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The Rise & Fall of Theranos

Updated: Aug 31, 2021

Elizabeth Holmes founded the company in 2003 when she was 19, shortly before dropping out of Standford University in 2004. She raised more than $700 million from private investors and venture capitalists. all automated devices.

Elizabeth Holmes founded the company in 2003 when she was 19, shortly before dropping out of Stanford Univserity in 2004. She raised more than $700 million from private investors and venture capitalists.

Former President Bill Clinton, former Secretary of State Henry Kissinger, Oracle co-founder Larry Ellison, Walmart founders the Walton family, media mogul Rupert Murdoch, former US Secretary of Education Betsy DeVos, and Mexican billionaire Carlos Slim, among others, believed in the company. This assisted in a $10 billion valuation between 2013 and 2014, and a partnership with Walgreens.

In 2015, medical research professors John Ioannidis and Eleftherios Diamandis, along with investigative journalist John Carreyrou, questioned the validity of Theranos' technology. By June 2016, Holmes's personal net worth had dropped from $4.5 billion to virtually nothing. After several years of lawsuits and sanctions, the company dissolved on September 4th, 2018.

Theranos claimed their machine, Edison, could perform life-saving tests cheaply just about anywhere, using only a finger prick of blood rather than a full vial from a vein. In 2018, Holmes said, "This is what happens when you work to change things. First, they think you're crazy, then they fight you, then all of a sudden you change the world."

Federal prosecutors have charged Holmes and Ramesh "Sunny" Balwani, her former business partner and ex-boyfriend, with two counts of conspiracy to commit wire fraud and nine counts of wire fraud for allegedly engaging in a multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients. The pair used a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information.

In 2018, nine people came forward as part of a class-action lawsuit against Theranos and Walgreens, which had offered testing.

Patients who were misdiagnosed by Theranos tests will be testifying against Holmes. Some had been told they were HIV-positive. One, who was pregnant at the time, was told she had miscarried her baby. Another, incorrectly tested positive for Hashimoto's disease.

Theranos' CEO Holmes and its president and COO Balwani had a secret romance. Presently, the two are blaming each other for the company's downfall. Holmes' legal team said she is highly likely to take the witness stand and accuse Balwani of manipulation and abuse to such a degree that it affected her state of mind during the time of the alleged fraud.

Holmes' attorneys said they have evidence that Balwani controlled what Holmes' ate, when she slept, how she dressed, and with whom she spoke. In the filing, Holmes' lawyers wrote, "This pattern of abuse and coercive control continued over the approximately decade-long duration of Ms. Holmes and Mr. Balwani's relationship, including during the period of the charged conspiracies." Balwani's lawyers have denied any abuse.

An estimated $700 million was lost in the unraveling of Theranos. Prosecutors allege that governments, businesses, and other investors were conned by Holmes' deceptive statements and presentations.

John Carreyrou said, "If she's convicted, I expect it to be a wake-up call in Silicon Valley to how much you can exaggerate, how much you can lie, how much you can experiment with your products before you cross that bright red line before you have to go to prison."

If convicted, they each could face up to 20 years in prison. Opening arguments are slated to start on September 8th. The trial is expected to stretch on for four months.

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