© Martin E. Klimek via Imagn Content Services, LLC
Syndication: USA TODAY
SAN JOSE, Calif. (AP) — In a case that exposed Silicon Valley’s culture of hubris and hype, Elizabeth Holmes was convicted Monday of duping investors into believing her startup Theranos had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood.
A jury convicted Holmes, who was CEO throughout the company’s turbulent 15-year history, on two counts of wire fraud and two counts of conspiracy to commit fraud after seven days of deliberation. The 37-year-old was acquitted on four other counts of fraud and conspiracy that alleged she deceived patients who paid for Theranos blood tests, too.
The verdict came after the eight men and four women on the jury spent three months sitting through a complex trial that featured reams of evidence and 32 witnesses — including Holmes herself. She now faces up to 20 years in prison for each count, although legal experts say she is unlikely to receive the maximum sentence.
The jury deadlocked on three remaining charges, which a federal judge anticipates dismissing as part of a mistrial ruling that could come as early as next week. The split verdicts are “a mixed bag for the prosecution, but it’s a loss for Elizabeth Holmes because she is going away to prison for at least a few years,” said David Ring, a lawyer who has followed the case closely.
Federal prosecutors depicted Holmes as a charlatan obsessed with fame and fortune. In seven days on the witness stand, she cast herself as a visionary trailblazer in male-dominated Silicon Valley who was emotionally and sexually abused by her former lover and business partner, Sunny Balwani.
The trial also laid bare the pitfalls of a swaggering strategy used by many Silicon Valley entrepreneurs — conveying a boundless optimism regardless of whether it’s warranted, known as “fake it ‘til you make it.” That ethos helped hatch groundbreaking companies such as Google, Netflix, Facebook, and Apple — the latter co-founded by one of Holmes’ heroes, Steve Jobs.
Her conviction might lower the wattage — at least temporarily — on the brash promises and bold exaggerations that have become a routine part of the tech industry’s innovation hustle.
The trial’s outcome “will send a message to CEOs that there are consequences in overstepping the bounds,” predicted Ellen Kreitzberg, a Santa Clara University law professor who attended the trial. But she also believes greed will keep hyperbole alive in Silicon Valley.
“Investors are still going to want to make more money on a promising idea.,” Kreitzberg said. “They will always go in for the golden ring.”
Holmes remained seated and expressed no visible emotion as the verdicts were read. She bowed her head several times before the jury was polled by U.S. District Judge Edward Davila. After the judge left the courtroom to meet with jurors individually, Holmes got up to hug her partner, Billy Evans, and her parents before leaving with her lawyers.
During a brief break after the verdict was read, a visibly shaken Evans stepped into the courthouse hallway to get a get drink from a water fountain while apparently trying to compose himself.
Holmes did not respond to questions about the verdicts lobbed at her during a three-block walk from the courthouse to the nearby hotel where she has stayed during jury deliberations.
She was to remain free on bond while awaiting sentencing, which will be determined by the judge. The judge indicated that he is likely to hold off on the sentencing until the completion of a separate trial involving similar fraud charges against Balwani, who was Theranos’ chief operating officer from 2009 to 2016. Balwani’s trial is scheduled to start next month in the same San Jose courtroom where Holmes’ legal saga unfolded.
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