The Trial of Elizabeth Holmes Begins

Opening statements in the fraud trial of Elizabeth Holmes, former CEO and founder of Theranos, began on September 8. Holmes is accused of intentionally misrepresenting Theranos’ blood-testing technology and the company’s business performance.

Holmes dropped out of Stanford University at age 19 to found blood-testing company Theranos, which promised comprehensive blood testing with just a single finger prick of blood. At its height, Theranos was valued at $9 billion and Holmes was proclaimed the world’s youngest self-made female billionaire. She was compared to Apple founder, Steve Jobs, and often wore similar black turtlenecks.

But in 2015, John Carreyrou, writing for The Wall Street Journal, published the first of several articles questioning Theranos’ claims about its blood-testing technology. In 2018, the Securities and Exchange Commission (SEC) charged Holmes with massive fraud.

The SEC alleged that Holmes, her partner Ramesh “Sunny” Balwani, and Theranos made false and misleading statements during investor presentations, product demonstrations, and media interviews. Their deception included statements that Theranos’ key product, its portable blood analyzer, was capable of conducting comprehensive blood tests from a single finger prick of blood. In reality, according to the SEC, the analyzer could only perform a small number of tests and Theranos instead conducted the majority of its tests on modified and industry-standard commercial analyzers manufactured by other companies.

Among the most egregious alleged statements, the SEC accused Theranos, Holmes, and Balwani of claiming that Theranos products were deployed by the U.S. Department of Defense in Afghanistan and on medevac helicopters and claiming the business would generate more than $100 million in revenue in 2014. Instead, the SEC asserted, the technology was never deployed by the Department of Defense and the business only generated a little over $100,000 from operations in 2014.

The federal trial, taking place in San Jose, California just one month after Holmes gave birth to a baby boy, is expected to last 13 weeks and feature witnesses such as former Secretary of State Henry Kissinger and media mogul Rupert Murdoch. Holmes faces up to 20 years in prison if convicted.

Robert Leach, an assistant U.S. attorney, made reference to the same false claims described in the SEC complaint in his opening statement and showed apparently falsified reports used by Holmes to convince investors and pharmaceutical companies of the technology’s success. “Out of time and out of money, Elizabeth Holmes decided to lie,” he stated.

In response, Lance Wade, one of Holmes’ defense attorneys, stated that Holmes was a naïve entrepreneur, not a criminal. “Trying your hardest and coming up short is not a crime,” he said. Furthermore, Holmes’ lawyers have stated that Holmes is likely to testify that Balwani emotionally and mentally abused her, negating her ability to form the intent to deceive investors. Balwani has denied any abuse.

Ramesh “Sunny” Balwani, Holmes’ former business and romantic partner, is facing the same 12 counts of wire fraud and conspiracy to commit wire fraud. He has also pleaded not guilty and will stand trial in January 2022.

Additional Reading

The Trial of Theranos’s Elizabeth Holmes Opens, The New York Times (September 8, 2021)

Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud, U.S. Securities and Exchange Commission (March 14, 2018)

Hot Startup Theranos Has Struggled With Its Blood-Test Technology, The Wall Street Journal (October 16, 2015)

Image Credit: Debby Wong /