Four of the eleven charges against Holmes were upheld at her high-profile trial in the winter, although she was cleared of any wrongdoing regarding patients at that time. Jurors convicted Sunny Balwani guilty of deceiving both investors and patients, and of conspiring to deceive them, by a unanimous vote.
Theranos wanted to do dozens of tests on a single drop of blood, which may have changed the healthcare business, according to the fictitious Hulu series “The Dropout.” Although it was valued at $10 billion, Theranos’ technology never actually worked, and in the most severe cases, patients were presented with dangerously incorrect medical results, after spending over a decade in research.
Holmes bears more responsibility than Balwani.
To avoid a joint trial, Holmes and Balwani pleaded guilty to separate counts of fraud and claimed that the 20-year-old senior had sexually and emotionally assaulted her. The judge allowed the motion, even though the court has yet to rule on such claims. As a result, Holmes was indicted on four counts, whilst Balwani was charged with twelve.
Even though he was an investor and officer at Theranos, Balwani’s lawyers argued throughout the trial that he was not involved in important decision-making. That $15 million investment ended up being worth more than $500 million at one time, but he never cashed out. A text from Balwani to Holmes that said, “I am responsible for everything at Theranos” was offered to the jury as evidence of his guilt.
Holmes’ defense tried to blame Balwani for the company’s catastrophic failure during her trial. A rare occurrence in a criminal fraud prosecution, she took the stand to describe their relationship. Holmes claimed that Balwani had such tight control over her and her company that he micromanaged her daily schedule, down to how she dressed and what she ate.
During cross-examination, Holmes indicated that he was “astonished” by his mediocrity and that he predicted that if he followed his instincts, he would fail.
The same evidence that led to the conviction of Holmes was used in the trial of Balwani. An important piece of evidence related to Theranos’ business relationship with Walgreens was the focus of the prosecution. Walgreens was unaware that the biotech startup’s flawed technology had been tested on third-party equipment in 41 of its shops. Many patients had their blood collected intravenously because Theranos’ devices couldn’t give accurate test results. What happened to all the money Walgreens spent on Theranos’ “wellness centers” when the business was still using the same old technology?
A Walgreens executive testified that, despite Balwani’s lawyers’ statements to the contrary, he worked closely with Balwani on the deal. A text from Balwani to Holmes claiming that he purposefully did not tell Walgreens that they were using different machines was also shown as evidence by the prosecution.
It was a difficult decision for Holmes to come to. Chris Lucas, Bryan Tolbert, and Alan Eisenman, who all testified in the trial, were not found guilty of three-wire fraud offenses. These three counts were ruled a mistrial by Judge Edward Davila. Balwani, on the other hand, was convicted of those counts.
Patients who obtained incorrect medical results at the hands of Theranos had to deal with the consequences, but Holmes was not held responsible.
When a woman with a history of losses was incorrectly told she was about to have another miscarriage, she was heartbroken. Another patient, Erin Tompkins, used Theranos because of its inexpensive prices and was identified as HIV-positive. She waited for three months before she could afford a second blood test to clear her name. It came out that she was HIV-free. During this time, a patient named Mehrl Ellsworth was given a fraudulent cancer diagnosis. Balwani was convicted of scamming patients despite the testimony of both Ellsworth and Tompkins. Holmes was only found responsible for harming investors, not the general public.
The Wall Street Journal’s devastating article on Theranos nearly seven years ago started the company’s demise. There have been various Hollywood adaptations of the story of the youngest self-made billionaire’s downfall, including a Hulu series on HBO and an impending Apple movie produced by Adam McKay.
There is a sense of finality once Balwani’s fraud trial ended, but Theranos’ lingering impact has remained in the minds of the public for a long time. There is a lesson to be learned from Theranos, but it’s not as though startup values have gone away. Because of this, the company credo of “move fast and break things” has become synonymous with Theranos and Holmes’ rise to notoriety. However, this strategy does not work when people’s health is at stake.
However, even though Theranos is hardly representative of the rest of the startup ecosystem, female biotech founders have reported that it is still more difficult to get investment since Holmes’ fall from grace. Even if you don’t count Holmes, women in tech have always had a harder time getting funding than their male counterparts. There will be less than 2% of venture capital investment going to companies with 100% female founders in 2021.
Holmes’ jury deliberated for seven days, whereas Balwani’s jury decided on the fifth day of deliberation. Both ex-Theranos executives are awaiting trial. Holmes will be sentenced on September 26, while Balwani will be sentenced on November 15, according to the court calendar. Theranos’ ex-executives have been released on bail for the time being.