Elizabeth Holmes, the former CEO and founder of failed blood-testing startup Theranos, was found guilty on four charges of defrauding investors, capping off the stunning downfall of a former tech icon.
She was found not guilty on three additional charges concerning defrauding patients and one charge of conspiracy to defraud patients. The jury returned no verdict on three of the charges concerning defrauding investors, and Judge Edward Davila, who is presiding over the case, is expected to declare a mistrial on those charges, CNN reported.
The charges Holmes was found guilty of include one count of conspiracy to defraud investors, as well as three wire fraud counts tied to specific investors. Holmes faces up to 20 years in prison as well as a fine of $250,000 plus restitution for each count.
Holmes departed the courthouse hand-in-hand with her partner, Billy Evans, her mother and her father. She was met with a sea of cameras and reporters but did not comment in response to questions shouted from reporters.
In a statement, U.S. Attorney Stephanie Hinds applauded the verdict.
“The jurors in this 15-week trial navigated a complex case amid a pandemic and scheduling obstacles,” she said, in a statement that was read aloud by a spokesperson outside the courthouse. “The guilty verdicts, in this case, reflect Ms Holmes’ culpability in this large-scale investor fraud, and she must now face sentencing for her crimes.”
Notably, the jury of eight men and four women determined that Holmes was guilty on counts pertaining to investors, but none of the counts that pertained to defrauding patients. Over the course of its 11-week case, the government called just three patient witnesses to the stand, two of whom were individually tied to wire fraud counts.
The jury deliberated for over 50 hours before returning a verdict on eight of the 11 charges. Earlier Monday, the jury returned a note indicating they could not reach a unanimous verdict on three of the counts. In response, Judge Davila issued what is known as an Allen charge, instructing them to continue deliberating to try to reach a verdict.
However, hours later, the jury returned another note that indicated it remained unable to reach a verdict on those counts. The counts pertained to three of the investor wire fraud charges.
The verdict comes after a trial that spanned over three months at a federal courthouse in San Jose. More than 30 witnesses testified during the trial, culminating with Holmes, who took the stand for seven days in her own defence.
Holmes’ case marked a rare criminal fraud trial of a Silicon Valley entrepreneur. Jurors were tasked with determining whether Holmes was a well-meaning founder who made mistakes as she built her startup, as her defence posited, or whether she intentionally deceived investors and patients in order to help herself and her company succeed, as federal prosecutors alleged.
While Holmes was the one on trial, the outcome of her case could serve as a cautionary tale for others in Silicon Valley.
“This is a verdict that should matter not just to Silicon Valley but to the people who celebrate it, invest in it and use its products,” said Margaret O'Mara, a historian of the tech industry and professor at the University of Washington. “She was made possible by a Valley business culture that celebrated and encouraged very young, marginally experienced people.”
George Demos, a former Securities and Exchange Commission prosecutor and adjunct law professor at the UC Davis School of Law, called the verdict “a significant win for the government and sends a powerful signal to Silicon Valley that fraud cannot masquerade as innovation.”
While much of Silicon Valley has tried to distance itself from Theranos for a variety of reasons, including that the startup was a medical device manufacturer, the power and control Holmes wielded over Theranos had all the trappings of a tech company, O'Mara said.
“She was not just the CEO,” O'Mara said, “she was a very powerful CEO in the Silicon Valley model.”