Elizabeth Anne Holmes (born February 3, 1984) is an American biotechnology entrepreneur who was convicted of
fraud in connection to her blood-testing company,
Theranos.[2] The company's
valuation soared after it claimed to have revolutionized
blood testing by developing methods that needed only very small volumes of blood, such as from a
fingerprick.[3][4] In 2015, Forbes had named Holmes the youngest and wealthiest self-made female billionaire in the United States on the basis of a $9-billion valuation of her company.[5] In the following year, as revelations of fraud about Theranos's claims began to surface, Forbes revised its estimate of Holmes's
net worth to zero,[6] and Fortune named her in its feature article on "The World's 19 Most Disappointing Leaders".[7]
The decline of Theranos began in 2015, when a series of journalistic and regulatory investigations revealed doubts about the company's claims and whether Holmes had misled investors and the government. In 2018, the
U.S. Securities and Exchange Commission (SEC) charged Theranos, Holmes, and former Theranos chief operating officer (COO)
Ramesh "Sunny" Balwani with raising $700 million from investors through a "massive fraud" involving false or exaggerated claims about the accuracy of the company's blood-testing technology; Holmes settled the charges by paying a $500,000 fine, returning 18.9 million shares to the company, relinquishing her voting control of Theranos, and accepting a ten-year ban from serving as an officer or director of a public company.
In June 2018, a
federal grand jury indicted Holmes and Balwani on fraud charges. Her trial in the case of U.S. v. Holmes, et al. ended in January 2022 when Holmes was convicted of defrauding investors, and
acquitted of defrauding patients.[8] She was sentenced to serve 11+1⁄4 years in prison, beginning on May 30, 2023. She and Balwani were fined $452 million to be paid to the victims of the fraud. The credibility of Theranos was attributed in part to Holmes's personal connections and ability to recruit the support of influential people, including
Henry Kissinger,
George Shultz,
James Mattis, and
Betsy DeVos, all of whom had served or would go on to serve as
U.S. presidential cabinet officials.
Elizabeth Holmes was born on February 3, 1984, in
Washington, D.C.[9] Her father, Christian Rasmus Holmes IV, was a vice president at
Enron, an energy company that later went bankrupt after an
accounting fraud scandal. Her mother, Noel Anne (
née Daoust), worked as a Congressional committee staffer.[10][9] Christian later held executive positions in government agencies such as
USAID, the
EPA, and
USTDA.[11][12] Elizabeth Holmes is partly of
Danish ancestry. One of her paternal great-great-great-grandfathers was
Charles Louis Fleischmann, a Hungarian immigrant who founded Fleischmann's Yeast Company.[13] The Holmes family "was very proud of its yeast empire" history, according to a family friend
Joseph Fuisz, "I think the parents very much yearned for the days of yore when the family was one of the richest in America. And I think Elizabeth channeled that, and at a young age."[14]
Holmes graduated from high school at
St. John's School in Houston.[15][16] During high school, she was interested in computer programming and says she started her first business selling
C++compilers to Chinese universities.[17] Her parents had arranged
Mandarin Chinese home tutoring, and partway through high school, Holmes began attending
Stanford University's summer Mandarin program.[18][9] In 2002, Holmes attended Stanford, where she studied
chemical engineering and worked as a student researcher and laboratory assistant in the
School of Engineering.[10]
After the end of her freshman year, Holmes worked in a laboratory at the
Genome Institute of Singapore and tested for
severe acute respiratory syndrome coronavirus (SARS-CoV-1) through the collection of blood samples with syringes.[17][19] She filed her first patent application on a wearable drug-delivery patch in 2003.[20][21] Holmes reported that she was
raped at Stanford in 2003.[22] In March 2004, she dropped out of Stanford's School of Engineering and used her tuition money as seed funding for a consumer healthcare technology company.[10][23]
In 2003, Holmes founded the company Real-Time Cures in
Palo Alto, California, to "democratize healthcare".[17][24][25][26] Holmes described her
