Elizabeth Holmes sentenced: how politics, celebrity and big pharma collided in trial of the century

 (Elizabeth Holmes)
(Elizabeth Holmes)

Elizabeth Holmes was the epitome of the Silicon Valley pin-up prodigy. At 19, she quit Stanford University to start Theranos, a company flush with investment, promising to change modern medicine. By 31, the charismatic dropout was billed as “the world’s youngest self-made woman billionaire” by Forbes, and was supposedly worth $4.5 billion. The “next Steve Jobs”, hailed Inc, a business magazine that put her on its cover. “Don’t worry”, gushed Bill Clinton as he introduced her to a conference crowd in 2015. “The future’s in safe hands”. Everyone agreed she would change the world.

Fast-forward seven years and Holmes, now 38, has just been sentenced to over 11 years in prison, after being found guilty of four counts of fraud. “I am devastated by my failings. I have felt deep pain for what people went through, because I failed them,” she told a court ahead of the sentencing on Friday, the final chapter in an empire collapse that has inspired best-selling books, documentaries and podcasts and even an upcoming Hollywood film starring Jennifer Lawrence.

The revelation at the heart of the Holmes’ downfall? Theranos, which employed more than 800 staff and was valued at $9 billion in 2015, is worthless. Its game-changing device for testing blood, Edison, the kind of thing that would make Covid-19 testing a doddle, proved a sham. Patients were misdiagnosed. Investors lost everything.

Holmes was found guilty in January and her ‘complex’ 15-week court case encompassed personal intrigue, big pharma and influential politicians. Holmes enlisted lawyer David Boies, who represented Harvey Weinstein, to defend her, who argued that she was subjected to a decade-long abusive relationship by her now ex-boyfriend and Theranos’s chief operating officer Ramesh “Sunny” Balwani, who will stand trial next year. His lawyers deny the accusation. So what exactly went wrong? How did Holmes fall so far, so fast? And why does it make for such compelling viewing?

The story starts decades ago, when Holmes was a child prodigy. She was reading Moby Dick aged nine, studying Mandarin on weekends, and dreamt of leaving her mark on humanity. Her mother Noel was a Washington foreign policy aide, her father Christian worked for various federal agencies. The family — from Fleischmann yeast empire money — knew how America’s wheels turned. Geeky Holmes didn’t want to be a president, she told family. She wanted to become the billionaire whom the president would want to marry. She was top of her class and on the athletics track, then scooped a place at Stanford University on a President’s scholarship.

There she charmed the influential dean of her chemical engineering school, Channing Robertson, with a pitch for a revolutionary blood-testing device. He joined a fledgling board, and Theranos was born. Then she wooed former senior government officials, including Henry Kissinger, former defence secretary William J Perry, General James Mattis and former secretary of state George Shultz, to her star-studded board. Within a decade, Theranos (a slick mash-up of “therapy” and “diagnosis” — part Greek demiurge, part Marvel villain) attracted hundreds of millions of dollars from investors like Rupert Murdoch and the De Votz, Waltz and Kraft dynasties. “She has a social consciousness Steve never had,” Perry, who knew Jobs, told the New Yorker. “He was a genius; she’s one with a big heart.”

On trial: Ramesh “Sunny” Balwani (Getty Images)
On trial: Ramesh “Sunny” Balwani (Getty Images)

The implausible, intractably secretive Edison technology sounded electrifying. A “teeny needle” would, Holmes said, take a drop of blood and process it on a “biochip” in a slick, black box. It would use 99.9 per cent less blood than other machines, and could detect, on the spot, everything from STDs to the earliest sign of cancer. She would save lives, quickly and ingeniously, at half the cost.

It would save Obamacare “hundreds of millions of dollars’, she told enraptured tech conferences. In 2013, this argument persuaded the supermarket chain Walgreens to spend millions of dollars to set up clinics, putting Theranos within touching distance of every American home (crucially, Walgreens’s “Project Beta” inspectors were never allowed to test for viability). Holmes would wear the same outfit every day — black trousers and a black polo neck jumper. America was buying and she became a fully-fledged star.

There was some controversy around Balwani, who had helped a spluttering Theranos with a $13 million loan in 2009. He’d made millions in Silicon Valley, working for the likes of Microsoft and securing early funding for start-ups. He drove a black Lamborghini and a Porsche 911, with personalised licence plates reading “Vidi Vici”, and “Das Kapital”. People said he was a workaholic with a wretched temper, who his rattled employees called The Enforcer. Twenty years older than Holmes, and unbeknownst to everyone, he was also dating her.

Faking it: Elizabeth Holmes at the Theranos laboratory (HBO)
Faking it: Elizabeth Holmes at the Theranos laboratory (HBO)

As Holmes’s star rose, something seemed off. She installed bulletproof glass in her office and travelled by jet or with a chauffeur and security team. Giant contracts with the US military were talked up by Holmes in the press, but were fictitious. The Walgreen contracts, sadly, were not.

Many people who showed up at clinics had their blood drawn from old-fashioned needles. Tests were graded not by Theranos’s technology — later likened to a school science project — but by the equipment of other major suppliers. Samples were stored at incorrect temperatures. Patients got faulty results and were rushed to emergency rooms. The whole setup was bogus.

It all began to unravel in 2014 when a man called Tyler Shultz got a job at Theranos, helped by his grandfather, George Shultz. Tyler was suspicious of the enterprise. Nearly a million tests conducted in California and Arizona had to be voided or corrected.

Theranos would save Obamacare millions of dollars. Then suddenly everything fell apart

Tyler reported to his grandfather that the place was rotten but he didn’t believe him. So in 2015 he went to the Wall Street Journal’s John Carreyrou, telling him that pieces of the testing device would fall off — and explode — during trials. Holmes begged Rupert Murdoch to have Carreyou’s story killed. He left the decisions to run the story to the paper’s editors, who went ahead.

Holmes has become a cautionary tale against Silicon Valley’s pervasive “fake it until you make it” philosophy. In HBO’s The Inventor: Out for Blood in Silicon Valley, a beaming Holmes walks into a meeting, after a Theranos device received FDA approval for a herpes test.

MC Hammer’s Can’t Touch This plays. She dances with employees, as Balwani gets the employees to yell a collective “F*** you” to what he called “the guys who are after us”.

Imposter syndrome: Holmes on trial (AFP via Getty Images)
Imposter syndrome: Holmes on trial (AFP via Getty Images)

Holmes has remained defiant. She married hotel scion William Evans in 2019 and had a son in July. “This is what happens when you work to change things,” she told a CNBC interviewer in 2015. “First they think you’re crazy, then they fight you, then you change the world.” Indignant backers blamed big pharma for campaigning against her revolution. But her vision crumbled.

Holmes’ tabloid-like saga means female founders have to work twice as hard. At meetings with investors, says the New York Times, many are asked how their pitch “would be different from Theranos”. By the height of her alleged deception in 2014, she was practically broadcasting her ignorance of medical science.

The New Yorker’s Ken Auletta called her words “comically vague”. Did she get trapped by her own ascent? Or lost in her own lies? So many bought what she was selling. “I don’t have many secrets”, she told a film crew documenting Theranos’s trailblazing early days, her blue eyes clapped on the camera. She stares. Then, just for once, she blinks.