The trial of Elizabeth Holmes, the once-lionized biotech founder whose fall from grace captured worldwide attention, is expected to finally commence Tuesday, more than three years after her blood-testing company Theranos was accused of massive fraud.
Holmes, 37, and her business partner Ramesh “Sunny” Balwani each face 10 counts of wire fraud and two counts of conspiracy to commit wire fraud, stemming from accusations that they willfully misled consumers and investors with a revolutionary blood testing technology that simply did not exist. The scheme skyrocketed Theranos’ valuation to a staggering $9 billion while allegedly defrauding investors and providing consumers with false medical reports.
Holmes and Balwani pleaded not guilty to all charges in 2018 after a federal grand jury elected to indict them. Holmes stepped down as Theranos’ CEO, but remained on the company’s board until its dissolution later that year.
The trial was slated to kick off in August 2020, but was delayed due to the COVID-19 pandemic, and then delayed again due to Holmes’ pregnancy. She gave birth to a baby boy last month.
The trial is expected to finally begin Tuesday with jury selection ― which could prove complicated, given how highly publicized the claims against Theranos have been for the past several years.
Following next week’s jury selection, Holmes is scheduled to stand trial on Sept. 8 in federal court in the Northern District of California. If convicted, she could be sentenced to up to 20 years in prison and face a fine of up to $3 million.
In 2015, questions began arising about the validity of Theranos’ machines, which claimed to be able to quickly test dozens of health metrics based on a single drop of blood ― something that typically takes several vials and a lot more time. The Wall Street Journal’s John Carreyrou led the charge, finding through his investigations that Theranos was allegedly running its blood tests on standard machines produced by other companies, and that nearly everything for which Holmes had earned so much acclaim was nothing but an elaborate scam.
That investigation, which would spawn a litany of documentaries, scripted movies, television series, podcasts and books, was the beginning of Holmes’ downfall. The companies that had partnered with Theranos to test their customers on the machines ― Walgreens, Safeway and others ― eventually severed their partnerships with her, and some sued. A settlement she reached with the U.S. Securities and Exchange Commission over additional fraud allegations in 2018 barred her from serving as a director or officer of any public company for a decade.
The ordeal marked a stunning reverse of fortune for Holmes, who launched Theranos when she was 19 after dropping out of Stanford University. The story of a young, female entrepreneur who styled herself as the next Steve Jobs drew fawning media attention and high-profile investors, including Walmart founders the Walton family, media magnate Rupert Murdoch and former Education Secretary Betsy DeVos.
Many ex-government officials joined Theranos’ board, including former U.S. secretaries of state George Shultz and Henry Kissinger. Shultz’s grandson Tyler Shultz, once an employee at Theranos, was one of the whistleblowers who helped expose the company’s alleged fraud.
Holmes and Balwani, with whom she was once in a romantic relationship while running the company, agreed to stand trial separately. His proceedings are expected to start in January.