Fall of tech star Elizabeth Holmes: If convicted in trial, entrepreneur once fortune was $ 4.5 billion could face 20 years in prison


Just six years ago, Elizabeth Holmes seemed destined to fulfill her dream of becoming Silicon Valley’s next superstar. She has appeared on the covers of business magazines describing her as the youngest self-made billionaire woman in history, former President Bill Clinton reverently quizzed her about her thoughts on technology, then Vice President Joe Biden saluted his ideas as a source of inspiration.

Holmes is now set to go to a San Jose, Calif. Courtroom to defend against criminal allegations describing her as the devious mastermind of a fraud that duped wealthy investors, former officials from the US government and patients whose lives have been put at risk by blood test technology. which has never failed to keep its bold promises.

If found guilty by a jury in a trial that opens Wednesday, Holmes could face 20 years in prison – a startling reversal of fortune for an entrepreneur whose fortune was once estimated at $ 4.5 billion. dollars. That amount represented her 50% stake in Theranos, a biotech start-up in Palo Alto, Calif., Which she founded in 2003 after dropping out of Stanford University at the age of 19.

As well as rehashing Holmes’ astonishing rise and fall, the three-month essay can also shed light on how style sometimes overshadows substance in Silicon Valley, which prides itself on a philosophy of logic, data and science rather than emotion.

The Holmes Saga has raised the curtain on a ‘pretend until you do’ strategy that has been embraced by other ambitious startups who believe that with just a little more time to hone their promised breakthroughs , they can join the hallowed ranks of Apple, Google, Facebook and other tech pioneers who have sprung up in the 50 mile corridor from San Francisco to San Jose.

“I left thinking she was just a fanatic who really believed her technology would really work, so maybe she could fake a bit,” said author Ken Auletta, who has written extensively. on Silicon Valley and who had behind-the-scenes access. to Holmes for a profile in 2014 in The New Yorker magazine. “I left thinking that she really believed that what she was doing was a public good. And if it had worked, it would have been a public good.”

At the very least, Holmes proved to be a master of marketing while also speculating that Theranos would help people avoid having to say “goodbye too soon” to loved ones.

Theranos – a name derived from the words “therapy” and “diagnosis” – purported to perfect technology that could test hundreds of diseases by extracting a few drops of blood from a quick finger prick performed at “wellness centers” in through us

Holmes promised that the samples would be tested in a specially designed machine named after famous inventor Thomas Edison. In his spiel, they would cost a fraction of traditional tests that require a doctor’s referral and vials of blood drawn before processing in the lab that could take days to deliver results.

Told in Holmes ‘husky voice, the story sounded so compelling that it was able to build a well-connected board of directors that helped bolster Theranos’ credibility. The board of directors included former US Secretaries of State Henry Kissinger and George Shultz, former US Secretary of Defense James Mattis, former Senator Sam Nunn, former Wells Fargo Bank CEO Richard Kovacevich and his former Stanford adviser Channing Robertson, who has stepped down from his permanent post. as a professor of chemical engineering after deciding that she had Beethoven-like qualities.

Holmes tried to mold himself to Apple co-founder Steve Jobs, even adopting his habit of wearing mostly black turtlenecks.

In addition to recruiting an impressive board of directors, Holmes also raised nearly $ 900 million before Theranos collapsed, sparked by a series of explosive Wall Street Journal articles that exposed serious flaws in the technology of the company.

The Journal articles sparked a U.S. Food and Drug Administration investigation and a civil lawsuit filed by the Securities and Exchange Commission. The SEC case resulted in a $ 500,000 settlement without an admission of wrongdoing, but still turned out to be the end of Theranos, which closed in 2018.

Significant amounts of money paid to Theranos came from billionaire investors including media baron Rupert Murdoch, the Walton family of Walmart, the DeVos family which included former US Secretary of Education Becky DeVos, business mogul Mexican Carlos Slim and former Oracle CEO Larry Ellison.

Some of those investors, as well as some of the former members of Theranos’ board of directors, are expected to testify at the trial chaired by U.S. District Judge Edward Davila.

Holmes can take the witness stand, based on court documents filed before trial. If she does, her lawyers have indicated in recently unsealed documents that she will testify that some of her statements and actions during the management of Theranos were the result of “intimate partner violence” inflicted by the COO. of the company and her secret lover, Ramesh “Sunny” Balwani, who faces multiple fraud charges in a separate trial set to begin next year.

“It will be extraordinary,” predicted Auletta, who observed and interviewed Holmes and Balwani together on several occasions as he wrote his profile. “I felt like she was the dominant one in this relationship. If she started a sentence, he would wait for her to finish it.”

Balwani’s attorney denied Holmes’ claims.

It remains to be seen whether the license plate of the car Balwani used to drive to Theranos’ former headquarters will be part of the evidence submitted during the trial. It read: “VDVICI”, abbreviation of the triumphant words that Julius Caesar would have written in the Roman Senate, “veni, vidi, vici” – Latin meaning “I came, I saw, I conquered”.

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