Theranos’ case has a number of intriguing players in the courtroom. The defendants include Elizabeth Holmes, Ramesh “Sunny” Balwani, Thomas Mattis, and several former employees. Let’s take a closer look at each. What does this trial mean for the public? And who can you trust? Here are a few thoughts. Theranos trial is far from over.
Several major companies invested in the company, including Walmart and Rupert Murdoch, have reacted negatively to the news of Elizabeth Holmes’ trial. The companies lost a combined $1.2 billion, and many investors have been left dismayed by the results. Holmes’ infamous technology was found to be ineffective. She was convicted of four fraud counts, each carrying a maximum sentence of 20 years. Although she pleaded not guilty to all charges, she is allowed to appeal the verdict.
The charges against Holmes, who is a Washington, D.C., man, are rooted in the company’s business practices, including its misrepresentation of its results. She faces up to 20 years in prison, a $250,000 fine and restitution for the harm Holmes caused to patients. However, legal experts say that a lesser sentence will be served. Holmes has until July to appeal her conviction and sentence. The date for her sentencing has been delayed from September 26 to October 17.
At age 19 she dropped out of Stanford to work on her company. As a young woman, she vowed to eliminate the use of needles in blood testing. Her claims of scientific advancement drew the ire of biotech experts, including US Treasury Secretary George Schultz and Rupert Murdoch, and led to her investment in Theranos despite never seeing its audited financial accounts. The company’s plight came to a head when Holmes was accused of charlatanism, but she refused to back down. She spent seven days in the witness stand, acknowledging her mistakes and proving her faith in the company’s potential to change healthcare.
Despite the verdict of the jury on Thursday, the case against Holmes and Theranos has already caused a sensation in Silicon Valley and the broader business world. Her conviction will have long-term implications for the future of the medical industry. The government is attempting to convince the court that Holmes was reckless and deceitful in her business venture. But despite the court’s findings, the company has still not been able to recover the money it lost.
After deliberating for several weeks, the jury returned a mixed verdict on the three charges against Holmes. While Holmes was found guilty of conspiracy to defraud investors, she was found not guilty on the other three counts, and was sentenced to five years in prison. The jury also failed to come to a unanimous decision on three counts, including wire fraud. As a result, the government filed a motion for a mistrial, which essentially means that the jury was unable to find a verdict against Holmes on the other counts.
The jury found that Holmes used misleading and deceptive techniques to lure investors to their company. She claimed that her device could detect diseases in blood. But despite her claims, she failed to meet these expectations and was eventually convicted of fraud. Her conviction has triggered a public outrage, and she has been forced to return to court. The HBO documentary team obtained more than 100 hours of leaked videos and filmed the company’s employees dancing and chatting.
Ramesh “Sunny” Balwani
Theranos’s founding CEO, Ramesh “Sunny,” Balwani, has been convicted on 12 fraud charges. Six of the charges stemmed from fraud against investors, while four others related to false advertising and deception on the part of Theranos. His sentencing has been delayed by a month, but he may appeal.
Although Holmes and Balwani were charged separately, they have common ground in that they were charged with the same crimes. The defendants were convicted of conspiracy to commit wire fraud. Holmes and Balwani are both facing up to 20 years in prison. Holmes is awaiting sentencing, which could be concurrent. Both men were not able to testify against their co-defendants, and their defense attorneys did not speak on the case.
While Holmes’ attorneys claimed Balwani had nothing to do with Theranos’ fraud, he had tremendous power over the company. He controlled who had access to the lab, hired employees, and oversaw financial projections for investors. The trial also revealed that Balwani and Holmes were prone to misusing technical terms. Their arguments centered on the lack of transparency in Theranos’ business model.
The trial drew the most attention to the Edison analyzer that Theranos used. This machine allegedly defrauded patients and investors. While prosecutors argued that Balwani knew the analyzer did not work, Balwani’s attorneys argued that Holmes was solely responsible for the fraud. If the jury finds him guilty, Balwani’s conviction will be the first of many.
Theranos was a major scam. Holmes deceived investors and hid serious flaws in their blood-testing technology. This mismanagement may have endangered the lives of patients. Holmes boasted about his company’s technology, saying it could detect as many as 200 health issues with just a finger prick. While this is impossible today, Holmes was able to convince investors to invest in Theranos by promising to improve the lives of patients.
In the early days of Theranos, Balwani became Holmes’ chief operating officer and helped her secure the company’s second round of funding. Holmes dumped him as her lover in 2016 when Theranos’ financials began to unravel. After Holmes brought him on board as a top lieutenant, Balwani put up $15 million to prop up the company. His investment was worth $500 million on paper, but he didn’t sell his stake when Theranos’ stock collapsed.
Holmes and Balwani were friends throughout the trial, and afterward. In fact, they moved in together in 2005 after Holmes dropped out of Stanford. In 2009, Holmes was accused of stealing $15 million from Theranos, and Balwani guaranteed the company’s $10 million loan. They eventually split up, but their relationship remained private. And Holmes’ decision to not testify about the company’s financial misdeeds was ultimately worked against him.
One of the most famous faces in the Theranos trial is James Mattis, a retired four-star Marine Corps general and former secretary of defense under President Donald Trump. He was an investor and board member of Theranos for a few years, but lost faith in the company after the Wall Street Journal exposed problems with the company’s technology. Mattis testified that he contacted Holmes and asked for a meeting, but she declined.
In 2011, Mattis met Holmes while serving as a four-star general in the Marine Corps, where he oversaw U.S. wars in Iraq and Afghanistan. After retiring from the military in 2013, Mattis joined Theranos’ board and invested his own savings. In January 2017, he was appointed to President Donald Trump’s cabinet. He was formerly nicknamed “Mad Dog” in the military, and the company’s technology had no clinical value.
The company’s stock price plunged nearly 50% after Holmes was indicted. The company’s stock price dropped and its stock value plummeted by nearly nine billion dollars. The company had a stacked board, with James Mattis and Henry Kissinger among the directors. The company’s founder allegedly misled investors and consumers by lying about her company’s progress in blood-testing technology. Despite the rocky start, the company has since recovered and its investors are being compensated.
In addition to Mattis, other high-profile investors of Theranos included Henry Kissinger and George Shultz. These two men were part-time directors of Theranos and repeatedly warned Holmes about the inaccuracy of her blood-testing technology. Former CEOs of Pfizer and Safeway were also involved. Also, two Oracle executives, Larry Ellison and Richard Kovacevich, are alleged to have financed Theranos.
Elizabeth Holmes’ emails to Mattis were a key part of the defense’s case. They encouraged him to believe in Theranos and were read without emotion. Even though she allegedly misled the public, Holmes has not admitted any wrongdoing. In addition to Holmes, the government will likely bring up several other high-profile witnesses as well. Ultimately, the jury will decide on how many potential witnesses to call for the government’s case.
Mattis also testified that he received a six-figure check from Theranos without telling the company beforehand. Mattis then passed this email exchange on to his military officials. He then asked how he could overcome the obstacle and requested a field demonstration of the technology. In the end, he was unable to do so. But the military is a different story. While the military might be hesitant to admit a military official’s involvement in a trial, the defense secretary told the jury that Theranos was involved in the scandal.
Elizabeth Holmes had an impressive track record as a CEO. Her reputation preceded her, and she travelled on a private jet. She also paid $1 million per month for a grand HQ building in Palo Alto, Calif., and even bought a $100,000 conference table. Her zeal came across as a religious zeal that made her seem like a member of a monastic order. In fact, Kissinger joined Theranos’ board along with George Shultz and General James Mattis.