Elizabeth Holmes was an undergraduate student who approached Stanford Medicine professor Phyllis Gardner for advice on her idea to develop a patch that would recognize microbes or infections and disperse the required antibiotics through the patient’s skin. However, her ideas were questioned by Dr. Gardner, who could not fathom how Holmes would implement her design and later described her as “a very inexperienced student with a grand idea based on illusions”
Holmes brushed aside Gardner’s advice founded Real-Time Cures, later renamed Theranos in 2003 and continued to work on her design for the patch and the Edison a device to conduct hundreds of tests from a single drop of blood. She was able to raise hundreds of millions of dollars from investors, but in 2015, The Wall Street Journal reported that the company’s claims were lies and that Holmes and others at the company had covered up results to hide that their technology didn’t work. The report prompted a major backlash against the company, ultimately leading to shut down its labs in 2016 and close down completely in the year 2018.
Theranos entered deals with both Safeway and Walgreens in 2011, but both partnerships ended after John Carreyrou published an article highlighting the Edison’s inconclusive and fluctuated test results. In the following years, Theranos faced several lawsuits from its investors, spurring the investigation that earned Holmes and Balwani multiple counts of wire fraud. Venture capitalists such as Timothy Draper and Oracle investor Don Lucas were among those deceived by Theranos’ false statements.
These allegations hold them accountable for endangering the lives of patients and acquiring millions of dollars by defrauding investors. Federal prosecutors indicted Holmes and the company’s former president and COO, Ramesh “Sunny” Balwani in 2017, charging the pair with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. The pair face 20 years in prison and hundreds of thousands of dollars in fines.
Their trial will begin in August 2020, with jury selection beginning on July 28th, 2020. The Wall Street Journal also reports that prosecutors have collected millions of pages of documents, and that the defense has complained about the amount that is being presented, and that the WSJ’s initial reporting might have unduly influenced the way the government regulators approached the company.
Holmes and Balwani bear charges of “massive fraud” from the U.S. Security and Exchange Commission (SEC) since Theranos’ downfall in 2015. They stand accused of amassing more than $700 million from private investors by making false claims regarding the financial and technological success Theranos was yielding. The jury further stated that “the tests performed on Theranos technology were likely to contain inaccurate and unreliable results.” Doctors and patients alike have been misguided by such test results, adding to the list of charges against the defendants.