The founder of the American biotech company Theranos, Elizabeth Holmes, was found guilty of fraud this Monday in a California court, in a case that has exposed the business culture of Silicon Valley.
Holmes is a rare example in the world of tech entrepreneurs, in an industry where investment is rife with promises that don’t materialize. His case also drew a dividing line between technological innovation and criminal dishonesty.
The jury spent a week analyzing the case and concluded that Holmes was guilty on four counts of fraud, considering that he deceived investors to put money in his ‘startup’, which promised to revolutionize blood tests with faster and cheaper tools than those used by traditional laboratories.
But the twelve-person panel, which listened for weeks to arguments from the defense and the prosecution, in addition to complex evidence, exempted the executive from four other charges and was unable to reach an agreement in relation to three of the charges she faced.
Holmes, 37, faces the possibility of spend years in jail. He will remain free and there will be another hearing next week to set the conditions of his bail. The date of the hearing in which his sentence will be set was not defined, nor was it pronounced when he left the court.
The ex-promise of Silicon Valley founded Theranos at age 19. She claimed the company would revolutionize the industry for diagnostic tests with machines that could deliver rapid results with just a few drops of blood, a project that attracted major investors and made her a multimillionaire at age 30.
He was considered the next figure in the tech world and raised millions of dollars from investors who gambled on his company. However, her empire collapsed when The Wall Street Journal published a report that argued that its machines did not fulfill the promised functionality and that the executive could have misled investors and patients.
Holmes placed the logos of pharmaceutical giants like Pfizer and Schering-Plow on Theranos reports that praised his company’s technology for analyzing blood tests, which were then sent to investors.
This did without the authorization of those companies, which was a linchpin in the prosecution’s arguments that she deliberately tried to increase Theranos’ credibility to gain financial backing.
Theranos attracted prominent figures such as media mogul Rupert Murdoch, former Secretary of State Henry Kissinger and former Secretary of Defense James Mattis.
Although they were all on the witness list, the defense only summoned Holmes, arguing that she believed in Theranos and worked hard on the project but failed. Holmes too He blamed his ex-partner and ex-boyfriend Ramesh ‘Sunny’ Balwani, an entrepreneur nearly twenty years her senior who was her right-hand man in Theranos.
To the point of tears, the American assured the jury that Balwani mistreated her and forced her to have sex, accusations that he refuted. Balwani will face another trial for his role in Theranos, whose charges he rejects.
The case has caused repercussions in the United States, for placing a figure in the world of technology on the bench and for placing the ambitious culture of entrepreneurs in the spotlight. It’s rare to see failed Silicon Valley entrepreneurs face fraud charges.
One of the most repeated cliches in the world of startups is “Pretend until you get it”, which supports the idea that convincing people to invest huge amounts of money in the hope that one day they will achieve their promised success works.