On Wednesday, September 8 in San Jose, California, the expected trial of Elizabeth Holmes, the founder of Theranos, a company that promised to revolutionize the medical analysis industry, began with a new home device capable of carrying out hundreds of tests using a single drop of blood. Beginning in 2003, Holmes was able to raise hundreds of millions of dollars from large and famous investors, making Theranos reach a valuation of $ 9 billion in ten years. But his promises were never kept: Theranos was finally liquidated in 2018 and now Holmes, 37, is on trial accused of lying and deceiving customers and investors for years in what has been called the biggest scam in the world. Silicon Valley.
The process is observed with great attention in the United States, especially by those who deal with Silicon Valley companies and for some time have reported how many of these receive billionaire investments and quotations on the basis of simple promises, despite the lack of concrete products to offer their clients. Holmes had been very adept at promoting Theranos' activities and goals, garnering great media coverage, which had then favored the arrival of money from prominent investors, such as Australian billionaire Rupert Murdoch, and prominent figures in the its board of directors: the two former secretaries of state Henry Kissinger and George Shultz, the former secretary of defense William Perry, the attorney close to the Democrats David Boies, the former senators Sam Nunn and Bill Frist. However, there were no doctors, engineers or scientists.
In an uncrowded courtroom due to pandemic limitations, Attorney Robert Leach exposed the allegations against Holmes, arguing that the founder of Theranos “decided to lie” to investors, customers and the press “when he understood that he had run out of time and money “for the development of the promised analysis technologies. Over the course of 45 minutes, Leach accused Holmes of always knowing that the systems developed by Theranos could not work, but of having ignored it anyway.
According to the indictment, in 2013 Theranos was in dire straits as it was unable to deliver to its two largest partners – the Walgreens Botts Alliance and Safeway chain stores and pharmacies – the devices that were supposed to carry out blood tests to automatically detect. over 200 diseases and health problems. Safeway had begun setting up 800 test points in its supermarkets, but then decided to cancel the collaboration before the test systems were deployed. Walgreens had begun offering Theranos systems in some forty pharmacies, but had suspended the initiative following the publication of a 2015 investigation in the Wall Street Journal that highlighted the inefficiencies of Holmes' system and company. .
At the time Theranos was already in economic difficulties, he explained the accusation always referring to internal documents and emails of the company, which will be brought as evidence during the next hearings. In 2011 the company had generated revenues of half a million dollars, but in the following two years it was unable to produce more. In 2013, the situation seemed to be compromised, with Theranos losing an average of 1-2 million dollars every week and risking bankruptcy.
According to the indictment, at that point Holmes and his business partner, Ramesh “Sunny” Balwani, with whom he also had a romantic relationship, asked to modify existing machinery for blood testing so that they could work. with a few diluted drops, to be passed off as Theranos systems. This ploy would have allowed the two executives to buy time in the hope of obtaining new funding.
Holmes was very adept at attracting media attention, with statements about his company's great ambitions and the results achieved with blood testing systems. He got television interviews, magazine covers, and great media coverage. She became Silicon Valley's first female billionaire, and many called her the new Steve Jobs. In September 2015 she was featured on the cover of Forbes in the issue dedicated to the 400 richest people in the United States – she was the only female billionaire not to have inherited her wealth – and in November 2015 she was awarded the “Women of the Year Award” of Glamor magazine, which annually awards women who have distinguished themselves in the world of entertainment, fashion, politics and business.
Things changed in October of the same year, when the Wall Street Journal revealed all the falsehoods that Holmes and the former general and operational director, Ramesh “Sunny” Balwani, had told up to that moment: first of all the absolute ineffectiveness of the test devices and the unreliability of the analyzes and demonstrations made up to that moment.
During the opening speech, Leach was quite straightforward: “This is a case of fraud, it's about lying and deceiving to get money.” He promised to prove it with emails and other documents, although the prosecution may have trouble providing the most salient details because the main archive of blood test data performed by Theranos has been lost.
In its initial statements, the defense led by Lance Wade tried to show the story from a different point of view: «Failing is not a crime. Doing your best and failing to prove yourself is not a crime. ' Wade said Holmes had devoted 15 years of his life to Theranos trying to make a universal blood test device a reality, firmly believing in this possibility to the point of never having sold a single company share in his possession.
Wade later said that Holmes allegedly acted under the bad influence of Balwani, with whom she had a difficult and often violent romantic relationship. These circumstances would have influenced the company decisions, but the defense did not elaborate that much, also because Balwani will be tried separately.
According to the defense, moreover, Holmes did not know that the tests developed by Theranos were not precise enough, because the technical and scientific skills were delegated to those who were physically involved in the development of the device. Wade then rejected accusations that Holmes had misled investors, recalling that they were fully aware of the business risks associated with a newly founded startup with a very young CEO, in his first experience.
To secure Holmes's conviction, the prosecution will have to convince a jury of 12 people (five women and seven men) that the defendant had voluntarily acted to defraud investors and clients. The defense will instead try to prove that the company had financial problems, like many others, and that these eventually led to the need to liquidate it.
Holmes has pleaded innocent to all ten counts of her and faces a sentence of more than 20 years in prison. The trial will continue for at least three months before arriving at a jury verdict.
