Elizabeth Holmes, the founder of Theranos, appeared in court on September 8 for the start of her trial on multiple charges of wire fraud. Holmes was charged in 2018 and Theranos was officially dissolved on September 4, 2018, but not before cheating investors on millions of dollars and causing serious health concerns for countless customers.
Theranos, the company Holmes founded after dropping out of Stanford at 19, initially seemed to be another one of Silicon Valley’s incredible tech startups, and news media buzzed about Theranos joining the likes of Twitter, Facebook and Uber. However, Theranos had a lofty mission. The company claimed to have invented and designed a small, more portable blood test machine called Edison that could test for hundreds of different diseases with just a few drops of blood, replacing most current blood testing machines, which are bulkier and more specialized tests. Edison was set to revolutionize the healthcare industry. However, the machines had high levels of inaccuracies. According to former employees, when Edison was inaccurate and violated standards, the company neglected to address the issue and sent out results anyway, later voiding the vast majority of tests done by Edison. The company would resort to using blood test machines from other companies to retest patient samples. Other claims of fraud include allegations that Theranos sent false letters from the pharmaceutical company Pfizer, which were used to trick investors into believing that the machine was accurate.
The publicity surrounding Theranos’ quick rise was highlighted by the massive investments coming in to support Theranos. Investors ranging from Henry Kissinger, Betsy DeVos, and many more brought in hundreds of millions to the company, despite potential red flags. At its peak, Theranos was valued at $9 billion. Holmes was featured on the cover of magazines such as Forbes and was estimated to be the youngest self-made female billionaire.
Walgreens pharmacy made a deal with Theranos and operated nearly 40 different blood testing locations that then sent the test back to the company lab for analysis. Many patients and doctors were left confused by surprising test results for cancers, cholesterol levels, and more. Almost all of the test results that Theranos sent out to patients have since been invalidated, but not before seriously disrupting lives and jeopardizing the health of patients. Without knowing that the test results were inaccurate, doctors and patients greatly altered treatment plans.
However, Holmes was not alone, and the company’s president Ramesh “Sunny” Balwani has also been charged with fraud. Both have pleaded not guilty. Former employees have added that Balwani and Holmes worked together to hide evidence from investors and the public and that a culture of fear and dishonesty had developed in the workplace. To make matters more complicated, Balwani and Holmes also developed a personal, romantic relationship around 2015. Although the two are no longer together, the relationship is a key component of the defense’s argument.
The prosecution is arguing that Holmes and Balwani lied and were manipulative and that the pair used the media frenzy surrounding Theranos to continue to fraud investors and the public. Holmes’ defense is arguing that although the business failed and money was lost, this was not a crime. Additionally, the defense adds that Balwani was an abusive partner and that he was controlling Holmes’ actions, including in the company’s alleged fraud. Balwani’s team has rejected these claims, and the prosecution has used text messages exchanged between the two to contradict this narrative. Balwani’s trial is set for January. If convicted, Holmes could receive a prison sentence as long as 20 years.
Although Theranos has ultimately dissolved after its quick rise to fame, it had detrimental effects on the many employees and customers. The relatively inexpensive tests, which in some states could be requested without a doctor, led to many patients reaching out for tests only to now be left confused. Many have since filed lawsuits against the company. Although the company did not last long, it continues to have an impact. It serves as a painful reminder to customers and investors that fact-checking and due diligence is always necessary, and that scams may not be as obvious as one might think.
'Trial begins for former CEO of fraudulent biotech startup' has no commentsBe the first to comment this post!