Elizabeth Holmes in a still from the documentary The Inventor: Out for Blood in Silicon Valley.
HBO; courtesy of Sundance Institute
Elizabeth Holmes, one of the more notorious figures in Silicon Valley lore of the past decade, will finally have a chance to defend herself in court in the coming weeks. The disgraced Theranos founder and CEO is charged with multiple counts of conspiracy and fraud over claims she made about the once-promising health care startup and its purportedly revolutionary blood testing invention. Investigations revealed the technology had serious problems.
Jury selection in the trial is set to start Aug. 31, with opening arguments on Sept. 8 in a federal court in San Jose, California. The courtroom drama has been over three years in the making, with Holmes originally charged in June 2018. The trial has been delayed multiple times by the COVID-19 pandemic and by the birth of Holmes’ child on July 10 of this year.
Here’s what to know about one of the biggest trials of the decade so far.
What happened to Holmes and Theranos?
In 2003, Holmes dropped out of Stanford University at 19 to found Theranos with the goal of disrupting the blood testing industry. The company said it was developing proprietary technology that required gathering a smaller amount of blood than a conventional intravenous draw and was more portable than traditional tests sent off to a lab.
Theranos began to see more mainstream attention in 2013 when it signed up Walgreens and Safeway as potential customers. At one point the startup was valued at more than $9 billion.
Holmes began to appear on the cover of various publications, including Fortune, sometimes drawing comparisons to Steve Jobs for her seeming powers of disruption and a penchant for high-necked black tops.
But the fortunes of both Holmes and Theranos began to change in 2015 when The Wall Street Journal took a deeper look into the company. The Journal reported that only a small portion of tests were being done with the company’s testing machine, named Edison, and that many tests were being done on other companies’ machines, using diluted blood samples. The accuracy of test results that patients received from Theranos was also called into question.
All this led to the charges filed against Holmes in 2018, a settlement with the Securities and Exchange Commission, and the permanent shuttering of Theranos shortly thereafter.
A 2019 documentary, a book called Bad Blood: Secrets and Lies in a Silicon Valley Startup by Wall Street Journal reporter John Carreyrou and multiple podcasts about the company’s precipitous fall helped bring mainstream attention to the story.
Former Theranos employee and whistleblower Tyler Shultz spoke with CNET in 2020 about the whole saga.
What is Holmes charged with?
Holmes is formally charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
“The charges stem from (Holmes’) allegedly deceptive representations about (Theranos) and its medical testing technology,” reads a statement from the US district court in Northern California.
Essentially, Holmes is accused of lying to patients about how the company’s blood testing worked and how effective the tests were. Some of the charges also relate to Holmes allegedly misleading investors about the internal workings at Theranos and how much revenue the company was expected to generate.
If convicted, Holmes could be sentenced to up to 20 years in prison.
What is Holmes’ side of the story?
Though Holmes denied that the allegations made by the Journal’s original reporting were true, she’s never told her side of the story from that point on in depth.
“This is what happens when you work to change things,” Holmes said on CNBC’s Mad Money in 2015. “First they think you’re crazy, then they fight you, and then all of the sudden you change the world.”
The 37-year-old reportedly pursued a book deal to get her story out. The book never materialized, but a widely acclaimed HBO documentary about the Theranos collapse, The Inventor: Out for Blood in Silicon Valley by director Alex Gibney, came out in 2019. It didn’t portray Holmes in a flattering light and she didn’t cooperate with the filmmakers, so her take on the events of the past half-decade largely remains a mystery.
One possibility is that Holmes will argue she was following something like the Silicon Valley “fake it till you make it” ethos and that she always believed in the long-term potential of the company and its technology to eventually deliver on its promises.
According to The Wall Street Journal, Holmes’ lawyers have said she may argue that “she believed any alleged misrepresentations were true and accordingly that Theranos was a legitimate business generating value for investors.”
On Saturday, newly unsealed court filings suggested Holmes could seek to defend herself by alleging she suffered psychological, sexual and emotional abuse at the hands of former Theranos President and onetime boyfriend Ramesh “Sunny” Balwani, and that because of submissiveness to him she believed allegedly fraudulent statements she made were true. Lawyers for Balwani called abuse allegations “outrageous.” One of the filings, by lawyers for Holmes, said she was likely to testify.
We’ll soon see whether Holmes ultimately takes the stand to tell her side of things.
How can I watch the trial?
The trial officially begins Sept. 7, with opening arguments expected the following day. Judge Edward Davila is set to preside. There won’t be an online feed of the trial, and television cameras won’t be allowed in the courtroom, so the best way to follow the case will be via reporters in the room taking notes the old-fashioned way.
Balwani faces similar charges in a separate trial scheduled for next year.
Both Holmes and Balwani have pleaded not guilty.