News·7 min read

Elizabeth Holmes and Theranos: Highlights From the Criminal Fraud Trial

Elizabeth Holmes
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January 4, 2022

Alleged crimes meet startup culture meets literal blood: Welcome to the Theranos trial aka the US v. Elizabeth Holmes. On Jan. 3, after a nearly four-month trial, Holmes was found guilty on four of 11 charges. She was convicted of conspiracy to commit fraud against investors, along with three charges of wire fraud. Each count holds a maximum prison sentence of 20 years. Yikes. Here’s everything you need to know about Holmes, her company, and the court case.

Elizabeth Holmes: From Self-Made Billionaire to Disgraced CEO

Holmes (the now-disgraced ex-CEO and founder of Theranos) dropped out of Stanford University in 2003 to start Theranos — a health tech company — whose name comes from the combination of the words ‘therapy’ and ‘diagnosis.’ Its goal: revolutionize medical blood testing. At the time, the company planned to do that with a machine called Edison.

  • Here’s the premise: Edison machines were Theranos’ bread and butter. The highly-lauded tool was marketed as one that would go above and beyond when testing blood, compared to traditional machines. It was promoted as a machine that could detect hundreds of illnesses (including cancer and diabetes) by using only a few drops of blood, as opposed to traditional blood tests — which can require long needles and multiple vials of blood. Edison was promoted as cheaper, faster, portable, and less painful for patients.

In 2013, Theranos started to attract real attention after it struck up a deal with Walgreens — which planned to install Edison machines in thousands of stores across the US. Investors flocked to the brand, including big names like media mogul Rupert Murdoch (who invested $125 million into Theranos), former Secretary of State Henry Kissinger, and former Secretary of Defense Jim Mattis, among others. Soon enough, the company’s valuation skyrocketed to more than $9 billion.

Holmes gained widespread media attention for her invention and company. She made it on the cover of magazines like Fortune and Forbes, was hailed as a visionary, and drew comparisons to Apple co-founder Steve Jobs. Something she took very seriously.

But in 2015, a bombshell Wall Street Journal report by John Carreyou said ‘hold up...something doesn't add up here.' The WSJ reported that Edison only handled a small portion of the company’s blood tests. And that many tests were actually done with traditional machines that Theranos purchased — which used diluted blood samples — calling into question the accuracy of the company’s test results. All of sudden, the unicorn’s downfall began.

In the years that followed, Theranos was sued by multiple investors for fraud. Prosecutors alleged that Theranos claimed they could generate more than $100 million in revenue in 2014, even though the defendants knew that wasn’t true. Eventually, the company’s blood-testing license was revoked by the US gov, and the company settled “massive” fraud charges with the Securities and Exchange Commission. As part of the settlement, Holmes agreed to pay a $500,000 penalty and was barred from serving as an officer or director of a public company for 10 years, among other things.

In June 2018, the federal gov indicted Holmes — alongside Theranos’ COO and president Ramesh “Sunny” Balwani — on federal wire fraud charges. (Side note: The duo was romantically involved while working at Theranos.) Both were accused of perpetrating a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. The indictment alleged that Holmes and Balwani knew that its analyzer (aka Edison) was throwing inaccurate results and wasn’t reliable. But they promoted it as capable anyway. Later that year, the company was dissolved.

What to Know About Holmes’ Case and Trial...

After years of delay (due to the COVID-19 pandemic and Holmes giving birth in July), the trial started in September in California. Holmes faced two counts of conspiracy to commit wire fraud and nine counts of wire fraud. She pleaded not guilty. (Note: Balwani — who faces the same charges and has also plead not guilty. And is expected to stand trial in February).

After nearly three months, the jury weighed whether to convict Holmes. And they had to decide ​​beyond a reasonable doubt that she intended to defraud investors and patients. On Jan. 3, they unanimously found Holmes guilty on four charges and acquitted her on four others.

  • But…The jury didn’t reach a verdict on three counts. The judge declared a mistrial for those charges, and federal prosecutors are expected to tell the court how they'd like to proceed during a future hearing. Holmes won’t be sentenced until all counts are a(count)ted for. (Meaning: She won’t be sitting behind bars quite yet.)

