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Elizabeth Holmes is the former CEO of Theranos, a blood-testing startup founded in 2004. At the time, she was the world’s youngest self-made billionaire and often called a “female Steve Jobs.” Theranos was once valued at US$9 billion and raised more than US$700 million from investors, including the Walton family of Walmart, the Walgreens chain of pharmacies and the Safeway grocery chain. But, the shocking news was that the Silicon Valley unicorn was a big fat lie.
In 2015, Wall Street Journal journalist John Carreyrou exposed Holmes and Theranos, saying that the company’s claims were false. The blood-testing device Edison couldn’t do what Holmes said it did. In 2018, Holmes was charged with 11 counts of fraud in the US. A year after her trial in 2021, she was found guilty of four of the charges.
On Friday, prosecutors said Holmes should serve a 15-year prison sentence and that she was remorseless and should pay full restitution to her duped investors. But her lawyer said the prison time should not be more than 18 months because she posed no danger and asked for it to be reduced to house arrest. She’s set to be sentenced on November 18.
“Holmes often seized upon investors’ desire to make the world a better place in order to lure them into believing her lies,” said US prosecutors. “She stands before the court remorseless. She accepts no responsibility. Quite the opposite, she insists she is the victim.”
“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, director of the SEC’s San Francisco regional office when Holmes was charged. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”
“There’s going to be a lot of attention on what did Elizabeth Holmes know and when did she know it, but a better question is what should the investment community know and when should we know it?” said Len Sherman, a professor of business at Columbia Business School.