SAN JOSE, Calif. — Theranos founder Elizabeth Holmes, the one-time billionaire and darling of Silicon Valley who promised a revolutionary blood-testing technology, has been found guilty of four charges in her criminal fraud trial.
The jury of eight men and four women were handed the case in mid-December after three months of proceedings and testimony from 32 witnesses. Deliberations lasted more than 50 hours over seven days.
In the end, the jurors convicted Holmes of one count of conspiracy to commit wire fraud and three counts of wire fraud against specific investors. U.S. District Court Judge Edward Davila will sentence Holmes at a later date. She faces up to 20 years in prison.
Holmes was found not guilty on four charges and the jury determined there was no verdict on the other three. Jurors told Davila earlier on Monday that they were deadlocked on three of the 11 charges. Davila later declared a mistrial on those three counts and scheduled a status meeting for next Monday.
Once heralded as the next Steve Jobs, Holmes raised $945 million from high-profile investors including the family of Betsy DeVos, Rupert Murdoch and the Walmart-founding Walton family. Theranos, at its peak, was valued at $9 billion.
Holmes was ultimately convicted of defrauding PFM Healthcare Master Fund, a San-Francisco based health-care hedge fund, out of over $38 million; Lakeshore Capital Management, a fund connected to the DeVos family, of almost $100 million; and Mosley Family Holdings, an LLC associated with former estate attorney Daniel Mosley, of close to $6 million.
As the jury handed was handing down its decisions, Holmes appeared stoic, showing little emotion and looking straight ahead. After the verdict was read, she went over to her family and embraced them.
An image of CNBC program Mad Money appears on a screen as Theranos founder Elizabeth Holmes is cross examined by prosecutor Robert Leach at Robert F. Peckham U.S. Courthouse during her trial, in San Jose, California, November 30, 2021 in this courtroom sketch.
Vicki Behringer | Reuters
Since its start on Sept.8, the Holmes trial attracted worldwide media attention. In the final weeks of proceedings, journalists and spectators began lining up at 2 a.m. to obtain one of the 34 tickets for the main courtroom or 45 tickets for the overflow room.
Jurors heard impassioned pleas in closing arguments from the government and Holmes’ defense.
Assistant U.S. Attorney Jeffrey Schenk told the jury that Holmes “chose fraud over business failure. She chose to be dishonest with her investors and patients. That choice was not only callous, it was criminal.”
Schenk reminded the jury that Holmes’ own employees repeatedly told her the technology simply didn’t work, yet she kept raising money on false claims.
Prosecutors also tried to convince the jury to disregard Holmes’ claims that her top executive and then-boyfriend Ramesh “Sunny” Balwani abused her. Blaming Balwani was central to Holmes’ defense strategy.
However, thousands of private text messages between Holmes and Balwani, obtained by CNBC, undercut some of Holmes’ claims. The messages, which span from June 2011 to July 2016, revealed romantic musings between the two. They showed a high-flying lifestyle while their start-up was bleeding hundreds of millions of dollars.
“You do not need to decide whether that abuse happened to reach your verdict,” Schenk said. “The case is about false statements made to investors, false statements made to patients.”
In his closing argument an attorney for Holmes, Kevin Downey, told the jury that Holmes acted in good faith and “believed that she built a technology that could change the world.”
Downey said that Holmes never sold a share of stock in Theranos and “went down with the ship when it went down.”
In the first 11 weeks of trial, the jury heard from 29 government witnesses, including former Defense Secretary James Mattis, who testified that Holmes exaggerated the capabilities of the blood-testing technology, doctored reports, concealed the use of third-party devices and faked demonstrations.
In a shocking move, Holmes took the stand to tell her side of the story. Over seven days, Holmes, at times crying, testified that she truly believed in her company and often blamed her employees for what happened inside the lab. Holmes told the jury that she didn’t mean to deceive anyone including the investors and patients.
Theranos dissolved in 2018 following civil and criminal probes. Holmes was indicted that year, alongside Balwani, following a series of damning articles exposing the shortcoming and inaccuracies of Theranos’ technology by Wall Street Journal reporter John Carreyrou.
Holmes settled the SEC case, paying a $500,000 fine and agreeing to not serve as an officer or director of a public company for 10 years, without admitting or denying the charges. Balwani did not agree to the settlement and is fighting the charges. He’s expected to go on trial early this year.
Holmes’ trial began on Sept. 8, after four delays. The last came when she revealed she was pregnant. Holmes gave birth to her first child in July.
The day before her trial began, CNBC confirmed that Holmes was living with her partner, William “Billy” Evans, at a home in the Green Gables estate in Woodside, Calif. The 74-acre property, currently listed for $135 million, is in one of the wealthiest towns in Silicon Valley. During the trial, she was often accompanied by Evans and her mother and father. Several friends from her days at Stanford also showed up in court to support her.
The verdict on Monday followed an order by Davila that the jurors keep deliberating, even though they said they were deadlocked on three of the 11 charges. After jurors said for a second time that they couldn’t come to a unanimous agreement, Davila told them to produce their verdict on the other counts, if they were ready.
Holmes then returned to the San Jose, California, courthouse on Monday, along with her parents and Evans.