This post was originally published on this site
Elizabeth Holmes captured the imagination of Silicon Valley with her self-made startup story in the early 2000s. She dropped out of Stanford to create a groundbreaking blood-testing system. She attracted high-profile investors, graced magazine covers and was dubbed the “next Steve Jobs.”
Holmes’ biotech company, Theranos, promised a revolutionary system for testing blood — only a few drops were required for a test that cost a fraction of existing blood testing technology. Theranos was valued at $9 billion and secured contracts with Walgreens and the Department of Defense, according to case filings.
Holmes became a media darling, appearing on the covers of Forbes, Fortune, Inc. and New York Times Style, and giving a Tedmed talk. But her meteoric rise came to an explosive halt following a series of investigative pieces from The Wall Street Journal in 2016.
The saga has inspired a book, an HBO documentary, a podcast, a Hulu limited series and a film.
Now, Holmes and former Theranos executive Ramesh “Sunny” Balwani face criminal charges and could serve up to 20 years in prison if convicted. Balwani and Holmes kept a romantic relationship private from investors, board members and employees for years.
It’s been three years since Holmes was charged, and jury selection for her trial in San Jose, Calif. begins on Tuesday, with opening arguments scheduled for Sept. 8. If you’re a little fuzzy on the details of the long-awaited trial, here’s a recap of what’s happened so far.
Who is Elizabeth Holmes?
Elizabeth Holmes grew up in Washington, D.C., and was a top student throughout high school. She dropped out of Stanford University in 2004 at just 19 years old to found what would become Theranos. Holmes lost an uncle to cancer when she was young, and said that his death inspired her to create Theranos’ testing system. (That claim, like others, has been debunked.)
“I believe the individual is the answer to the challenges of healthcare. But we can’t engage the individual in changing outcomes unless individuals have access to the information they need to do so,” Holmes said in a now-deleted 2014 Tedmed talk. Theranos was meant to do just that by making blood tests as routine as eating right and exercising.
Holmes, now 37, became known for her distinctive black turtlenecks — seemingly modeled after Steve Jobs — and her baritone voice. She sported the turtlenecks “like a uniform,” telling “Glamour” in a 2015 interview, “I probably have 150 of these.”
In 2015, she was crowned the youngest self-made female billionaire by Forbes, with a net worth of $4.5 billion at 31 years old.
What was Theranos?
Holmes kept Palo Alto, Calif.-based Theranos in “stealth mode” for its first 10 years in operation, keeping it out of the public eye while developing its proprietary tech, which it said could run tests using only a few small drops of blood.
“One tiny drop changes everything,” Theranos’ slogan claimed. The blood was stored in its “nanotainer,” and Theranos’ stated goal was to create a second device that could quickly and accurately test that blood. That device was, at times, called “Theranos Sample Processing Unit (TSPU), “Edison” and “miniLab.”
Running several blood tests using only a few drops of blood would be especially helpful for elderly people with collapsed veins, people who required frequent blood tests due to chronic illness, and anyone with a fear of needles, Theranos said. And, the company claimed, all of this could be done at a fraction of the cost of existing technology.
The company drew the attention of big name investors, including former Education Secretary Betsy DeVos, the heirs of Walmart
WMT,
founder Sam Walton, and Rupert Murdoch, executive chairman of News Corp
NWSA,
MarketWatch’s parent company.
Holmes also secured a highly unusual board of directors for a health care startup, including former U.S. Secretary of State George Shultz, former U.S. Secretary of Defense William Perry, former U.S. Secretary of State Henry Kissinger and Gen. James Mattis, who went on to serve as former President Donald Trump’s secretary of defense, among others.
What happened at Theranos?
Questions about the accuracy of Theranos’ claims arose as early as 2015, with The Wall Street Journal reporting that the company’s keystone product was only handling a small fraction of the 240 tests it advertised. In truth, the company was using traditional technology to run a majority of its patients’ tests.
In 2015, employee Tyler Schultz — the grandson of board member George Shultz — blew the whistle and reported Theranos to New York state’s public health lab. It’s the first-known complaint against the company.
Theranos scaled back its testing in late 2015 at the behest of the FDA, which had only approved one of its tests so far. Walgreens terminated a partnership it had with Theranos and closed the 40 lab-testing centers it had introduced in California and Arizona stores. The Securities and Exchange Commission (SEC) filed civil securities-fraud charges against Holmes in 2018. She settled and paid a $500,000 fee.
After federal prosecutors filed criminal charges against Holmes and Balwani, Theranos dissolved in 2018.
What charges does Holmes face?
Both Holmes and Balwani, 56, are charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
The indictment, filed in the U.S. attorney’s office in the Northern District of California, alleges that Holmes and Balwani defrauded two groups: investors and patients.
Holmes and Balwani “engaged in a scheme, plan and artifice to defraud investors,” prosecutors claim. Between 2010 and 2016, the two told investors that Theranos could provide accurate, fast, reliable and cheap blood tests and results when they knew their technology was not capable of doing so, prosecutors allege.
Prosecutors also allege the pair told investors that Theranos would generate over $100 million in revenue in 2014, when Holmes and Balwani knew the company would only generate a few hundred thousand dollars that year. Prosecutors say investors were also told that Theranos had lucrative contracts with the Department of Defense and that its technology was already in the battlefield, when in actuality, the company only had limited revenue from military contracts.
Patients were defrauded between 2013 and 2016 because the tests weren’t fast, accurate or reliable as advertised, prosecutors allege.
If convicted, Holmes and Balwani each face a maximum of 20 years in prison, a fine of $250,000 and restitution for each count of wire fraud and for each conspiracy count. Both have pleaded not guilty and were released pending trial.
Holmes could argue that she was in a decade-long abusive relationship with Balwani that left her under his control during the period in which the government says the two committed the alleged fraud, newly revealed court records show.
Balwani “unequivocally denies that he engaged in any abuse at any time,” according to newly unsealed filings.
When is the trial set to begin?
Holmes’ trial was delayed several times, first due to the pandemic and then due to her pregnancy. Jury selection for her trial begins Aug. 31, and opening statements are expected to start Sept. 8. There will be no public livestream of the case.
Balwani’s trial is slated for January 2022.
