Fallen US biotech star Elizabeth Holmes was convicted on Monday of defrauding investors in her blood-testing startup Theranos in a high-profile case seen as an indictment against Silicon Valley culture.
Holmes is a rare example of a tech executive brought in to deal with a burning business, in an industry littered with the carcasses of losing companies that once promised untold wealth.
His case shed light on the blurry line between the bustle that characterizes the industry and outright criminal dishonesty.
Jurors took seven days of deliberation to render their verdict, finding her guilty on four counts of tricking investors into pouring money into what she claimed was a revolutionary testing system.
But the panel – which had listened to weeks of sometimes complex evidence – also acquitted her of four counts and was unable to rule on three others.
The 37-year-old now faces 20 years in prison for each conviction. She remains at large ahead of another bail hearing next week. No date has been set for sentencing.
She made no comment when she left court when asked if she intended to appeal.
Holmes was committed to revolutionizing health diagnostics with self-service machines capable of performing a series of tests on a few drops of blood, a vision that attracted high-profile donors and made her a billionaire at the age of 30.
She was hailed as the next tech visionary on magazine covers and raised mountains of investor money, but it all fell apart after The Wall Street Journal revealed the machines were not performing as promised .
Prosecutors spent 11 weeks presenting more than two dozen witnesses, as they painstakingly laid out their argument that Holmes knew his technology was insufficient and had deliberately misled investors and patients.
She personally put the logos of pharmaceutical giants Pfizer and Schering-Plow on Theranos reports praising the company’s blood testing technology, which were then shared with investors.
This was done without the clearances from the companies and was a key part of the prosecution’s argument that it deliberately attempted to inflate Theranos’ credibility in order to gain support.
– ‘Pretend until you do’ –
Although high-profile Theranos investors like Rupert Murdoch and Henry Kissinger were on the witness list, the biggest backer to take a stand was former Pentagon chief Jim Mattis.
The defense called only one important witness, Holmes herself, as they claimed that the fallen entrepreneur genuinely believed in Theranos’ vision, invested heavily in her success, and simply failed.
Holmes also sought to place some of the blame on Ramesh “Sunny” Balwani, a boyfriend nearly two decades her senior whom she brought in to help run her business.
She fought back tears as she told jurors that Balwani had disparaged and sexually imposed himself on her when he was angry – accusations he firmly denied.
He is to be tried separately for his role in the company’s operations and has pleaded not guilty.
Beyond the reams of company documents, very detailed technical questions and the sometimes moving testimony of Holmes, was the question of the very nature of Silicon Valley.
One of the most repeated clichés in the startup world is “pretend until you do,” where ambitious entrepreneurs with an idea that almost works convinces people to invest huge sums of money in the hope that it will work. ‘one day that will be the case.
It is extremely rare that the founders of failed Silicon Valley companies – of whom there are many – are prosecuted for fraud over unfulfilled promises and unreimbursed investments.
Some tech figures, like former Reddit chief Ellen Pao, said sexism may have been a factor in the lawsuits, but others argued Holmes went too far in trying to support his gradually dissolving vision.
After the 2015 Wall Street Journal report questioning whether Theranos’ machines were performing as promised – and ultimately bringing the company down – Holmes went on the offensive in the media.
“First they think you’re crazy, then they fight you, then all of a sudden you change the world,” said in a TV interview.
This story was posted from an agency feed with no text editing. Only the title has been changed.
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