Stanford dropout Theranos founder, Elizabeth Holmes convicted of fraud


Alyssa Tang, Staff Writer

Elizabeth Holmes, a Stanford University dropout at age 19 who set out to revolutionize healthcare in 2003, was convicted on four of 11 charges of fraud after a 3 month trial on Jan. 3.  Using just a few drops of blood from the prick of a finger, her proposed blood-testing technology promised to be able to detect diseases, such as cancer and diabetes. Hiding behind the veil of trade secrets, Theranos did not deliver any working devices. Instead, she led the company to discard failed tests and falsified results. 

This young founder secured hundreds of millions of dollars from prominent investors including two former United States Secretary of State, Henry Kissinger and George Schultz. Theranos was often touted as the next Apple and became valued as high as $9 billion in 2015.

A jury of eight men and four women found Holmes guilty of three counts of wire fraud and one count of conspiracy to commit wire fraud, each carrying a maximum sentence of 20 years in prison.

“I think the verdict was justified, given the magnitude of the consequences of Holmes’s actions and decisions; with Theranos and its technology, you have actual people’s lives and diagnoses being impacted,” junior Aniyah Shen said.

Other students pointed out that venture capitalists are also to blame for perpetuating the deceit. 

“I also believe a number of investors in general do not care for the implications of products created by startup companies and are only invested in the financial gain,” junior Wanqi Jia said.

While students at UHS are too young to remember the rise of Theranos, many young women, such as former employee Erica Cheung, were attracted to work for a female-led company.

“I can certainly see how many would view her as an inspirational figure, what with being such a successful, industry-defining female in Silicon Valley,” Shen said.

Her charismatic personality won many supporters until employee Erica Cheung revealed the truth and Wall Street Journal reporter John Carreyrou exposed her lies.

“From a medical point of view, we can learn that all medical techniques and technologies need to be thoroughly inspected and approved to ensure that no one is hurt. From a business and investment point of view, we can learn that short-term benefits and shortcuts do not necessarily mean long-term gain,” sophomore Miles Hexun said.

The downward spiral of the high-flying company shattered the fairy tale of a young woman billionaire in Silicon Valley.

“I think Holmes’s case is definitely going to cause more people to evaluate the gender gap in tech and Silicon Valley and how that might have factored into her case, but I hope that it does not discourage other women entrepreneurs hoping to start health care companies,” Shen said.

The collapse of Theranos brought to light the consequences of the “fake it till you make it” philosophy. 

“Startup companies should be required to provide sufficient evidence of their work to prove they are not bluffing or misusing money invested for the purpose of developing their technologies and products, but they should also be protected from manipulation by investors,” Jia said.

Especially in companies involving people’s health and well-being, transparency and audits are of utmost importance.

“We need organizations like the FDA and SEC to investigate and regulate to hopefully prevent more people from being negatively impacted,” Shen said.

Among Silicon Valley entrepreneurs, Holmes’ conviction marked a rare trial outcome and serves as a reminder to executives of the importance of distinguishing between optimistic projections and misleading claims.