Stanford Dropout and Theranos Founder Elizabeth Holmes Convicted of Fraud

Autumn Lloyd, Editor

Elizabeth Holmes, founder and CEO of failed biotech company Theranos, was found guilty of four out of eleven counts of fraud on Monday, January 3rd in San Jose, California. The trial lasted 4 long months, and jurors deliberated for more than fifty hours over seven days to reach this verdict, according to Erin Griffith and Erin Woo at the New York Times. Holmes was convicted of four counts of defrauding investors, was found not guilty of four counts of lying to patients, and the jury could not come to a decision on the remaining three fraud charges, on which U.S. District Judge for the Northern District of California in San Jose Edward Davila is expected to declare a mistrial. The defense is expected to appeal the guilty verdicts in the coming months. Holmes could serve up to twenty years for each offense, likely to be served concurrently.

Elizabeth Holmes underwent a spectacular fall from grace in the past two decades. After dropping out in her freshman year of college at Stanford, Holmes founded Theranos, a biotech startup that “promised to revolutionize blood testing with an innovative technology that required just a small sample of blood pricked from a patient’s finger,” according to Bobby Allyn at NPR. She emulated disruptive Silicon Valley CEOs like Steve Jobs, even wearing the black turtlenecks that he was known for. Holmes and Theranos captured the attention of the media in the late 2000s, as Elizabeth was lauded as a barrier-breaker for women in the tech industry and her device, called the Edison, was expected to change blood testing forever.

This rosy narrative was crushed when Theranos and Holmes were scrutinized by federal regulators in 2018 following multiple whistleblower reports detailing dishonest behavior by the company, according to Allyn at NPR. The FTC investigation revealed that Theranos’ Edison regularly failed quality control tests and that Holmes had repeatedly misled Investors and the public about the effectiveness of her machines. 

Theranos’ story had been cast as a cautionary tale for Silicon Valley startups. Jina Choi, director of the SEC’s San Francisco regional office, told Jessica Dickler at CNBC that “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.” Will the downfall of Theranos subdue overly optimistic speculation in the tech industry, or will Elizabeth Holmes be viewed as just another bad apple by her peers? Whether Holmes’ verdict will have any significant effect on startup culture and business practices in Silicon Valley remains to be seen.