On January 3, a jury in San Jose, CA, returned a guilty verdict, convicting Elizabeth Holmes of four federal fraud charges for deceiving investors on what her blood testing company’s machines could do, how much money the company could earn, and how widely the machines were being used.
Holmes is the founder of Theranos, which was an American privately held corporation advertised as a breakthrough health technology company. Theranos claimed to have developed blood tests that required small amounts of blood and could be performed rapidly using small, automated devices.
According to an audio clip published at trial, Holmes told investors that the device could perform any blood test, and that the company was on track to earn over a billion dollars. Holmes is heard implying that the devices were being used on military medevac helicopters. The statements were found to be false.
The scandal surfaced with a series of Wall Street Journal articles in 2015 and 2016 that called into question Theranos’ proprietary blood-testing technology. In 2016, The Wall Street Journal reported that Theranos’ devices were inaccurate and that the company was actually running blood tests on other companies’ machines, the very ones her company considered competitors.
Holmes was indicted on 12 charges. Holmes was found guilty of one count of conspiracy to defraud investors, as well as three wire fraud counts. She was acquitted on the remaining counts, which related to defrauding patients, and on one count of conspiracy; another count was dismissed during trial. The jury remained deadlocked on three counts of defrauding investors. Holmes faces up to 20 years in prison, as well as a fine of $250,000 plus restitution for each count. In total, Holmes was found guilty of defrauding investors of more than $140 million. The judge will sentence Holmes at later date, not yet determined.
“This is a case about fraud, about lying and cheating to get money,” Assistant U.S. Attorney Robert Leach said in opening arguments.
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with fraud investigations. If you need assistance with such a matter, please contact us today.