By Cristian Bustos. Originally published at ValueWalk.
Elizabeth Holmes, former Theranos CEO, was convicted of conspiracy to commit fraud plus three charges of wire fraud against investors in the worldwide famous case. Holmes did not accept the four charges, which could carry 20 years in prison each.
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Elizabeth Holmes Conviction
After a months-long trial, disgraced entrepreneur Elizabeth Holmes was found guilty of defrauding investors after falsely claiming that Theranos —her healthcare technology company— was able to detect cancer and other terminal diseases with just a small blood sample.
As reported by the BBC, prosecutors in California found she had knowingly lied to investors by touting its technology as a breakthrough, with the purpose of raising money and gain fame.
According to The New York Times, “If sentenced to prison, Ms. 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.”
Holmes faced a total of 11 charges, and the split verdict arrived “after the judge said the jury, having deliberated for seven days, could deliver a partial verdict after being unable to reach consensus on another three counts.”
Scandal
Theranos was once deemed as one of the most exciting startups in Silicon Valley and had reached a $9 billion valuation. The company managed to raise over $900 million from several billionaires, among them Larry Ellison and Rupert Murdoch.
In 2015, the Wall Street Journal revealed that the blood-testing tech was flawed as several tests did not show positive results. However, Holmes and her then-associate Ramesh Balwani, claimed Theranos’ tech was legitimate.
“Calling some 30 witnesses, the prosecution sought to prove that Holmes knew the product she was selling to investors – a machine called the Edison – was a sham, but remained hell-bent on the firm’s success,” the BBC reports.
Theranos covertly relied on commercially available equipment to carry out the tests, according to prosecutors.
“At trial, multiple lab directors testified to telling Holmes about the flaws in Theranos’ technology but being instructed to downplay their concerns. At the same time, they added, Holmes told investors the technology was operating as planned.”
Holmes is expected to appeal, while at a hearing on the three hung charges next week, the sentencing date is predicted to be set.
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