The months-long trial generated a number of headlines. Here are some of the highlights…

Opening arguments...Prosecutors argued Holmes lied to investors in order to make money for her struggling company. But the defense claimed that while Holmes made mistakes, she didn’t commit any crimes. And portrayed her as a hardworking exec who’s just human.

Witness testimony...Over the course of nearly three months, the prosecution called 29 witnesses. Holmes’ lawyers had successfully limited what some patients can say on the stand: The court determined that they can’t speak to any “physical, financial, or emotional harm” they experienced due to Theranos. Here’s what the jury learned about:

  • The company’s financial situation: One witness said Theranos racked up $585 million in losses by 2015. But that the company was telling investors it was bringing in the dough. Mattis said he invested $85,000 in the company. And a representative for former Education Secretary Betsy DeVos’ family said it was misled before investing $100 million.

  • Faulty tests: Brittany Gould, the first patient to testify, told the jury that a Theranos blood test falsely said she had a miscarriage. Her nurse practitioner, Audra Zachman, said she stopped referring patients to Theranos after the company blamed the false test on data entry. Meanwhile, a scientist for a biopharma company that Theranos contracted said they couldn’t “comprehensively validate” the blood test results. 

  • The lab machines: A former Theranos lab director said Holmes was aware that the lab machines weren’t working. But still moved forward with the Theranos launch. And that the company prioritized its image over patient care. But the defense tried putting the blame on him, saying he’s responsible for the lab. Erika Cheung, a Theranos whistleblower, also testified that the Edison machines failed quality control tests. 

  • Theranos’ practices: Witnesses shared how they became frustrated with the company’s methods. Including reps from former retail partners (hi, Safeway and Walgreens). Others spoke about how the company used an app that hid Edison machine errors from investors. The company’s fourth lab director said Theranos voided anywhere from 50,000 to 60,000 tests.

Holmes Took the Stand...In an unexpected move, the defense called Holmes for questioning. Here are some of the key takeaways from her six days of testimony:

  • On Theranos’ tech...Holmes maintained that reports from her staff led her to believe that the company’s tech was working. And that she trusted her crew about what was going on inside the lab. Later in her testimony, Holmes said the company switched to commercial blood analyzers because they could process a higher volume of blood tests. But said she didn’t tell clients like Walgreens.

  • On falsified docs...Holmes admitted that she added the logos of pharma companies — including Pfizer — to Theranos documents. Surprise: The companies hadn’t authorized the use of their logos. Holmes said she didn't mean any malicious intent andwishes she had done things “differently.”

  • On alleged abuse…The ex-CEO accused her former boyfriend and colleague Balwani of emotional and sexual abuse. Holmes said he was trying to make her into a “new Elizabeth.” And said the abuse affected the decisions she made at Theranos. Balwani has denied the allegations.

  • On Theranos employees and reports...Holmes said she regretted not taking her employees’ concerns about the company’s tech seriously. But said Theranos didn’t retaliate or threaten them. She said she “mishandled” The Wall Street Journal’s reporting on her company.

On Dec. 16 and 17, the prosecution and defense delivered their closing arguments. Prosecutors recapped the testimony from all 29 of their witnesses. And told the jury that the evidence maintained that Holmes “chose fraud over business failure.” The defense argued that it was never her intent to mislead anyone. And that Holmes was just trying to build tech that could “change the world.”


More than three years after the federal indictment was drawn up against Holmes, she was found guilty on four of the 11 counts against her. The long-awaited trial gave the world insight into how Theranos allegedly operated. Now, many are waiting to see how the final chapter of Theranos’ story could impact investors, medical professionals, patients, and Silicon Valley.

PS…if you want to learn more about Theranos and Elizabeth Holmes, we’ve got some recs for you to check out: Here’s a documentary, book, and podcast on the topic.

Updated on Jan. 4 to include Holmes’ guilty verdicts.

Updated on Dec. 23 to include closing arguments and details on the jury.

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