Theranos Founder Indicted on Fraud Charges
The rest of your life is a long time, no matter how old you are.
That's how long Elizabeth Holmes, 34, could be in jail if convicted of fraud charges for duping investors and others about blood-testing technology. Holmes, who founded Theranos, was once a startup darling in Silicon Valley.
But now she stands indicted on nine counts of wire fraud and two counts of attempted wire fraud. It could have turned out differently -- five years ago.
According to the indictment, Holmes and her former second-in-command deliberaty mislead investors, regulators and the public about the accuracy of Theranos' blood-testing technology in 2013. Holmes founded the company in 2003, claiming a cheaper way to run blood tests.
The pitch worked, as investors poured money into the startup. It was worth $10 billion and Holmes was the first, self-made female billionaire.
The technology, however, didn't work. At least, not like Theranos claimed.
"CEO Elizabeth Holmes and COO Sunny Balwani not only defrauded investors, but also consumers who trusted and relied upon their allegedly-revolutionary blood-testing technology," said acting U.S. Attorney Alex Tse.
The Wall Street Journal exposed Theranos in a series of reports two years ago that showed the technology was inaccurate and that the company was routinely using other equipment for most of its blood tests.
John Carreyrou, who broke the story, said after the indictment that Holmes "dropped out of Stanford truly wanting to follow in the footsteps of great entrepreneurs." But she went too far.
"It got to the point that the gap between her promises and the reality got so enormous that it became a massive fraud," said Carreyrou, who also wrote a book about the scandal.
"The main lesson of the Theranos scandal is this 'fake it till you make it' ethos that has been embedded in the way of doing business in the valley for 30 or 40 years is not applicable to medicine or medical products," he said.
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