The highly-anticipated Theranos trial kicks off this week, with former CEO and founder Elizabeth Holmes facing up to 20 years in prison if found guilty.
But before the trial begins to dominate headlines for the coming weeks and months, there’s a lot to unpack, so let’s explain.
Who Is Elizabeth Holmes And What Is Theranos?
Way back in 2003, a 19-year-old Elizabeth Holmes dropped out of Stanford University with a goal of completely revolutionising how we test blood.
Holmes — who had a crippling fear of needles — then went on to found her company Theranos, which she claimed was developing proprietary technology that could perform blood tests with a fraction of the blood used in traditional tests.
By 2013 Theranos gained mainstream attention with Walgreens and Safeway signing up as potential customers, which resulted in the startup being valued at more than $US9 billion at one point.
Rupert Murdoch, Betsy DeVos and Walmart founders the Walton family were among the early investors in Theranos.
As for Holmes herself, she was basically the definition of #girlboss before Sophia Amoruso popularised the term that has now been memed into oblivion. Wearing a signature black turtle neck à la Steve Jobs and giving TedTalks with her uniquely deep voice, Elizabeth Holmes made a name for herself as a leading woman in STEM.
What Went Wrong?
To put it simply? Everything.
In 2015, The Wall Street Journal took a deeper look into the company, which appeared to be revolutionising the industry as we knew it.
In the report, the WSJ found that only a small portion of tests being done by Theranos actually used the company’s allegedly revolutionary testing machine, the ‘Edison’. Ironically, the device was named after the famed inventor who many believe to be a fraud.
In addition to many of the tests allegedly being done using diluted blood samples on other machines, the WSJ also questioned the accuracy of the tests altogether, much to the dismay of patients.
When Did Theranos Shut Down?
Following the WSJ report, Holmes and her former partner and company president Ramesh ‘Sunny’ Balwani were charged with fraud.
According to the lawsuit, Theranos, Holmes and Balwani deceived investors by leading them to believe the Edison could conduct comprehensive blood tests from just a few drops of blood when, in reality, the company allegedly “conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others”.
“Investors are entitled to nothing less than complete truth and candor from companies and their executives,” Steven Peikin, co-director of the SEC’s enforcement division, said in a statement. “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.”
The lawsuit resulted in a settlement with the Securities and Exchange Commission, and the permanent dissolution and liquidation of Theranos on September 4, 2018.
What Does Elizabeth Holmes Say About It?
Holmes has repeatedly denied the allegations but hasn’t really elaborated much on her own side of the story, likely due to ongoing legal issues. However, she shed a little light on the situation in an interview with CNBC back in 2015.
“This is what happens when you work to change things,” Holmes said. “First they think you’re crazy, then they fight you, and then all of the sudden you change the world.”
What Is Holmes Actually Charged With?
Formally, Elizabeth Holmes is charged with two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
“The charges stem from [Holmes’] allegedly deceptive representations about [Theranos] and its medical testing technology,” a statement from the US district court in Northern California states.
To put it simply, Holmes stands accused of lying about the efficacy of the tests and misleading investors regarding the revenue and internal workings of the company.
How Long Could She Go Away For?
If convicted, Holmes could be sentenced to a maximum of 20 years in prison.
How Did She Plea?
Elizabeth Holmes has pleaded not guilty. Balwani has also pleaded not guilty but is being tried separately in a trial set for next year.
Can I Watch The Trial?
Short answer: no.
The trial kicks off this week with more than 200 potential witnesses identified to give evidence, which means it could go on for weeks.
Unfortunately, there won’t be any cameras or online feed of the trial, so the only way to follow along is via news reporters in the courtroom.
How Can I Find Out More About The Theranos Story?
Bad Blood: Secrets and Lies in a Silicon Valley Startup – $13.99
The Inventor: Out For Blood In Silicon Valley – Binge
The Dropout: Elizabeth Holmes On Trial – ABC Audio (U.S.)