Blog Post

Elizabeth Holmes Found Guilty on Four Charges of Fraud


Mason Wilder, CFE
ACFE Research Manager

After seven days of deliberations, a jury in California found Theranos founder Elizabeth Holmes guilty on four out of 11 federal fraud charges on January 3, 2022; nearly four years after Holmes and Theranos agreed with the U.S. Securities and Exchange Commission (SEC) to settle civil charges of securities fraud. Each charge carries a maximum prison sentence of 20 years.

The charges Holmes faced during her 15-week trial included nine counts of wire fraud and two counts of conspiracy to commit wire fraud. Four of the charges (three counts of wire fraud and one of conspiracy to commit wire fraud) were related to the defrauding of patients, while the remaining seven were related to the defrauding of investors. Holmes, a former darling of Silicon Valley, managed to convince many high-profile individuals to align themselves with her supposedly revolutionary blood-testing company. A 2015 investigation into the accuracy of the blood testing technology, published by The Wall Street Journal, led to a federal investigation. Holmes was charged with fraud by the SEC in March 2018 and Theranos officially dissolved in September 2018.

The jury acquitted Holmes on all four counts related to defrauding patients and could not reach a verdict on three of the seven counts related to defrauding investors. The counts of wire fraud on which she was found guilty involved the investors PFM Healthcare Master Fund (USD 38,336,632), Lakeshore Capital Management LP (USD 99,999,984) and Mosley Family Holdings LLC (USD 5,999,997).

Holmes is expected to appeal the convictions, but there will not be a retrial of the counts the jury could not reach agreement on since a guilty verdict on those counts would not affect her sentencing. Her sentencing has not yet been scheduled but will likely take place at least six months from now. Ramesh “Sunny” Balwani, the former president and chief operating officer of Theranos, as well as Holmes’s former romantic partner , faces the same fraud charges as Holmes; his trial is set to begin February 2022.

Although Holmes’ sentencing and the fate of any appeals will be undetermined for some time, her convictions close at least one chapter of the Theranos saga.  

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners

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