In 2014, Theranos founder and CEO Elizabeth Holmes was dominating the front covers of renowned business magazines for being the youngest self-made billionaire in the world.
In 2022, she’s making headlines again ––but for all the wrong reasons. A recent Hulu series, The Dropout, has led to more interest in Holmes, her relationship with former COO Sunny Balwani, and where she is today.
Here’s the background on Holmes’ story, what she and Balwani are doing today, and what the future could hold.
Holmes’ story and fall from grace
Holmes had a childhood dream of becoming a billionaire. At 19, she dropped out of Stanford to work on her “revolutionary” blood-testing startup called Theranos. With Theranos, Holmes promised to eliminate needles from the blood testing process, claiming that her “proprietary” machine called the “Edison” could deliver cheaper and faster results for over 240 diseases with a single pin-prick and a drop of blood.
Holmes was a descendant of the family that founded America’s first yeast company and was also the daughter of a former Enron VP and congressional aide. Her pedigreed background helped link Theranos with some of the biggest names in America.
She appointed luminaries like former Secretary of State Henry Kissinger and ex-director of CDC William Foege to her board of directors and landed contracts with industry giants like Pfizer and Safeway. She even convinced high-profilers like Oracle founder Larry Ellison and pharmacy leader Walgreens to invest in her startup, raising over $700 million without ever disclosing how her technology worked.
This secrecy reflected the company’s work culture and Elizabeth herself, who hired bodyguards to drive her around, installed bulletproof glass in her office windows, and forbade employees from discussing projects with workers in other departments. Holmes enjoyed the media spotlight, speaking at TED Talks and panels with Bill Clinton and Jack Ma. By 2014, Theranos had testing centers in 40 Walgreens stores and was valued at a whopping $9 billion.
But while all this was happening, skeptics started questioning Holmes’ claims.
A downward spiral for Theranos
In 2014, Theranos employee Tyler Schultz called out Holmes for ignoring failed quality control checks in the testing process. Despite receiving threats from Holmes, Tyler contacted the Public Health Laboratory in New York, alleging that Theranos was doctoring research and manipulating its proficiency testing.
By 2015, the FDA was investigating Theranos, finding “major inaccuracies” in the tests it was performing on patients. For example, a Theranos STD test claimed it was accurate 95% of the time. But regulators found the results to be accurate only 65% to 80% of the time.
Holmes’ misdeeds caught public attention when WSJ reporter John Carreyrou published a series of reports exposing her lies and flawed blood test results. Soon after, Walgreens sued Theranos for $140 million dollars for misleading them about the capabilities of the technology. In 2016, the SEC slapped Holmes and her ex-boyfriend and Theranos COO Sunny Balwani with 11 felony counts for fraud against investors and patients. Theranos completely shut down by 2019.
Holmes’ trial began in September 2021 and prosecutors and witnesses exposed her as a fraud. Here are some of the most shocking revelations of the trial:
To get investor funding, Holmes claimed that the world’s 10 largest pharmaceutical companies had validated Theranos’ results. They had not.
Holmes allegedly forged Pfizer’s logo and letterhead on the lab results she showed to investors to make them think she had contracts with Pfizer.
Theranos hid its inaccuracies by substituting Edison’s reports with results from regular blood draws done on traditional machines; in fact, most tests were run on regular machines.
Whistleblowers testified to Holmes firing engineers who told her the Edison didn’t work.
Ex-Theranos patients testified against the health tech company for providing faulty test results. One such patient was Brittany Gould, who was told that she was having a miscarriage when, in fact, she had a healthy pregnancy. Because of the false positive, she changed the medication she was taking, which could have harmed the fetus.
Holmes’ defense & Sunny Balwani
Elizabeth Holmes’ central defense was that her manipulations were in the spirit of progress and that she was simply trying to make the company succeed. “Coming up short is not a crime,” she said.
She also blamed her ex-partner Sunny Balwani for most of the wrongdoings, claiming that he controlled and abused her throughout their relationship, which hindered her decision-making.
Holmes’ lawyer presented a handwritten note that outlined her daily schedule and affirmations which, according to Holmes, Balwani dictated along with how she should act and speak.
“I speak rarely. When I do—CRISP and CONCISE. I call bullshit immediately. My hands are always in my pockets or gesturing,” the last few lines of the note read.
Balwani and his lawyers have denied the abuse claims, calling them “salacious and inflammatory” and remain firm that Holmes was the final decision-maker of the company, not Balwani.
But recently, a series of text exchanges between Balwani and Holmes came forward, suggesting Balwani had more power than he admits.
“I am responsible for everything at Theranos,” Balwani wrote in a text to Holmes, as reported by NBC.
Will Elizabeth Holmes go to prison?
After a lengthy trial and almost 30 witnesses, the court found Holmes guilty of four counts of criminal fraud against investors with 20 years in prison and a $250,000 fine for each of her convictions. The jury acquitted Holmes of charges of fraud against patients.
Because the conviction was for a non-violent, white-collar crime, legal experts think it’s likely that Holmes will only spend three years behind bars, and that too in a premium prison with low security and plenty of facilities like pilates classes, tennis courts, and arts programs. The recent birth of her baby boy with husband Billy Evans could further reduce her sentence.
White-collar defense lawyer Amanda Kramer told NPR that Holmes’ case is a deterrent for business owners who may intend to commit fraud. She said it would be “utterly shocking” if Holmes dodged imprisonment.
Balwani is going through a separate trial for fraud along with the abuse allegations. According to Kramer, Balwani’s case affects Holmes’ sentence, which is why the court has set her sentencing date in September 2022.
Where is Elizabeth Holmes right now?
Once touted “the next Steve Jobs” with a net worth of $4.5 billion, Elizabeth Holmes has fallen from grace (and money) and is now worth $0, according to Forbes. Currently out on a $500,000 bail bond, Holmes is living it up in her $135 million Green Gables estate in Silicon Valley with her husband and son.
Where is Sunny Balwani today?
After working at companies like Microsoft and Lotus, Sunny made his riches after founding his e-commerce startup CommerceBid at the peak of the dot-com bubble in the late 90s.
After the industry burst, he pursued further studies and, at 37, went to China as part of a summer program where he met 18-year-old Elizabeth. After 3 years in 2005, the two started dating and Sunny gave Holmes a $13 million personal loan to help fund Theranos.
In 2009, Sunny became the president and COO, reigning the Theranos C-suite with Holmes until the pair split in 2016 and he quit the company. As a key decision-maker in Theranos, Sunny has been charged with the same counts as Holmes and is going through a separate trial that began in March 2022.
It has been reported that he just sold the luxury home he and Holmes co-owned (later bought out by Balwani) for almost $16 million as he plows money for his ongoing litigation.
This story was originally featured on Fortune.com