On January 3, 2022, after seven days of deliberation, a California jury found Elizabeth Holmes guilty of 4 of 11 counts related to her industry-disrupting blood testing technology and her company, Theranos.  The jury found her not guilty for defrauding patients, but guilty of more than half of the counts relating to defrauding investors.  Holmes is now subject to a sentence of up to 20 years in federal prison and a sizable fine.

As a quick recap, Holmes started Theranos when she was 19 years old, after dropping out of Stanford. Her stated goal was to disrupt the conventional blood testing industry, making blood testing readily available and relatively painless for anyone and everyone.  Her educational path, confidence, and, of course, black turtlenecks, drew immediate and continual comparison to Steve Jobs of Apple.

With a few drops of blood, Holmes promised that her special machines and processes could provide the same results as conventional blood sampling and testing.  Based on the promise of hockey-stick growth, Holmes and Theranos attracted a star-studded Board and nearly $945 million in investment capital, placing its valuation at $9 billion.

A series of newspaper articles in 2015 disputed Holmes’ claims about her blood testing machines and processes.  The reporter found that Holmes’ special machines could only perform a few tests; conventional blood testing machines had to be used for the remainder.  To meet the minimum requirements of those conventional testing machines, the small drops of blood Theranos collected had to be diluted, resulting in unreliable results and leading the claim at trial that Holmes defrauded patients.

While Silicon Valley tech companies have been quick to distance themselves from Theranos, arguing that Theranos was all along “just” a medical company and never a technology company, the trial and its outcome should serve as a cautionary tale to them and everyone else who owns or markets a business. With its verdict, the jury seemingly reinforced two kindergarten lessons: 1. Listening to or being influenced by another does not excuse your own behavior; and 2. Half-truths are also lies.

As her primary defense, Holmes argued that her life was controlled by her co-executive at Theranos, who also happened to be her boyfriend, Ramesh “Sunny” Balwani. Holmes argued that Balwani was abusive and controlled her entire life which influenced her work at Theranos, clouded her judgment, and prevented her from fully being aware of what was going on. Based on the verdict, the jury did not find this a sufficient legal excuse for defrauding her investors.

Holmes also defensively argued that although her actions may have been problematic at times, they did not rise to the level of fraud. However, the jurors did not find Holmes’ testimony from the witness stand credible, finding instead that statements to investors, even if problematic and also half-true, were still lies.

Perhaps as evidence that start-up companies or even Holmes herself may not heed the lessons from trial, Holmes was released from custody on $500,000 bail and is purportedly currently living with her new boyfriend and baby in a $135 million estate.  Balwani is scheduled to go on trial for similar fraud claims related to his role in Theranos later this year. Holmes is scheduled to be sentenced after the trial of Balwani is concluded.

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