In the world of white-collar crimes, Elizabeth Holmes is queen. While not the first or only female to be accused of fraud, Homes’ case took place at such a large scale that it garnered much media attention. Now, the court has issued a verdict.
The Rise of Theranos
Elizabeth Holmes was a young college student with ambitions larger than her mentors could comprehend. She saw an opportunity to join two of her interests: science and money. So, Elizabeth Holmes set out to change the world at 21.
She introduced a new idea to the medical technology sector: a blood-testing machine that only required one pinprick for unlimited testing. Her vision took shape and became Theranos, the now-defunct research facility where Holmes promised investors a brighter future.
If Theranos had been successful, Holmes would have revolutionized blood testing. Patients with chronic conditions often have to go for regular blood tests every few weeks, which can become tiresome and painful. If they only needed to provide one blood sample, they could get the same level of care without having to get poked and prodded every other week.
Investors, media contributors, and the great minds of Silicon Valley saw Holmes’ vision and did their best to get into the business before the board seats were gone and stock prices shot up. The tech industry had exploded, and Holmes became the darling of Silicon Valley. Media outlets compared her to Apple founder and former CEO Steve Jobs.
A Fall From Grace
Things began to take a turn for the young Elizabeth Holmes. After years of promising a revolutionary medical device, Holmes still had nothing to show for it, and her name had barely shown up in the news. The public had lost interest, and her investors were also starting to lose hope.
To compete with emerging technologies that were flashier and more applicable to the “every man,” