Elizabeth Holmes has been found guilty of four counts of wires fraud after a jury in San Jose found that she deceived investors in her blood-testing device so she could rake in billions of dollars.
The former Theranos CEO was acquitted on four counts and the jury could not reach a decision on three counts. Prosecutors can choose to retry those counts at a later date, but have not given any indication if they plan to.
Each count carries a maximum sentence of 20 years, terms that are likely to be served concurrently. Holmes is expected to appeal. She ignored reporters’ questions as she left the courthouse in San Jose on Monday evening after the verdicts were returned.
If sentenced to prison, Holmes would be the most notable female executive to serve time since Martha Stewart did in 2004 after lying to investigators about a stock sale.
After seven days deliberating, the jury earlier on Monday said it was unable to reach a unanimous verdict on three of the 11 criminal counts she faces.
The judge told them to press ahead, with the four guilty verdicts and four acquittals later shared with the court.
Holmes, 37, was facing nine counts of wire fraud and 12 counts of conspiracy to commit wire fraud.
Her trial was postponed several times, because of the COVID-19 pandemic and Holmes’s pregnancy.
She gave birth to a boy in July in Redwood City, California – her first child, with San Diego hotel heir Billy Evans, who often accompanied her to trial alongside her mother, Noel Holmes.
Elizabeth Holmes is seen leaving court on Monday, having been found guilty on four counts
Holmes holds hands with her boyfriend Billy Evans and her mother, Noel, as they leave court
Evans, Holmes, her mother Noel, and father Christopher all hold hands as they leave court in San Jose on Monday night
Holmes, seen here entering court on Monday, claimed she never meant to mislead any of the investors in her company
Holmes, center, walks to federal court in San Jose, California, on Monday, January 3 as the jury resumed deliberations for the seventh day after an extended holiday break
At Theranos’ height, Holmes had amassed a fortune of $4.5 billion on paper and was being lionized as a visionary on cover stories in business magazines
Elizabeth Holmes found guilty of four counts
1. Conspiracy to commit wire fraud against Theranos investors: Guilty
2. Conspiracy to commit wire fraud against Theranos paying patients: Not guilty
3. Wire fraud against Theranos investors: wire transfer of $99,990 from Alan Jay Eisenman: No verdict
4. Wire fraud against Theranos investors: wire transfer of $5,349,900 from Black Diamond Ventures: No verdict
5. Wire fraud against Theranos investors: wire transfer of $4,875,000 from Hall Phoenix Inwood Ltd.: No verdict
6. Wire fraud against Theranos investors: wire transfer of $38,336,632 from PFM Healthcare Master Fund: Guilty
7. Wire fraud against Theranos investors: wire transfer of $99,999,984 from Lakeshore Capital Management LP: Guilty
8. Wire fraud against Theranos investors: wire transfer of $5,999,997 from Mosley Family Holdings LLC: Guilty
9. Prosecutors dropped this count in November, after making an error that put the count in peril.
10. Wire fraud against Theranos paying patients: wire transmission of patient E.T.’s blood-test results: Not guilty
11. Wire fraud against Theranos paying patients: wire transmission of patient M.E.’s blood-test results: Not guilty
12. Wire fraud against Theranos paying patients: wire transfer of $1,126,661 used to purchase advertisements for Theranos Wellness Centers: Not guilty
During the trial, which began in September, jurors heard testimony from former Theranos employees who said they left the company after witnessing problems with its technology.
Investors testified that Holmes made misleading claims about Theranos, such as that its machines were being used in the field by the U.S. military.
Former patients told jurors that they would not have used Theranos’ tests if they had known the tests were flawed.
Prosecutors said had Holmes been truthful with investors and patients, the venture never would have attracted critical funding and revenue.
‘She chose fraud over business failure. She chose to be dishonest,’ Assistant U.S. Attorney Jeff Schenk said at the start of closing arguments.
‘That choice was not only callous, it was criminal.’
Holmes could face up to 20 years in prison, as well as a fine of $250,000 plus restitution for each of the nine counts of wire fraud two counts of conspiracy.
Earlier on Monday jurors told US District Judge Edward Davila saying they could not reach a verdict on three of her 11 counts, though they did not specify which counts they were unable to reach a verdict for.
Following the announcement, Judge Davila publicly raised the possibility of a partial verdict if the jurors remain conflicted on returning verdicts for any of the charges.
He then ordered them to deliberate further under an ‘Allen charge,’ and instructed the eight men and four women who comprise the jury to do their best to reach a verdict, reminding them that Holmes is presumed innocent ‘unless or until the government proves her guilt beyond a reasonable doubt.’
If the jury was still unable to reach a verdict, Davila said, a mistrial could be declared on those three counts and Holmes could be retried.
The jury sifted through three months of testimony and more than 900 pieces of evidence as they decided whether she intentionally deceived investors, business partners, patients and advertisers in the quest for investments for her blood testing startup.
