A biotech CEO who revealed the cluelessness of America’s political class — including a former Secretary of State and Secretary of Defense — has just been convicted, despite her attempt to rely on the “abuse excuse.”
A federal jury in Maryland found former biotechnology CEO Elizabeth Holmes guilty today on four counts of fraud. To con investors, she got prestigious former high-ranking government officials such as Henry Kissinger and James Mattis to serve on her board. They utterly failed to detect the fraud.
Holmes was the founder and CEO of Theranos, a biotechnology firm that manufactured blood-testing equipment. The Justice Department indicted Holmes in 2018 on eleven fraud-related charges, alleging she willfully misled investors as to the effectiveness of the blood-testing technology.
Holmes sought to deflect blame for the fraud by claiming she was under the control of an abusive boyfriend at the time of the alleged fraud. She accused her then-boyfriend, Theranos’ Chief Operating officer Sunny Balwani, of abusing her. Balwani’s lawyers denied her accusations of abuse and called the allegations “salacious and inflammatory.”
Her “abuse excuse” defense did not work. “Eleventh-hour claims of mental or physical abuse are not well received as excuses, especially when the defendant has been living the high life for years,” says defense lawyer and former prosecutor Bill Portanova.
Holmes was found guilty on four charges, including three counts of wire fraud against Theranos investors and one count of conspiracy to commit wire fraud. The jury was unable to agree on two other wire fraud charges, and Holmes was found not guilty on the remaining wire fraud counts and one count of conspiracy to commit wire fraud. Holmes faces perhaps 15-20 years in prison under the federal sentencing guidelines, although the judge is not bound by those guidelines.
Holmes’ lengthy trial began all the way back in August, and focused on whether she was aware her blood-testing technology didn’t work and whether she deliberately lied to investors. Holmes initially indicated to the court an intent to blame an abusive boyfriend for making her commit the acts of fraud, a strategy that apparently never panned out in court.
Holmes founded Theranos in 2004, and within a decade, the company had landed major deals with Safeway and Walgreens, and attracted several big names to its board of directors, including former Secretary of State Henry Kissinger and former Secretary of Defense James Mattis.
Holmes depicted Theranos as a huge advance in blood testing, claiming its blood testing technology could detect hundreds of diseases from only a few drops of blood, rather than a vial, and do so without the need for a laboratory.
Theranos’ flaws were first revealed in a 2015 expose by The Wall Street Journal that discovered that Theranos was processing the vast majority of its blood samples using old-fashioned blood testing equipment rather than its patented technology. Holmes had hidden this fact from her firm’s investors and creditors, and one of Theranos’ largest investors sued for fraud the following year.
The jurors took a week of deliberations to find Holmes guilty. The trial of Holmes’ former lover and business partner Sunny Balwani is expected to begin next week.