Who is Elizabeth Holmes? Holmes was the founder and CEO of Theranos Inc., a medical diagnostic company focused on minimally invasive laboratory testing. Founded in 2003, Holmes relied on funding from investors to build infrastructure and develop the company’s big idea. Then, in 2013, their device, the Edison, was launched and partnered with drugstore company Walgreen Co. to provide laboratory blood testing for patients, using only a few drops of blood.
Traditional blood testing requires five to 10 mL of blood per tube by a large needle. The Edison was meant to run more than 1,000 medical tests using a few drops of blood, a technique not previously made possible by medical technology.
Theranos’s groundbreaking technology caused Holmes to be dubbed the world’s youngest self-made female billionaire at the age of 30 in 2014. The company had provided over 200 diagnostics tests, was licensed to operate in almost every state and had a certification by the federal regulation center overseeing medical laboratories, the U.S. Centers for Medicare and Medicaid Service.
In late 2015, articles published in The Wall Street Journal, The Washington Post and other major news outlets argued that despite Holmes’s claims, Theranos exaggerated the Edison’s ability to run tests, as it had only been used for a fraction of what was promised. The articles also pointed out the company’s decision to release aggregate testing data, which is a summary of data from multiple sources, instead of individual data from each test. They were also under scrutiny for their compliance issues with the company’s laboratory, for delaying to give federal authorities full access to their device and for delaying having their devices be peer reviewed by scientists.
In July of 2016, this led to the U.S Centers for Medicare and Medicaid Service notifying Theranos that they failed to provide documentation proving they corrected previous errors and complied with federal regulation. The consequence was that the company was blocked from receiving reimbursements from Medicare and Medicaid, and Holmes was forbidden from operating and possessing a medical laboratory for two years.
In March of 2018, Holmes and Theranos’s former president, Ramesh “Sunny” Balwani, were charged with fraud by the U.S. Securities and Exchange Commission for taking over $700 million from investors for a false product. Holmes settled those charges by paying a $500,000 fine, surrendering her 19 million shares in Theranos, and agreeing to be barred from being an officer or director of a public company for 10 years.
In June of 2018, Holmes stepped down as CEO when she and Balwani were indicted for wire fraud. Late 2018 marked the end of Theranos.
Since the rise and fall of Theranos, there have been many pop culture adaptations of the company’s story, including the documentary “The Inventor: Out for Blood in Silicon Valley” by HBO, the book “Bad Blood: Secrets and Lies in a Silicon Valley Startup” by John Carreyrou, and the recent TV show “The Dropout” on Hulu.
In January of 2022, Holmes was found guilty of one count of conspiracy to defraud investors and three wire fraud counts out of 11 federal charges. Then, in November of 2022, she was sentenced to 11 years and three months in prison, plus an additional three years of supervision after her release and a $400 fine. Due to the waiting period prosecutors granted her for being pregnant, Holmes is meant to start serving her sentence on April 27, 2023.
In December of 2022, Holmes appealed the conviction, believing she was wrongly or too harshly convicted and wanting the opportunity to share specific errors that may have occurred during the trial. She also asked Judge Edward Davila, who sentenced her, to let her remain free until after the appeal is over, which is predicted to take more than a year.
This caused prosecutors to file a claim arguing that she should start her sentence sooner instead of living on her estate that is “reported to have $13,000 in monthly expenses for upkeep.” They also argued that Holmes poses as a flight risk, stating that “[t]he government became aware on January 23, 2022, that Defendant Holmes booked an international flight to Mexico departing on January 26, 2022, without a scheduled return trip…Only after the government raised this unauthorized flight with defense counsel was the trip canceled.” Now, prosecutors are saying that her incentive to flee the country is higher and that she has the means to flee.