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A jury has found former Theranos CEO Elizabeth Holmes guilty of four of 11 fraud charges related to her now-defunct startup business that once promised to revolutionize the health care system.
Jurors heard three months of arguments over the supposed breakthrough technology that formed the foundation for Holmes’ Palo Alto, California-based business, as previously reported. Holmes, 37, was accused of fleecing big-name investors, including billionaire media tycoon Rupert Murdoch, and partnering up with major retail chains such as Walgreens and Safeway on the proposition of innovative blood testing. Holmes claimed Theranos created a new medical device that could replace phlebotomy and provide scores of blood screening results from samples as small as a blood droplet from a finger prick.
The device, called the “Edison,” was pitched as an efficient and cheaper alternative to traditional blood-screening methods.
On Monday, after 50 hours of deliberations, a federal jury convicted Holmes on three counts of wire fraud and one count of conspiracy to commit wire fraud. She was acquitted of four fraud counts and jurors earlier told the judge they had deadlocked on three charges.
In 2015, Forbes named Holmes the world’s youngest self-made woman billionaire worth an estimated $4.5 billion.
That year, Wall Street Journal writer John Carreyrou cast major doubts to Holmes’ claims about her business in a 2015 article contesting the new science. Of several accusations, Carreyrou reported doctors avoided sending patients to Theranos for fears that the results were less than accurate, supported by Theranos employee whistleblowers Erika Cheung and Tyler Schultz.
Schultz’s grandfather, former Secretary of State George Schultz, stepped down from his position as a Theranos board member that same year.
Carreyrou’s expose, followed by his bestselling book “Bad Blood: Secrets And Lies In A Silicon Valley Startup,” put in motion the eventual downfall of Holmes and her company.
Despite Holmes making public appearances in an attempt to save face, investors and business partners began pulling out. In early 2016, a federal inspection conducted by the Centers for Medicare and Medicaid Services found fault in one of the two Theranos laboratories, citing underqualified employees who worked without proper licensing.
Federal regulators banned Holmes from owning or operating a laboratory for the next two years, according to CNN.
“We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions,” said Holmes, according to CNN.
That year, Forbes stated that Holmes’ company’s $9 billion valuation was actually far less.
“Theranos … has been hit with allegations that its products don’t work as advertised and is being investigated by an alphabet soup of federal agencies,” Forbes stated. “That, plus new information indicating Theranos’ revenues are less than $100 million, has led us to revise her net worth. To zero.”
In 2018, Holmes paid a $500,000 fine after the U.S. Securities and Exchange Commission accused her of fraud, as previously reported. The settlement didn’t act as an admission of wrongdoing, but Holmes agreed to a 10-year ban from serving as director of a company.
The trial took a dramatic turn last month when Holmes took the stand and accused her former business partner, Ramesh "Sunny" Balwani, of subjecting her to emotional, mental, and sexual abuse. Balwani, the former president of Theranos, denied the accusations.
Balwani also faces federal fraud charges related to Theranos. He's expected to go to trial in 2022.
Each count Holmes faced carries a maximum of 20 years in prison. It wasn't immediately clear when Holmes' sentencing is scheduled to take place. She's expected to appeal, according to the New York Times.
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