Silicon Valley’s biggest fraud scandal is going to court
She was the youngest self-made billionaire in the world and was hailed as “the next Steve Jobs”. Elizabeth Holmes is now on trial for fraud. You face up to 20 years in prison.
The trial of Theranos founder Elizabeth Holmes begins today, Tuesday, August 31, 2021 in San Jose, California. Holmes is accused of fraud in several cases. Her company, founded in 2003, allegedly developed a revolutionary method for blood tests and thus became a unicorn within seven years. Among others, Oracle founder Larry Ellison, publishing mogul Rupert Murdoch and the later US Secretary of Education Betsy de Vos had invested. In 2014, the company was worth nine billion US dollars – but then doubts arose.
The Wall Street Journal published a report in 2015 that cast doubt on the effectiveness of the blood test developed by Theranos. The US Securities and Exchange Commission and the US Department of Justice started investigations, deals with large American pharmacies collapsed and in mid-2016 the business magazine Forbes corrected Holmes’ estimated fortune to “zero”. In the same year all Theranos laboratories were closed. In 2018 the company was finally dissolved.
Now Holmes and Theranos top manager Ramesh Balwani have to answer for fraud against investors and patients in court. “While reassuring doctors and patients that Theranos could provide accurate, fast, reliable, and cheap blood tests and results, Holmes and Balwani knew that Theranos’ technology was not really capable of consistently accurate and reliable results for certain blood tests to deliver ”, it says in the indictment.
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Elizabeth Holmes: Founder claims to have been under Balwani control
According to the Wall Street Journal Elizabeth Holmes will focus on long-time Theranos top manager Balwani on defense. She had a secret relationship with him for years. Balwani is said to have controlled Holmes and abused emotionally and sexually. The manager is said to have checked when Holmes slept, how she dressed and what she ate. According to the Wall Street Journal, an expert on sexual abuse is also set to testify for her in court.
Holmes also apparently claims that her judgment suffered due to the toxic relationship and that she actually thought Theranos was a worthwhile investment for investors. Balwani denies the allegations. A separate fraud trial against him is due to begin in 2022.
It is unclear whether Holmes’ defense strategy will work. The Wall Street Journal quotes a University of California psychiatrist who said that while post-traumatic stress disorder can affect judgment, it is unlikely to do so in years of cheating.
