Silicon Valley Failure

How one CEO managed to fraud the entire country.


Nicholas Yoo, Editor

Theranos, a company once worth $9 billion, was considered the breakthrough health technology company, claiming to have state-of-the-art blood testing that required a very minimal blood sample with rapidly delivered results. Behind this company was the supposed genius Elizabeth Holmes, a Stanford University drop-out who dressed like her hero Steve Jobs with the traditional black turtleneck. 

After leaving Stanford early in her college years, she began to work on Theranos in the basement of her college house. As Holmes began to raise money for her startup company, eventually raising over $700 million dollars. Many high-profile individuals invested in Theranos including, the Cox Media family, media mogul Rupert Murdoch, former Secretary of Education Betsy DeVos and former Secretary of State Henry Kissinger.  Following the ways of Steve Jobs again, Holmes took care to operate Theranos under extreme autocracy and secrecy, taking three of her employees to court for alleged misuse of company trade secrets.  At one point, Holmes was the world’s youngest self-made female billionaire with a net worth of around $4.5 billion. 

But of course, before her fraud came to the public, scientists working in Theranos warned Holmes that the medical technology was not ready for public release nor did it produce consistent or accurate results. In August 2015, the FDA investigated Theranos and discovered multiple major inaccuracies from the test results of Theranos. 

Theranos and Elizabeth Holmes’ official downfall began when Wall Street Journal reporter John Carreyrou published his famous editorial: “Hot Startup Theranos Has Struggled With Its Blood-Test Technology.” Despite Holmes attempting to defend her company, the science community and investigators kept Theranos under intense scrutiny and by October 2016, Theranos was forced to shut down all of its laboratories and wellness centers. 

In June 2018, the Department of Justice announced that a federal grand jury indicted Holmes with nine counts of wire fraud and two counts of conspiracy to commit wire fraud. 

After several delays due to the pandemic and her pregnancy, Holmes finally made her appearance in the courtroom and following a four-month trial the jury rendered its final verdict, finding her guilty on one count of conspiracy to defraud and three counts of wire fraud. 

While her sentencing date is set in September 2022, each of her offenses carries a maximum of 20 years in prison, $250,000 fine, and requirements to pay her victims restitution.