Fallen US biotech star Elizabeth Holmes was convicted on Monday of defrauding investors in her blood testing startup Theranos in a high profile case seen as an indictment of Silicon Valley culture.
Holmes is a rare example of a tech manager held accountable for a burned-out company in an industry littered with the corpses of money-losing companies that once promised untold fortunes.
Her case highlighted the blurred line between the hustle and bustle that shapes the industry and overt criminal dishonesty.
It took the jury seven days of deliberation to reach their verdict and found them guilty of leading investors to put money into an allegedly revolutionary test system on four counts.
But the panel, which had listened for weeks with sometimes complex evidence, also acquitted her on four counts and was unable to pass judgment on three others.
“The convictions in this case reflect Ms. Holmes’ guilt for this large-scale investor fraud and she must now be convicted of her crimes,” said US Attorney Stephanie Hinds in a prepared statement read by a representative outside the courthouse .
Holmes made no comment when she left the court when asked if she would appeal.
The 37-year-old now faces 20 years imprisonment for every conviction. She will be released next week before another bail hearing next week. No date has been set for the sentencing.
Holmes had vowed to revolutionize health diagnostics with self-service devices that could perform a series of tests with just a few drops of blood, a vision that attracted high-profile supporters and made her a billionaire by the age of 30.
She was hailed on the covers of magazines as the next tech visionary and raised mountains of investor money, but it all collapsed when the Wall Street Journal coverage revealed the machines were not working as promised.
Prosecutors spent eleven weeks presenting over two dozen witnesses as they carefully advanced their argument that Holmes knew their technology was too short and that they deliberately misled investors and patients.
She personally placed the logos of pharmaceutical giants Pfizer and Schering-Plow on Theranos reports celebrating the company’s blood testing technology, which were then shared with investors.
This was done without the firms ‘permission and was an integral part of the prosecution’s reasoning that they were deliberately trying to inflate Theranos’ credibility in order to attract backers.
‘Fake it till you make it’
Although well-known Theranos investors like Rupert Murdoch and Henry Kissinger were on the witness list, the most prominent financier to take a stand was former Pentagon chief Jim Mattis.
The defense cited only one significant witness, Holmes himself, as they argued that the fallen entrepreneur really believed in Theranos’ vision, invested heavily in its success, and simply failed.
Holmes also tried to shift some of the blame on Ramesh “Sunny” Balwani, a friend nearly two decades older than her who she brought with her to run her business.
She fought back tears when she told the jury that Balwani vilified her and sexually intruded himself when he was angry – allegations he has emphatically denied.
Because of his role in the operation of the company, he has to answer separately in court and has not pleaded guilty.
Beyond the masses of company documents, highly detailed technical questions and Holmes’ sometimes emotional statement, the question of the nature of Silicon Valley lurked.
One of the most common stereotypes in the startup world is “Fake it till you make it,” where ambitious entrepreneurs with an idea that almost works trick people into investing huge sums in the hope that one day it will works.
It is extremely rare for founders of failed Silicon Valley companies – of which there are many – to be fraudulently prosecuted for unfulfilled promises and unpaid investments.
Some tech personalities, like former Reddit boss Ellen Pao, said sexism could have been a factor in the indictment, but others argued that Holmes went too far to support her ever-dissolving vision.
Following the Wall Street Journal’s 2015 coverage that questioned whether Theranos’ machines were working as promised – and eventually toppling the company – Holmes went on the offensive in the media.
“First they think you’re crazy, then they fight you, then suddenly you change the world,” she said in a TV interview.