fear of needles as a motivation and sought to perform blood tests using only small amounts of blood.[12][24] When Holmes pitched the idea to reap "vast amounts of data from a few droplets of blood derived from the tip of a finger" to her medicine professor
Phyllis Gardner at Stanford, Gardner responded, "I don't think your idea is going to work", explaining it was impossible to do what Holmes was claiming could be done. Several other expert medical professors told Holmes the same thing.[12] However, Holmes did not relent, and she succeeded in getting her advisor and dean at the School of Engineering,
Channing Robertson, to back her idea.[12] In 2003, Holmes renamed the company
Theranos (a
portmanteau of "therapy" and "diagnosis").[27][28] Robertson became the company's first board member and introduced Holmes to venture capitalists.[10]
Holmes was an admirer of
Apple founder
Steve Jobs, and deliberately copied his style, frequently dressing in a black turtleneck sweater, as Jobs did.[29] Holmes said her mother dressed her in black turtlenecks when she was young[30] and that she had worn the turtlenecks beginning around the age of eight,[31] but she also claims that she started wearing black turtlenecks upon founding the company in 2003.[32] An employee said she suggested Holmes copy Jobs's famous
Issey Miyake turtleneck look in 2007.[33]
During most of her public appearances, she spoke in a deep
baritone voice, although a former Theranos colleague later claimed he heard her speak in a voice stereotypical of a woman her age to welcome him when he was hired.[34][35] Gardner of Stanford also denies that Holmes has a naturally deep voice.[36] Her family, however, has maintained that her deep voice is authentic.[37][38] In a 2023 New York Times interview, Holmes spoke in her natural,
higher pitch voice, and confirmed that the low voice was an affectation.[39]
Funding and expansion
By December 2004, Holmes had raised $6 million to fund the firm.[10] By the end of 2010, Theranos had more than $92 million in venture capital.[20] In July 2011, Holmes was introduced to former secretary of state
George Shultz. After a two-hour meeting, he joined the Theranos board of directors.[40] Holmes was recognized for forming "the most illustrious board in U.S. corporate history" over the next three years.[41]
Holmes operated Theranos in "
stealth mode" without press releases or a company website until September 2013, when the company announced a partnership with
Walgreens to launch in-store blood sample collection centers.[42][43] She was interviewed for
Medscape by its editor-in-chief,
Eric Topol, who praised her for "this phenomenal rebooting of laboratory medicine".[44] Media attention increased in 2014, when Holmes appeared on the covers of Fortune, Forbes, T: The New York Times Style Magazine, and Inc.[45]Forbes recognized Holmes as the world's youngest self-made female billionaire and ranked her #110 on the
Forbes 400 in 2014.[46] Theranos was valued at $9 billion and had raised more than $400 million in venture capital.[10][47] By the end of 2014, her name appeared on 18 U.S. patents and 66 foreign patents.[21] During 2015, Holmes established agreements with
Cleveland Clinic, Capital Blue Cross, and AmeriHealth Caritas to use Theranos technology.[20]
Downfall
John Carreyrou of The Wall Street Journal initiated a secret, months-long investigation of Theranos after he received a tip from a medical expert who thought that Theranos's Edison blood testing device seemed suspicious. Carreyrou spoke to ex-employee
whistleblowers and obtained company documents. When Holmes learned of the investigation, she initiated a campaign through her lawyer
David Boies to stop Carreyrou from publishing, which included legal and financial threats against both the Journal and the whistleblowers.[48][49]
In October 2015, despite Boies's legal threats and strong-arm tactics, the Journal published Carreyrou's "bombshell article"[50] detailing how the Edison device gave inaccurate results, and revealing that the company had been using commercially available machines manufactured by other companies for most of its testing.[51] Carreyrou continued to report problems with the company and Holmes's conduct in a series of articles and, in 2018, published a book titled Bad Blood: Secrets and Lies in a Silicon Valley Startup, detailing his investigation of Theranos.[52][53]
Holmes denied all the claims, calling the Journal a "tabloid" and promising the company would publish data on the accuracy of its tests.[54][55] She appeared on
CNBC's Mad Money the same evening the article was published.
