Former Theranos CEO Elizabeth Holmes guilty on 4 charges in fraud case

Jan 04, 2022

Ben Burke Producer

By Ben Burke (Producer)

After hearing 32 witnesses over a three-month trial and seven days of deliberation, a jury found former Theranos CEO Elizabeth Holmes guilty on three counts of wire fraud and one count of conspiracy to commit fraud Monday. She was acquitted on four other counts of fraud and conspiracy. The video above shows her leaving the courthouse after the verdict, and includes reaction from prosecutors and a legal expert.

With the partial guilty verdict, Holmes was found to have duped investors into believing Theranos had developed a revolutionary medical device that could detect a multitude of diseases and conditions from a few drops of blood. The counts Holmes was found not guilty on alleged she deceived patients who paid for Theranos blood tests, too.

“The guilty verdicts in this case reflect Miss Holmes’ culpability in this large scale investor fraud,” U.S. Attorney Stephanie Hinds said in a statement. “She must now face sentencing for her crimes.”

Holmes faces up to 20 years in prison for each count. Legal experts say she is unlikely to receive the maximum sentence. A federal judge indicated he is likely to hold off on Holmes’ sentencing until the completion of a separate trial involving similar fraud charges against Sunny Balwani, who was Theranos’ chief operating officer from 2009 to 2016.

The jury deadlocked on three remaining charges. The judge anticipates dismissing the charges as part of a mistrial ruling that could come as early as next week.

“I think it’s a pretty significant movement in the case by the jury letting us know that they’re unable to reach a verdict on three of the counts,” legal analyst and former prosecutor Michele Hagans said Monday. “Clearly, this jury is being very cautious and they want to make sure they’re doing the right thing.”

The collapse of Theranos and the guilty verdict for Holmes are expected to serve as an indictment against a popular marketing strategy among Silicon Valley entrepreneurs, known as “fake it ’till you make it.” The strategy involved brash promises, bold exaggerations and boundless optimism, regardless of whether it’s warranted.

A Santa Clara University law professor who attended the trial said Holmes’ guilty verdict “will send a message to CEOs that there are consequences in overstepping the bounds.”

Abraham Simmons, a spokesman for the U.S. Attorney in San Francisco: “This statement is from U.S. Attorney Stephanie Hinds, and she has said the jurors in this 15-week trial navigated a complex case amid a pandemic and scheduling obstacles. I thank the jurors for their thoughtful and determined service that ensured verdicts could be reached. The guilty verdicts in this case reflect Miss Holmes’ culpability in this large scale investor fraud. And she must now face sentencing for her crimes. That’s all we have. Thank you.”

Michele Hagan, Legal analyst and former prosecutor: “So the verdict was guilty on four counts. One count was conspiracy to defraud investors and then guilty on three wire fraud counts against investors and then not guilty on three other counts related to the patients. And then I’m sorry four other counts related to patients and then three undecided. I think, you know, based on the testimony, the evidence I heard and saw, I think that’s a pretty fair decision. And again, I’m sure the jury, you know, indicates that they probably spent I mean, they spent over six days or so deliberating on this. And I think they, you know, I think they made the best decision they could make. I think it’s a fair decision at this point.”

“I had a feeling it would probably be, I call it a compromised verdict, where they find guilty or not, you know, on some counts, not guilty on another. And I, you know, given their question this morning where they were asking the judge, ‘now we are unable to come to a unanimous verdict on three counts’, I think that indicates that they really wanted to get it right and they were trying to follow the procedure and they are asking the judge for guidance.”

“Because it was undecided, the prosecution has an opportunity if they want to retry her on those three counts. And it all depends on how you know how hung it was. In other words, how many were for guilty or not guilty? And I’m sure the prosecution is evaluating whether they would try. But, you know, given the amount of counts that they came, where they found her guilty and the exposure of the sentencing that she’s looking at, they may not refile and try to go after on those counts.”

“So sentencing, probably a month or two out, I don’t know when the judge set the hearing yet, I don’t know if it’s been set yet, but there’ll be a pre-sentencing report done by the probation department. And just to give you one example, the average sentence in 2020 for one count of wire fraud was 21 months. But in this case, because of the amount of money that she was defrauded and the jury found her guilty of, which was 144 million dollars defrauding investors, that significantly increases her exposure to more time. But it’s the judge’s decision to make as to what the proper sentence will be. And I’ve no doubt she’ll appeal it, and she should appeal it. You know, she should stand up for her rights and make sure that the evidence supports each one of these verdicts. And you know, it’s not over until the appeal’s over.”

“It’s a wake up call to Silicon Valley or to anybody out there, any business owner out there who makes statements that are misrepresentations or false or fraudulent, and they need to be very careful about what they say to people, make sure that that’s truthful and they can back it up and that their website, the statements they make on websites and their agreements are truthful. Because wire fraud is no joke and you’re looking at up to 20 years in prison on each count.”