Jury finds Elizabeth Holmes, founder of Theranos, guilty of defrauding investors

A U.S. jury has convicted Elizabeth Holmes, the founder of Theranos, of being guilty of defrauding investors in the blood testing startup.

The jury convicted Holmes of of investor fraud and conspiracy, but acquitted her on three counts of defrauding patients who paid for tests from Theranos as well as a related conspiracy charge.

The jury could not reach a decision on three counts related to other, individual investors.

A date for sentencing was not immediately set.

According to prosecutors, Holmes, 37, had swindled private investors between 2010 and 2015 by convincing them that Theranos’ small machines could run a range of tests on just a single drop of blood from a finger prick.

Holmes rose to fame in Silicon Valley in 2003 when at the age 19 she attracted high-profile wealthy investors including media mogul Rupert Murdoch and high-profile board members; in 2015 according to Forbes, her net worth was an estimated $4.5 billion.

Although she faces up to 80 years in prison when sentenced by U.S. District Judge Edward Davila, she is likely to get a much lower sentence.

Although Holmes was charged with misleading patients on the accuracy of Theranos’ tests, she was acquitted of those charges.

Holmes may appeal the verdict. Neither her attorneys nor a spokesperson for the prosecutors immediately responded to requests for comments.

The jury’s verdict came after seven days of deliberations.

The lawsuit shed light on Theranos’ failed endeavor to revolutionize lab testing.

The company had secretly relied on conventional machines manufactured by Siemens to run patients’ tests, said prosecutors.

Theranos collapsed following a report by the Wall Street Journal which suggested that its devices were flawed and inaccurate.

Holmes was acquitted on charges of defrauding patients after her attorneys argued there was no statistical evidence showing errors were happening at such a high rate that Holmes knew the tests were inaccurate.

Investors testified that Holmes made a range of misleading claims about Theranos, including that its machines were being used in the field by the U.S. military.

Prosecutors said had Holmes been truthful with investors and patients, the venture never would have attracted critical funding and revenue.

“She chose fraud over business failure. She chose to be dishonest,” said Assistant U.S. Attorney Jeff Schenk at the start of closing arguments. “That choice was not only callous, it was criminal.”

Testifying in her own defense at trial, Holmes said she never meant to deceive anyone and said Theranos’ lab directors were in charge of test quality.

In closing arguments, defense attorney Kevin Downey said the evidence did not show Holmes was motivated by a cash crunch at Theranos, but rather thought she was “building a technology that would change the world.”

“You know that at the first sign of trouble, crooks cash out,” but Holmes stayed, Downey said. “She went down with that ship when it went down.”

Categories: Creativity, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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