The Case Skimm'd: Theranos

Published on: Sep 1, 2021fb-roundtwitter-roundemail-round
Elizabeth HolmesGetty Images

Alleged crimes meet startup culture meets literal blood: Welcome to the Theranos trial aka the US v Elizabeth Holmes. With opening arguments starting on Sept 8, we’re breaking down everything you need to know about Holmes, her company Theranos, and the court case.

From Self-Made Billionaire to Disgraced CEO

Holmes (the now-disgraced ex-CEO and founder) 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’s 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 reportedly invested more than $100 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’s COO and president Ramesh “Sunny” Balwani — on federal wire fraud charges. (Side note: The duo were 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.

Here’s the Latest On the Trial...

After years of delay (due to the COVID-19 pandemic and Holmes giving birth in July), the trial around alleged wire fraud is finally underway. It’s taking place in California and officially kicks off on Sept. 8 with opening arguments. 

Here’s what’s happened so far… 

  • Aug 31: Holmes’s legal team and the US attorney’s office began jury selection. They need 12 jurors and five alternates to serve. Would-be jurors were asked to answer a detailed questionnaire about their hobbies, lifestyle, media exposure, and experience with the legal system. They were also asked if they were vaxxed against COVID-19

Psst…The trial will not be televised. So check this section for updates. We’ll be Skimm'ng it till the gavel hits the coaster-looking thing.

Here’s What Else You Need to Know About the Case…

The charges...Holmes and Balwani are each facing two counts of conspiracy to commit wire fraud and nine counts of wire fraud. If convicted, they would both face up to 20 years in prison, hefty fines, and need to provide victim compensation. Note: Holmes and Balwani had their cases separated, and he’s expected to stand trial in early 2022. Both have pleaded not guilty.

The witnesses…The prosecution (aka the US gov) proposed a witness list of nearly 280 people. And it’s full of high-profile names (like Murdoch and Mattis). Eleven patients and nine doctors are also expected to testify. But Holmes’s lawyers have already had some success in limiting 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. Experts say that a central part of the prosecution’s argument will be around Holmes’s intent (aka what did she know, when did she know it, and did she intend to deceive).

Defense strategy…It appears that Holmes’s attorneys may try to point the finger at Balwani. According to newly unsealed court documents, Holmes plans to accuse Balwani of emotional and sexual abuse. Balwani’s attorneys said that he “adamantly denies” the claims. But they did acknowledge that Holmes’s legal team will introduce evidence that could show that Balwani was verbally abusive and controlling — going as far as to tell Holmes what to eat and wear.

Another possibility for the defense is the argument that she was following the Silicon Valley startup model of “fake it till you make it.” The defense may say that Holmes believed her company could achieve its goals in the long term and that it would have eventually delivered on its promise. And now she’s being singled out for an approach that many startups take. But a court order says Holmes vowed to not use the ‘singled out’ argument. Either way, the result of this case could have implications for tech startup culture. 


More than three years after the federal indictment was drawn up against Holmes, her long-awaited trial is finally set to begin. And many people will be awaiting the verdict in the final chapter of Theranos’s story, which could have major impacts on 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. See you here for our next update.

Skimm'd by Kamini Ramdeen and Maria McCallen

live smarter.

Sign up for the Daily Skimm email newsletter.

Delivered to your inbox every morning and prepares you for your day in minutes.