For three years, Elizabeth Holmes has been court-martialed, where books, articles, articles, and countless TV shows have released a final drop in blood tests. Theranos. Now, the appellate court has issued a final ruling. On Monday, after seven days of negotiations, a judge in San Jose, California, found him guilty of four counts of wire fraud and conspiracy to commit wire fraud. The judges ruled in favor of the four judges, but they did not agree on all three.
Four of the lawsuits involved Theranos ‘investors, who say they were misled by Theranos’ potential, and lost millions of dollars after the company’s collapse. Holmes now faces up to 20 years in prison for each crime. (The judge had not yet made a case for sentencing.)
For the past three months, the defendant he made his case that Holmes deliberately “chose fraud for business failure,” enticing investors to invest more in the company even though it failed. Twenty-nine Witnesses stood up, including former staff members who testified that if Theranos technology did not work as promised, Holmes urged them to hide. A former sales manager said the company falsified the demos and removed the bad results when sending reports to investors. China also revealed that Holmes had forged alliances with pharmaceutical companies, made non-existent military agreements, and placed medical labels on Theranos’ reports, confusing investors and potential allies with regard to confirming blood tests. Journalist from Fortunately, who wrote a cover story of Theranos in 2014, said Holmes failed to correct many of the errors in the report, because it benefited the company from appearing more capable than it actually was.
The mountains of evidence – including messages, emails, and corporate records – showed that Theranos ‘technology was flawed, and failed to live up to its founder’ vision as the future of blood tests. But the lawsuit was based on whether Holmes, as the chief executive of the company, deliberately deceived accountants and patients, or whether he acted in good faith as a troubled businessman. “The battlefield is what Holmes thinks: whether he had a problem or not purpose committing fraud, ”says James Melendres, a former attorney general and colleague at the law firm Snell & Wilmer. “You have 12 judges – 12 people off the street – who sit in one room and decide what Holmes had.” The judges found Holmes not guilty of any wrongdoing on the part of patients, two of whom received false results from Theranos’ blood test.
The prosecutor called three witnesses. including Holmes himself, who spent seven days at the exhibition, filed a lawsuit against several Theranos scientific advisers and board members. Many Theranos employees had years of experience working in biotechnology; Holmes, by comparison, left Stanford in his second year.
He testified that Ramesh “Sunny” Balwani, a former business associate and ex-girlfriend, was responsible for making false reports and overseeing Theranos labs. Holmes also claims that Balwani corrected and tortured him, which upset him during his years in Theranos. Balwani will be tried later this year.
The Holmes case has been seen as a Silicon Valley case for a decade, as well as an attack on the original culture itself: When did the founding hubris become a fraud? Melendres calls the ruling a “bellwether,” saying it could be a key factor in setting the precedent for the Ministry of Justice.
For the rest of Silicon Valley, the case could serve as a reminder that there is a limit to the amount of start-up that ends – and that the government is watching. Jennifer Kennedy Park, a colleague of Cleary Gottlieb Steen & Hamilton, states: “The government is winning. They also see a lot of things and the power of singing that can give a chance to the critics. This case shows that the originators have no limits.
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