Jim Cramer said, "The article was pretty brutal", to which Holmes responded, "This is what happens when you work to change things, first they think you're crazy, then they fight you, and then all of a sudden you change the world."[56]
In January 2016, the
Centers for Medicare and Medicaid Services (CMS) sent a warning letter to Theranos after an inspection of its
Newark, California, laboratory uncovered irregularities with staff proficiency, procedures, and equipment.[57] CMS regulators proposed a two-year ban on Holmes from owning or operating a certified clinical laboratory after the company had not fixed problems in its California lab in March 2016.[58] On The Today Show, Holmes said she was "devastated we did not catch and fix these issues faster" and said the lab would be rebuilt with help from a new scientific and medical advisory board.[59][60]
In July 2016, CMS banned Holmes from owning, operating, or directing a blood-testing service for a period of two years. Theranos appealed that decision to a
U.S. Department of Health and Human Services appeals board.[12][61] Shortly thereafter, Walgreens ended its relationship with Theranos and closed its in-store blood collection centers.[62] The
U.S. Food and Drug Administration (FDA) also ordered the company to cease use of its Capillary Tube Nanotainer device, one of its core inventions.[63]
In 2017, the State of Arizona filed suit against Theranos, alleging that the company had sold 1.5 million blood tests to Arizonans while concealing or misrepresenting important facts about those tests. In April 2017, the company settled the lawsuit by agreeing to refund the cost of the tests to consumers, and to pay $225,000 in civil fines and attorney fees, for a total of $4.65 million.[64][65] Other reported ongoing actions include an unspecified investigation by the
U.S. Federal Bureau of Investigation (FBI) and two
class action fraud lawsuits. Holmes denied any wrongdoing.[12]
On May 16, 2017, approximately 99 percent of Theranos shareholders reached an agreement with the company to dismiss all litigation and potential litigation in exchange for shares of
preferred stock. Holmes released a portion of her
equity to offset any dilution of stock value to non-participating shareholders.[66][67]
In March 2018, the SEC charged Holmes and Theranos's former president, Ramesh Balwani, with fraud by taking more than $700 million from investors while advertising a false product. The charges of fraud included the company's false claim that its technology was being used by the
U.S. Department of Defense in combat situations.[68] The company also lied when it claimed to have a $100-million revenue stream in 2014. That year, the company only made $100,000.[69] On March 14, 2018, Holmes settled the lawsuit.[70] The terms of Holmes's settlement included surrendering voting control of Theranos, returning 18.9 million shares to the company, a ban on holding an officer or director position in a public company for 10 years, and a $500,000 fine.[71][72][73]
At its height in 2015, Theranos had more than 800 employees.[74] It dismissed 340 people in October 2016 and an additional 155 in January 2017.[75] In April 2018, Theranos filed a
WARN Act notice with the State of California, announcing its plans to permanently lay off 105 employees, leaving it with fewer than two dozen employees.[74][76] Most of the remaining employees were laid off in August 2018. On September 5, 2018, the company announced that it had begun the process of formally dissolving, with its remaining cash and assets to be distributed to its creditors.[77]
On June 15, 2018, following an investigation by the
U.S. Attorney's Office for the Northern District of California in San Francisco that lasted more than two years, a
federal grand jury indicted Holmes and former Theranos chief operating officer and president, Ramesh "Sunny" Balwani, on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.[78][79] Both pleaded not guilty. Prosecutors allege that Holmes and Balwani engaged in two criminal schemes, one to defraud investors, the other to defraud doctors and patients.[78][80][81] After the indictment was issued, Holmes stepped down as CEO of Theranos but remained chair of the board.[79]
Holmes was tried in the
U.S. District Court for the Northern District of California, with U.S. district judge
Edward Davila presiding. Holmes retained defense lawyers from
Williams & Connolly, a prominent American law firm that specializes in
white-collar crime defense. The trial began on August 31, 2021,[82] after being delayed for over a year due to the
COVID-19 pandemic and Holmes's pregnancy.[83] The case was prosecuted by the
United States Attorney for the Northern District of California. Holmes testified in self-defense for seven days, claiming among other things that she was misled by her staff about the technology, and that her ex-romantic partner Balwani, who was also facing trial, held influence over her during the romantic relationship they had and which was still ongoing when the alleged criminal acts happened.[84][85][86] The case's evidence outlined Holmes's role in faked demonstrations, falsified validation reports, misleading claims about contracts, and overstated financials at Theranos.[2]
