In 2014, Elizabeth Holmes, then 30, was riding high on success. Despite dropping out of Stanford University, she founded Theranos, a company valued at $9 billion, aiming to revolutionize disease diagnosis. Forbes magazine hailed her as ‘the world’s youngest self-made female billionaire,’ and Ink magazine even dubbed her ‘the next Steve Jobs.’
Holmes’ company, Theranos, claimed a groundbreaking technology. Their Addison test purportedly could swiftly detect diseases such as cancer and diabetes using just a few drops of blood. Renowned figures like Henry Kissinger and Rupert Murdoch invested in her company, adding to the buzz around her innovative venture.
However, by 2015, the company’s facade began to crumble, and within a year, Holmes was exposed. The technology she had claimed to be revolutionary didn’t work at all, and by 2018, the company she had founded was defunct.
Elizabeth Holmes, now 37, could potentially face up to 20 years in prison if she is convicted of the 12 counts of fraud against her. Her trial is set to begin next month, during which she is expected to plead not guilty.
A surprising turn in the story occurred over the weekend when her lawyers revealed their intention to prove that Holmes was accompanied by her ex-boyfriend and business partner, Ramesh ‘Sunny’ Balwani, at the time of the alleged crimes. They plan to present the argument that Balwani had sexually assaulted her and emotionally manipulated her, severely impacting her mental state.
Sunny Balwani, 56, who is also facing the same charges, has vehemently denied these claims, labeling them as “outrageous.” Now, it’s in the hands of the jury to decide whether to sympathize with or take a stern stance against the woman who managed to deceive a wide spectrum of people, from politicians to secretaries.
A big start
Despite being the focus of a book, an HBO documentary, and an upcoming TV series and movie, it remains a mystery why Holmes chose to invest in technology she knew wouldn’t work.
People who knew her reveal that she grew up in an affluent family in Washington, D.C., and was a standout but distant girl.
Inventor and businessman Richard Foys, 81, speculates that there might have been immense pressure on Holmes to succeed. His family had been neighbors with the Holmes family for many years but had to move out when Theranos filed a lawsuit against them in 2011 over a patent dispute (though the case was later dropped).
Despite Holmes’ parents dedicating their careers to bureaucratic roles on Capitol Hill, they held a deep fascination for social standing and influential connections. Notably, the family’s roots were intertwined with a yeast strain that significantly transformed America’s bread industry. They also invested considerable thought into their ancestral heritage.
At the young age of nine, Elizabeth expressed her aspirations in a heartfelt letter to her father. In it, she conveyed her desire for him to embark on a journey of discovery, to find something new in life that humanity hadn’t deemed possible before.
Upon entering Stanford University in 2002 to pursue her studies in chemical engineering, Holmes proposed an innovative concept: a ‘patch’ designed to scan the wearer for infections. When necessary, this patch could automatically release antibiotics, representing a pioneering approach to wearable healthcare technology.
Phyllis Gardner, a clinical pharmacologist at Stanford, recalls discussing the concept of a skin ‘patch’ with Holmes. Gardner informed her that the idea wouldn’t be viable. Gardner shared with the BBC her frustration, stating that Holmes appeared unwavering in her confidence, solely relying on her own intellect. Despite Gardner’s expertise, Holmes didn’t show any interest in her skills, which was a source of irritation for Gardner.
A few months later, at the age of 19, Holmes made the decision to drop out of Stanford University and founded Theranos. This time, her vision was to revolutionize blood testing by taking just a drop of blood from a finger and conducting tests in an innovative manner.
Holmes’ passion for this project captivated the attention and investment of numerous renowned and influential individuals. Notably, supporters included high-profile figures such as US Treasury Secretary George Shultz, Marine Corps General James Mattis (who would later serve in the Trump administration), and members of America’s wealthiest family, the Waltons. Their belief in her idea led to significant backing for Theranos.
I recognized she had a compelling concept, considering she managed to persuade all these investors and scientists,” remarked former Harvard Medical School dean Dr. Jeffrey Flair, reflecting on his lunch meeting with her in 2015.
Dr. Flier further noted, “She exuded absolute confidence, but when I posed several questions about her technology, she didn’t seem to grasp them.” Although it struck me as odd, I didn’t immediately suspect it was a fraudulent endeavor.
Dr. Flier extended an invitation to join the medical school’s board of fellows at that time, a decision he now regrets deeply. However, Holmes was eventually removed from the board when the scandal surrounding Theranos came to light.
The fraud was exposed in 2015 when a whistleblower raised concerns about Theranos’ primary testing device, Edison. Multiple reports by The Wall Street Journal alleged that the results presented by the company were unreliable. Moreover, it was revealed that Theranos was utilizing commercially available machines from other manufacturers for the majority of its testing.
As legal battles mounted and partnerships dissolved, US regulators took action in 2016, banning Elizabeth Holmes from operating a blood-testing service for a period of two years. The unraveling of Theranos became a significant chapter in the annals of corporate misconduct.
In March of this year, Holmes settled civil charges filed by financial regulators for defrauding investors of $700 million.
However, three months later, she and her accomplice Balwani were arrested on criminal charges of wire fraud and conspiracy to commit wire fraud.
Prosecutors allege that Holmes knowingly misled patients about the tests and significantly exaggerated the firm’s performance to attract financial backers.
Holmes married 27-year-old William ‘Billy’ Evans, one of the heirs to the Evans Hotel Group, in 2019 after being released on bail. They welcomed a son in July this year.
“I don’t believe her being a new mother will impact the case, but if she’s convicted, the judge might take that into consideration,” remarked Emily DeBaker, a former Los Angeles district attorney and legal expert.
According to court documents, Holmes’ legal team is prepared to argue that she “held the genuine belief that any supposed misrepresentations about Theranos were true and that it was a legitimate business aimed at generating profits for investors.”
Additionally, they are anticipated to assert that Balwani’s alleged controlling behavior towards Holmes had hindered her “capacity to make decisions, including her ability to deceive victims.”
They claim that Theranos’ former chief operating officer, who will be tried separately next year, dictated what they wore, what they ate, and even controlled their social interactions. This control persisted for over a decade. They plan to present a psychologist as a witness regarding the alleged sexual abuse.
“The most challenging aspect in any fraud case is proving the intent to defraud,” says Emily Baker.
Exactly, prosecutors will have to meticulously examine her texts and emails, aiming to establish that she was aware the technology didn’t function as claimed, yet she continued to assert that it did. This digital trail will be crucial in building the case against her, demonstrating her alleged intent to deceive despite the actual shortcomings of Theranos’ technology.