Former Theranos CEO Elizabeth Holmes, 38, was sentenced by a federal judge last Friday to more than 11 years in prison for misleading investors. The sentencing in Sacramento, California, brings Holmes’ lengthy legal saga to an end.
Holmes took responsibility for her deceit and told U.S. District Judge Edward Davila, “I regret my failings with every cell of my body.”
Holmes faced a maximum penalty of 20 years. Her legal team hoped that Holmes, a mother of a 1-year-old son with another baby on the way, would serve only 18 months. Her legal team claimed that, despite the company’s shortcomings, Holmes’ efforts to revolutionize the medical industry were well-intentioned.
Theranos was a health technology company that attempted to develop a machine that would run more than 200 blood tests with just a few drops of blood from a finger prick. Holmes hoped her machine, named “Edison,” would one day be able to run blood tests at home as a form of preventative medicine.
Holmes’ revolutionary idea promised to remove cost barriers and promote a healthier future. However, the Edison device did not function as Theranos claimed it did and failed to produce the intended results.
A college dropout without formal medical training, Holmes nonetheless attracted big-name investors.
In a CNBC interview before Theranos’ downfall, Holmes said, “First they think you’re crazy, then they fight you, then you change the world.”
Instead of admitting to Edison’s shortcomings, Holmes created a smoke and mirror show to give the illusion of success. For a while, the illusion worked. Theranos struck a deal with Walgreens, promising to deliver quick blood test results.
Unbeknownst to investors who had given Theranos more than $600 million, the blood tests were taken with regular blood draws and transported to a facility where they were tested on traditional machines. Workers at Theranos signed lengthy nondisclosure agreements to conceal the deceit.
Theranos’ lies were finally revealed in a 2015 Wall Street Journal article by John Carreyrou with the help of four former employees of Theranos’.
Following the report, Holmes’ house of cards came crumbling down. Theranos, once estimated to be worth $9 billion, lost its deal with Walgreens in June of 2016, and many top investors cut ties with the firm. To save the company, Theranos shrunk its workforce from 800 in 2015 to just under two dozen by June 2018. The company finally dissolved in September 2018.
Holmes and her former business partner and lover, Ramesh “Sunny” Balwani, were each charged with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Balwani, 57, will be sentenced on December 7.
Helen Raleigh, a journalist at the Federalist, attributed Holmes’ deception to a “fake it until you make it” ethos that runs deep in Silicon Valley.
Holmes’ company, legal saga, and enigmatic persona have been documented and dramatized in Carreyrou’s novel “Bad Blood,” an HBO documentary, and a Hulu series, “The Dropout.”