On January 3, 2022, Holmes was found guilty on four counts of defrauding investors – three counts of wire fraud, and one of conspiracy to commit wire fraud. She was found not guilty on four counts of defrauding patients – three counts of wire fraud and one of conspiracy to commit wire fraud. The jury returned a "no verdict" on three counts of wire fraud against investors – the judge declared a
mistrial on those counts and the government soon after agreed to dismiss them.[2][8][87][88] Holmes waited on sentencing while remaining 'at liberty' on $500,000 bail, secured with property.[89][90] She faced a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, for each count of wire fraud and for each conspiracy count.[82][2]
On November 18, 2022, Davila sentenced Holmes to 11+1⁄4 years (135 months) in prison and ordered her to surrender by April 27, 2023. The sentence included a fine of $400, or $100 for each count of fraud, and a three-year
supervised release after the prison term.[1] Davila recommended she be incarcerated at
Federal Prison Camp, Bryan, in Texas, a minimum-security facility with limited or no perimeter fencing. "No one wants to get kicked out because compared to other places in the prison system, this place is heaven. If you have to go it's a good place to go," said a criminal defense lawyer.[91]
Holmes made some unsuccessful appeals and on May 17, 2023, Davila ruled that she must surrender to custody on May 30, after accepting that she needed time to arrange childcare for her two children.[92][93] She was ordered to pay $452 million to the victims of the fraud. Holmes and Balwani are equally responsible for the full amount.[94] Holmes surrendered to custody at FPC Bryan on May 30.[95] In July 2023, the
Bureau of Prisons web site projected that Holmes would be released from prison two years early, after serving 85% of her sentence, according to guidelines for
good conduct time. With these credits, in conjunction with the credits she will earn in accordance with the 2018
First Step Act, it is estimated Holmes will serve approximately 6 or 7 years in prison.[96][97][98]
Promotional activities
Holmes partnered with
Carlos Slim in June 2015 to improve blood testing in Mexico.[99] In October 2015, she announced #IronSisters to help women in
science, technology, engineering, and mathematics careers.[100] In 2015, she helped to draft and pass a law in Arizona to let people obtain and pay for lab tests without requiring insurance or healthcare provider approval, while misrepresenting the accuracy and effectiveness of the Theranos device.[101][102]
Connections
Theranos's board and investors included many influential figures.[103][104] Holmes's first major investor was
Tim Draper – Silicon Valley
venture capitalist and father of Holmes's childhood friend
Jesse Draper – who "cut Holmes a check" for $1 million upon hearing her initial pitch for the firm that would become Theranos.[105][106] Theranos's pool of major investors expanded to include[104]Rupert Murdoch, the
Walton family, the DeVos family including
Betsy DeVos, the Cox family of
Cox Enterprises and
Carlos Slim Helú. Each of these investors lost tens to hundreds of millions of dollars when Theranos folded.[104]
Before the collapse of Theranos, Holmes received widespread acclaim. In 2015, she was appointed a member of the
Harvard Medical School Board of Fellows[111] and was named one of Time magazine's "
Time 100 most influential people".[112] Holmes received the Under 30 Doers Award from Forbes and was ranked number 73 in its 2015 list of "the world's most powerful women".[113][114] She was also named Woman of the Year by Glamour and received an Honorary Doctor of Humane Letters from
Pepperdine University.[115][116] Holmes was awarded the 2015 Horatio Alger Award of the
Horatio Alger Association of Distinguished Americans, making her its youngest recipient in history.[27][117] She previously had been named Fortune's Businessperson of the Year and had been listed in its
40 Under 40 feature.[118][119] In 2015, she was a member of
Bloomberg's 50 Most Influential.[120] In 2016, Fortune named Holmes in its article on "The World's 19 Most Disappointing Leaders".[7]
Personal life
Holmes was romantically involved with the
Pakistani-born technology
entrepreneurRamesh "Sunny" Balwani, who immigrated to
India and then the US.[121][122] She met him in 2002 during a trip to
Beijing as part of
Stanford University's
Mandarin program. Holmes was 18 at the time and had just graduated from high school; Balwani is 19 years older than Holmes and he was married to another woman at the time.[123][124]
Balwani divorced his wife in 2002[125] and became romantically involved with Holmes in 2003, about the same time Holmes dropped out of university.[123] The couple moved into an apartment together in 2005. Although Balwani did not officially join Theranos until 2009, when he was given the title of chief operating officer, he was advising Holmes behind the scenes from the company's inception.[123] Holmes and Balwani jointly ran the company with a corporate culture of "secrecy and fear" according to employees.[123] Their romantic relationship was kept secret for much of their time running the company.[126] Balwani left Theranos in 2016 in the wake of investigations. The circumstances of his departure are unclear; Holmes has stated that she fired him, but Balwani says that he left of his own accord.[123]
