 billion by Forbes in 2015.  

She faces up to 80 years in prison when sentenced by US District Judge Edward Davila but will likely get a much lower sentence.

Holmes was also charged with misleading patients about the tests’ accuracy but was acquitted of those charges. 

Holmes is likely to appeal, but her attorneys and a spokesman for prosecutors did not respond to requests for comment on Monday.

The jury’s verdict came after seven days of deliberations.  

The case shed light on Theranos’ failed endeavor to revolutionise lab testing. The company secretly relied on conventional machines manufactured by Siemens to run patients’ tests, prosecutors said. 

Theranos collapsed after the Wall Street Journal published a series of articles that suggested its devices were flawed and inaccurate. Holmes was indicted in 2018 alongside Theranos’ former chief operating officer Ramesh “Sunny” Balwani.

Remote video URL

She had pleaded not guilty to nine counts of fraud and two counts of conspiracy. Balwani also had pleaded not guilty and will be tried at a later date.

During the trial in San Jose, California, which began in September, jurors heard testimony from former Theranos employees who said they left the company after witnessing problems with its technology.  

Investors testified that Holmes made misleading claims about Theranos, such as that its machines were being used in the field by the United States military.

Former patients told jurors that they would not have used Theranos’ tests if they had known the tests were flawed.

Remote video URL

Prosecutors said that had Holmes been truthful with investors and patients, the venture never would have attracted critical funding and revenue.

“She chose fraud over business failure. She chose to be dishonest,” Assistant US Attorney Jeff Schenk said at the start of closing arguments.

“That choice was not only callous, it was criminal.”

Testifying in her own defence at trial, Holmes said she never meant to deceive anyone and that Theranos’ lab directors were in charge of test quality.

In closing arguments, defence attorney Kevin Downey said the evidence did not show Holmes was motivated by a cash crunch at Theranos, but rather thought she was “building a technology that would change the world”.

“You know that at the first sign of trouble, crooks cash out,” Mr Downey said, but Holmes stayed. “She went down with that ship when it went down.”

Join ST's Telegram channel and get the latest breaking news delivered to you.