Fraud Trial of Theranos Boss Begins

Photo by Tingey Injury Law Firm on Unsplash

On Wednesday, the trial of Elizabeth Holmes, founder of medical technology company Theranos, began. Prosecutors alleged she “lied and cheated” for money and fame.

Ms Holmes faces 12 fraud charges over her role at the failed company which was once worth $9bn, facing up to 20 years in prison if found guilty.

She is accused of deceiving patients and investors about the company’s testing technology, which was claimed to diagnose basic illnesses from a few drops of blood. Her defence team argues that she was naive and her company simply failed.

“Failure is not a crime. Trying your hardest and coming up short is not a crime,” said defence lawyer Lance Wade in his opening statement on Wednesday.

Former Theranos executive Ramesh “Sunny” Balwani faces the same charges next year. He was romantically involved with Ms Holmes.

Ms Holmes, who founded Theranos in 2003 aged 19, was dubbed the world’s youngest self-made female billionaire and hailed as the “next Steve Jobs”.

In 2015 and 2016, investigations by the Wall Street Journal revealed Theranos’ blood-testing devices did not work and the company was doing most of its testing on commercially available machines made by other manufacturers. She initially denied these reports.

Prosecutor Robert Leach alleges that, after running out of funds, Ms Holmes and Mr Balwani turned to fraud in 2009, lying about the tests and exaggerating the firm’s performance. Mr Leach said this included falsely claiming the tests were vetted by Pfizer and being used by the US military.

The case will probably take months and Ms Holmes will likely take the stand — a necessary gamble in the face of overwhelming evidence that the technology did not work.

Ms Holmes “dazzled” Walgreens into using the company’s services, and the company brought her fame.

“She had become, as she sought, one of the most celebrated CEOs in Silicon Valley and the world. But under the facade of Theranos’ success there were significant problems brewing.”

 The defence’s Mr Wade said Ms Holmes “naively underestimated” the business challenges but did not attempt to defraud investors. Ms Holmes has also alleged years of emotional and psychological abuse by Mr Balwani, who has denied the allegations. She is likely to testify as to how this affected her.

Source: BBC News

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