On Monday, 3 January 2022, a jury in Silicon Valley found Elizabeth Holmes, the American businesswoman and founder of Theranos, guilty of four counts of fraudulently deceiving investors, each of which carries a prison sentence of up to 20 years.
Now, ten months later, Elizabeth, who was once described by Forbes as the youngest self-made billionaire, has been sentenced to 11.25 years in prison and three years of supervised release. A follow-up hearing by Judge Edward Davila will be scheduled to determine what Elisabeth owes in restitution.
It's a case that has captured the public's imagination, with the limited series of Elizabeth Holmes' life, The Dropout, receiving critical acclaim and earning lead actress Amanda Seyfried a coveted Emmy. Her portrayal was so good that Jennifer Lawrence dropped out of playing the Theranos founder in a movie which was set to be directed by Don't Look Up's Adam McKay. “I thought she was terrific,” Jennifer told the New York Times. “I was like, ‘Yeah, we don’t need to redo that.’ She did it.”
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But who exactly is Elizabeth Holmes? What was the Theranos scandal? And what did Elizabeth do that warranted jail time? Here's everything we know about the case that everyone's talking about.
Who is Elizabeth Holmes?
According to BBC News, Holmes was raised in a “well-off family” in Washington DC. Richard Fuisz, an inventor and businessman who used to live next door to Holmes' family, told the BBC that her parents "were very interested in status" and "lived for connections." He added that her parents were conscious of their lineage, as Holmes' father's great-great-grandfather founded Fleischmann's Yeast.
In 2002, Holmes went to Stanford University to study chemical engineering and – according to BBC News – came up with an idea for a patch that could detect infections on the wearer and release antibiotics accordingly. Phyllis Gardner, a professor at Stanford, told the BBC that she discussed this idea with Holmes, telling her it "wouldn't work."
Professor Gardner added, "And she just seemed absolutely confident of her own brilliance. She wasn't interested in my expertise, and it was upsetting."
Holmes dropped out of Stanford at the age of 19 and launched Theranos, a healthcare start-up, which claimed to revolutionise blood testing.
What was Theranos?
Holmes' company, Theranos, claimed to have the breakthrough technology to enable advanced blood testing using a finger prick alone. It was inspired – in part, at least – by Holmes' own fear of needles.
People were understandably excited about this technology – it was touted to democratise the healthcare system, enabling people to get tested at a pharmacy and analyse their results within hours.
It also drew the attention of investors, leading to the company's meteoric rise between 2010 and 2014. US Treasury Secretary George Schultz, Rupert Murdoch and America's wealthiest family, the Waltons, invested enormous sums of money in the business.
In 2013, according to Tatler, Theranos struck a deal with Walgreens, an American pharmacy chain, to enable customers to have their blood analysed in-store.
By the end of 2014, Theranos was valued at about $9 billion, and Holmes was worth $4.5 billion, according to Forbes magazine, making her the youngest self-made female billionaire at the time. She appeared on the covers of Forbes, Fortune and the New York Times’ T Magazine and was dubbed “the female Steve Jobs.”
What was the Theranos scandal?
Theranos began to unravel in 2015 after John Carreyrou, a Pulitzer Prize-winning journalist at the Wall Street Journal, began to investigate the company, speaking to various employees who revealed that the majority of testing was done by conventional machines rather than in Theranos' labs.
One whistleblower claimed that its flagship testing device, The Edison, didn't produce accurate results. After John Carreyrou's story was published, the US financial regulator, the Securities and Exchange Commission, launched an investigation into Theranos.
According to BBC News, “The Centers for Medicare and Medicaid Services, which oversee blood testing laboratories, revoked Theranos' licence. Within a year, the company began shutting down its labs and laid off more than 40% of its full-time employees.”
In 2018, Theranos was dissolved. Although Holmes was able to settle civil charges from financial regulators, she was arrested three months later on criminal charges of wire fraud and conspiracy to commit wire fraud."
How did Elizabeth Holmes get found out?
Theranos primarily operated under the radar. It didn't have a website and rarely released information to the press. However, after Holmes entered the mainstream discourse (cue those Steve Jobs comparisons), the increased exposure led to heightened scrutiny of her business operations.
In 2014, Holmes was even invited to give a TEDMED talk in Washington, indicating her rapid rise to fame and establishing herself as an expert in the healthcare technology business. Her increasing celebrity status undoubtedly played an essential role in her downfall.
What happened during Elizabeth Holmes' trial?
In 2018, the U.S. Attorney’s Office for the Northern District of California released a statement claiming that Holmes, and her co-defendant Ramesh “Sunny” Balwani, Theranos' chief operating officer, knowingly participated in “Multi-million Dollar Schemes To Defraud Investors, Doctors, and Patients,” and that they knew their representations about their test analyser were false.
Holmes was released on bail, during which time she married William "Billy" Evans, an heir to the Evans Hotel Group chain of hotels. They had a son in July 2021.
During the trial, Holmes personally gave evidence in court, alleging that her relationship with Ramesh Balwani was abusive, claiming that he sexually abused her and exercised coercive control over her. Mr Balwani categorically denies the allegations.
A core aspect of Holmes' legal defence was that she never cashed in the company's shares, which are now worthless. Had Holmes been a fraud, the defence argued, she surely would've taken the money. Another line of defence was that Holmes was unaware of the problems with Theranos' technology.
On Monday, 3 January, Holmes was found guilty of conspiracy to commit fraud against investors and three wire fraud charges. She was found not guilty of four charges relating to defrauding the public. The jury couldn't reach a consensus on another three counts of fraud.
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For more from Glamour UK's Lucy Morgan, follow her on Instagram @lucyalexxandra.
