What could’ve gone wrong when 19-year-old Stanford dropout Elizabeth Holmes founded blood-testing company Theranos in 2003? Apparently everything, including Theranos ex-president and former COO Ramesh “Sunny” Balwani being convicted of fraud in a federal court earlier today.
Theranos promised a technology like no other: A medical device that could run countless tests using a single drop of patient blood. Company founder and CEO Elizabeth Holmes wanted to revolutionize healthcare, until she finally realized that the technology she imagined was an impossible feat for engineering and chemistry.
Anyone else may pivot to another product or realistically redesign the machine, but Elizabeth Holmes and Sunny Balwani—Holmes’ rumored lover and company COO/president—lied themselves into a hole they could not dig their way out of. Theranos went bankrupt and closed its doors in September 2018, but that was only the beginning of the end. Today, a federal jury convicted Balwani on 12 counts of conspiracy and fraud according to the Wall Street Journal.
Holmes and Balwani were indicted together but tried separately after Balwani’s legal team successfully got the cases separated. Their indictment, filed in 2018, reads:
From a time unknown but no later than 2013 through 2015, Holmes and Balwani, and other known and unknown to the Grand Jury, through their company, Theranos, engaged in a scheme, plan, and artifice to defraud investors as to a material matter, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, by making materially false and misleading statements, and failing to disclose material facts with a duty to disclose.
Holmes’ was convicted in January 2022 of four counts of fraud, and is awaiting sentencing scheduled for September. Notably, Holmes’ trial and conviction received widespread media attention while Balwani remains a much more elusive figure in the Theranos mythos, while receiving a heavier sentence.
While Holmes and Balwani have received their comeuppance, the story of Theranos is a cautionary tale of “fake it till you make it” gone awry, which is having unfortunate consequences for other women executives trying to smash through the reputation Elizabeth Holmes left behind.