On November 29, 2021, Holmes testified that she had been raped while she was a student at Stanford and that she sought solace from Balwani in the aftermath of the incident.[84][85] She also said Balwani was very controlling during their romantic relationship, which lasted more than a decade, and at times he berated and sexually abused her.[84][85] In her testimony, she stated he also wanted to "kill the person" she was and create a "new Elizabeth".[84] However, she also testified that Balwani had not forced her to make the false statements to investors, business partners, journalists and company directors that had been described in the case.[127] In court filings, Balwani has "categorically" denied abuse allegations, calling them "false and inflammatory."[128]
Before the March 2018 settlement, Holmes owned half of Theranos's stock.[17]Forbes listed her as one of U.S. Richest Self-Made Women in 2015 with a net worth of $4.5 billion.[47] In June 2016, Forbes released an updated valuation of $800 million for Theranos, which made Holmes's stake essentially worthless, because other investors owned
preferred shares and would have been paid before Holmes, who owned only
common stock.[6] Holmes reportedly owed a $25 million debt to Theranos in connection with exercising
stock options. She did not receive any company cash from the arrangement, nor did she sell any of her shares, including those associated with the debt.[129][130][131]
Holmes first met William "Billy" Evans in early 2017.[132] In early 2019, Holmes became engaged to Evans, a 27-year-old heir to Evans Hotels, a family-owned group of hotels in the San Diego area.[133][132] In mid-2019, Holmes and Evans reportedly married in a private ceremony.[134][135] Holmes and Evans have not directly confirmed whether the two are legally married, and several sources continue to refer to him as her "partner" rather than her husband.[136][137] Holmes gave birth to a son in July 2021.[137] In October 2022, weeks before her sentencing hearing, it was reported she was pregnant with a second child.[138] Holmes was accused of conceiving a second child, according to a court filing from February 2023, as a strategy for delaying the start of her prison term.[139] Holmes denied this, saying she wanted to grow her family and the child was conceived before she was indicted, which she did not anticipate.[132] Prior to her incarceration, she lived in the
Mortimer Fleishhacker House in
Woodside, California with her partner.[140][141]
In January 2022,
NPR obtained a copy of a partial police report from the evening of October 5, 2003, in which Holmes called the police and alleged she had been sexually assaulted at a fraternity house at Stanford between 1 a.m. and 3 a.m. that morning. The police report supported claims made by Holmes during the trial, in which she said: "I was questioning how I was going to be able to process that [rape] experience and what I wanted to do with my life, and I decided that I was going to build a life by building [a company]." She had started Theranos later that year. The report written by the deputies who responded to the call was withheld from release, and the partial information obtained by NPR does not identify an alleged perpetrator or other details about the incident but identifies the street address of the
Sigma Chi fraternity house as the location.[142]
In the media
The case of Holmes is said to have created a stigma for other female entrepreneurs, particularly in the sciences and health care industries, who are often compared to her. Writing in The New York Times, technology journalist Erin Griffith commented that "Holmes continues to loom large across the start-up world because of the audacity of her story, which has permeated popular culture", with female entrepreneurs reporting that "the frequent comparisons [to Holmes] are pernicious".[143] Holmes has also been featured in a number of media works:[144]
In May 2018, author John Carreyrou released the book Bad Blood: Secrets and Lies in a Silicon Valley Startup, describing the life of Holmes and the inner workings of Theranos.[149] The film rights to Carreyrou's book were purchased by
Legendary nearly two years before the book was published.[150]
In January 2019, ABC News, Nightline, and
Rebecca Jarvis released a podcast and documentary about the Holmes story called The Dropout. It included interviews and deposition tapes of key figures, including Elizabeth Holmes, Sunny Balwani, Christian Holmes (Elizabeth's brother), Tyler Shultz (Theranos whistleblower and grandson of Board Member
George Shultz), Theranos board members
Bill Frist, Gary Roughead, Robert Kovacevichz and others. The series also featured an interview with Jeff Coopersmith, the attorney representing Balwani.[151][105]
On March 18, 2019, HBO premiered the documentary The Inventor: Out for Blood in Silicon Valley, a two-hour documentary film first shown at the
Sundance Film Festival on January 24, 2019. It portrays the claims and promises made by Holmes in the last years of Theranos and how ultimately the company was brought down by the weight of many falsehoods. The documentary ends in 2018, with Holmes and Balwani indicted for multiple crimes.[152]
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^Fox, Justin (May 19, 2016).
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^"Keiko Fujimoto Vs. Ramesh Balwani". UniCourt. San Francisco County Superior Courts. February 14, 2002.
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