Holmes, center, is charged with nine counts of wire fraud and 12 counts of conspiracy to commit wire fraud
If convicted on all counts, Holmes could face up to 20 years in prison, as well as a fine of $250,000 plus restitution for each of the nine counts of wire fraud two counts of conspiracy
Holmes founded Theranos in 2003, and dropped out of Stanford the next year as she raised money for her new blood testing device.
She repeatedly claimed that the company’s new testing device could scan for hundreds of diseases and other problems with a few drops of blood taken with a finger prick, instead of a needle stuck in a vein.
The results, she claimed, could come within a matter of minutes.
The concept was so compelling that Theranos and Holmes were able to raise more than $900 million, some of that from billionaire investors such as media magnate Rupert Murdoch and software titan Larry Ellison.
The Palo Alto, California, company also negotiated potentially lucrative deals with major retailers Walgreens and Safeway. Holmes soon began to grace national magazine covers as a wunderkind.
At Theranos’ height, Holmes had amassed a fortune of $4.5 billion on paper and was being lionized as a visionary on cover stories in business magazines.
But unbeknownst to most people outside Theranos, the company’s blood-testing technology was flawed, often producing inaccurate results that could have endangered the lives of patients who took the tests.
After the flaws were exposed by the Wall Street Journal in 2015 and 2016, Theranos eventually collapsed. The Justice Department filed its criminal case in 2018.
Assistant US Attorney Jeff Schenk (center) cast Holmes as a desperate con artist who brazenly lied to get rich during his three-hour presentation last month
Holmes’ defense attorney Kevin Downey (right) has argued that she ‘was building a business and not a criminal enterprise.’ Above, a sketch from court on November 29
Theranos’ miniLab (pictured) was advertised as a new technology that could provide blood test results in a matter of minutes
Holmes was able to seduce high-profile investors with the promise of Theranos. Some of the biggest investors included: the founders of Walmart, who gave $150million; Rupert Murdoch, who invested $125million; Betsy DeVos who put in $100million. In addition to the scions of the Cox telecommunications family who lost $100million, as well as the Mexican tycoon Carlos Slim, Robert Kraft and the Oppenheimer family who once owned De Beers diamonds
In 2015, Vice President Joe Biden heralded Theranos as ‘a laboratory of the future. You can see what innovation is all about just walking through this facility.’ But former Theranos design architect, Ana Arriola, recounted the hysteria leading up to his visit. It was ‘completely fake,’ she said. What Biden saw that day was a smoke and mirrors operation. They cleared out a room, slapped on a fresh coat of paint and stocked it with every Edison device they could find
Over the course of the trial, prosecutors called 29 witnesses including former Theranos employees, retail executives and even a former US Defense Secretary as they attempted to prove that Holmes ‘chose fraud over business failure,’ as Jeff Schenk, an assistant US attorney said in his closing arguments, according to the New York Times.
The defense, meanwhile, rested much of their case on Holmes’ own testimony.
She said she believed the claims she made about Theranos’ miniLab and did not find out until it was too late that it did not work as promised.
Holmes’s lawyer Kevin Downey told the jury last month that Holmes didn’t realize the scope of the problems with the miniLab until a Theranos laboratory director informed her in March 2016 that the company had to invalidate 60,000 of its past blood tests.
He likened Holmes’ final days at the company to a captain valiantly trying to save a sinking ship, and said that if she had committed any crimes, she would have been scurrying to jump overboard like a scared rat, Downey, told jurors as he wrapped up roughly five hours of closing arguments.
But not only did she never sell a share, Downey said, she continued to try to salvage the company.
Her turnaround efforts included ousting Theranos’ chief operating officer, Sunny Balwani, who also had been her lover.
Holmes, left, has testified that she was in a decade-long abusive relationship with Theranos’ chief operating officer, Sunny Balwani, right. They are pictured here addressing the company’s staff in 2015 at the company’s former headquarters in Palo Alto, California
Taking the stand in November, Holmes acknowledged some of the government’s points about the failures of the miniLab and the company’s lofty goals, she maintained she never intended to deceive anyone.
She alleged that she was the victim of a decade-long abusive relationship with Balwani, who, she testified, had been secretly controlling her diet, her friendships and more while claiming it would help her succeed in the business world.
Balwani, who is also facing fraud charges and will stand trial next month, has denied the allegations.
Near the end of her testimony, CNN reports, she also testified that while she was not aware about everything that happened at Theranos, she ‘never’ took any steps to mislead anyone who invested in the company.
‘They were people who were long-term investors and I wanted to talk about what this company could do a year from now, five years from now, 10 years from now,’ she claimed.
‘They weren’t interested in today or tomorrow or next month,’ she said.
‘They were interested in what kind of change we could make.’