Why Theranos founder Elizabeth Holmes is facing trial
- Elizabeth Holmes' company Theranos claimed to have revolutionised healthcare
- It claimed its machine Edison could diagnose up to 200 conditions with just a drop of blood
- By 2018, the company had collapsed with Holmes facing up to 20 years in prison and a nearly $3 million fine
Elizabeth Holmes was on top of the world as a 30-year-old in 2014 as her biotech startup Theranos claimed to have developed technology touted to revolutionise healthcare. The company, with a peak valuation of $9 billion, claimed its Edison machine could diagnose conditions such as cancer and diabetes in quick time with just a drop of blood – eliminating the need for needles and tedious lab testing procedures.
She soon became “the world’s youngest self-made billionaire” as she was hailed by Forbes magazine, while another business magazine Inc called her the “next Steve Jobs”.
Then why is she on trial?
Holmes, a dropout form Stanford University, claimed the machine could perform life-saving tests cheaply and practically anywhere, saving time and money for both patients and doctors as it needed just a drop of blood from a finger prick and could function in locations such as the next-door grocery store. It claimed Edison could diagnose over 200 conditions.
She was known for her fascination of Apple’s iconic founder Steve Jobs, styling her look after him as she was known for wearing the signature turtleneck and referring to Edison as the “iPod of healthcare”.
She even used a marketing strategy similar to Apple’s.
Her story drew investors to the project, including Oracle co-founder Ellison, Walmart founders the Walton family, media tycoon Rupert Murdoch and former US Secretary of Education Betsy DeVos.
However, by 2015, the company was exposed as a Wall Street Journal story – based on whistle blowers and data – showed that technology worked inconsistently, if at all, and that the reports it produced were secretly based on lab-based procedures, according to Al Jazeera.
By 2018, the company had collapsed with Holmes, now 37, facing up to 20 years in prison and a nearly $3 million fine. Also facing the same fraud charges are former Theranos president and CEO Ramesh ‘Sunny’ Balwani, who was once in a relationship with Holmes.
Both face two counts of conspiracy to commit wire fraud, nine counts of wire fraud for allegedly engaging “in a multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients”.
They are also accused of using a “a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information to defraud potential investors,” according to the indictment.
They are being tried separately, with Balwani’s trial scheduled for January next year, while the jury selection in Holmes’ trial is set to begin on Tuesday.