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Elizabeth Holmes Trial: Jury Finds Founder Theranos Guilty of Four Fraud Cases

Elizabeth Holmes, founder of Theranos, has been found guilty of four of the 11 counts of fraud, closing a high-profile lawsuit that fascinated Silicon Valley and documented the missteps of the now-defunct blood testing startup.

The jury found Holmes guilty of several charges — including conspiracy to defraud investors — after a dramatic day when jurors said they were incarcerated on three of the criminal counts she faced.

On Monday, the seventh day of deliberation, the jury told U.S. District Judge Edward Davila that it was unable to reach a unanimous verdict on these three charges. In response, Davila encouraged them to deliberate further, but the judges later returned and made their final decision.

As the verdict was read, the founder of Theranos bowed her head, remained seated, and expressed no visible emotion. Her partner, Billy Evans, showed excitement before but seemed calm as the verdict was read.

Holmes was found guilty on four counts: one count of conspiracy to defraud investors, and three counts of wire fraud against investors.

Holmes, meanwhile, was acquitted of three charges, including one conspiracy to defraud patients and two charges related to patients receiving incorrect test results. One charge was dismissed earlier in the trial and the jury did not reach a verdict on the remaining three charges.

The verdict seals Holmes’ extraordinary rise and fall and could have far-reaching implications for the tech industry. It also marked an indictment of the hype machine that propelled Holmes to fame as she graced the covers of major magazines, headlined conferences and drew comparisons to Apple’s Steve Jobs.

The split sentences are “a mixed bag for the prosecution, but it’s a loss for Elizabeth Holmes because she’s going to jail for at least a few years,” said David Ring, a lawyer closely following the Holmes case.

Holmes, 37, faces jail time, though no date has been set. She pleaded innocent and is expected to appeal.

After the judge left the courtroom to meet the jurors individually, Holmes rose to hug her partner Billy Evans and her parents before leaving with her lawyers.

Over the course of nearly four months, federal prosecutors called 29 witnesses, detailing the missteps and alleged fraud Holmes committed during her 15-year reign as CEO.

Holmes founded the company after dropping out of Stanford at age 19, promising a revolutionary technology that could perform hundreds of health tests on just a drop of blood. But in the end, the company failed to deliver on its ambitious promise.

Once a charismatic figure, Holmes was initially hailed as a visionary. As Theranos grew, the company attracted major investors, including former Secretaries of State George Shultz and Henry Kissinger. At its peak, Theranos was valued at over $9 billion.

But cracks began to appear in the glossy surface in 2015 when the Wall Street Journal report found that the in-house tests contained massive inaccuracies and that the company conducted other tests using traditional blood collection methods and outside labs.

The fall of Theranos has been followed with perhaps even more fervor than its spectacular rise, inspiring multiple documentaries, a feature film and an upcoming television show. As of late August, crowds of reporters have lined up in front of a seat at the federal courthouse in San Jose, California, in the early morning hours.

During the trial, prosecutors portrayed Holmes as a strict, power-hungry leader who would go to great lengths to save her company’s image, suppress internal and external dissent and manipulate the press.

“She chose fraud over corporate failure,” District Attorney Jeff Schenk said in his closing statement. “She chose to be dishonest with investors and patients. That choice was not only heartless, it was criminal.”

As witnesses, the prosecution called for Theranos lab directors who testified that their concerns about the technology’s shortcomings were largely ignored. Meanwhile, investors like former US Secretary of Defense James Mattis said he and others were discouraged from scrutinizing the company for fear of missing out on opportunities.

Theranos founder Elizabeth Holmes leaves the federal courthouse in San Jose during her trial. Photo: Brittany Hosea-Small/Reuters

Holmes’ defense team tried to counter that image by portraying Holmes as an ambitious entrepreneur who did not knowingly commit fraud, but failed to understand the shortcomings of Theranos’ complex technology.

Those arguments came to a head when Holmes made the stunning decision to take the stand for her own defense, arguing that she was making decisions in good faith and not knowingly committing fraud.

Prosecutors repeatedly pointed to documents that Holmes admitted to being promoted before sharing with potential partners, adding the logos of drug companies and falsely implying that they had endorsed the methodology.

“I wish I hadn’t,” she told the jury in the stands. Her defense team stated in closing arguments that the logo evidence was “a distraction” and that Holmes was in talks with those companies at the time.

Her attorneys also put forth a line of defense that Holmes was abused by her former romantic and business partner Sunny Balwani, who was co-president of the company for ten years.

“There was another side of Holmes’ relationship with Balwani that the public has never seen,” attorney Lance Wade said in opening arguments, adding that “trust [Balwani] as her primary advisor was one of her mistakes”.

Some of the most powerful moments in the trial came when Holmes testified directly about Balwani’s alleged abuse, and got emotional when the prosecution called on her to read their romantic lyrics. She claimed he controlled what she did, who she spent time with, and even what she ate in an effort to make her a successful CEO.

Balwani has strongly denied allegations of assault against Holmes. He faces his own trial for fraud in 2022.

The Associated Press contributed coverage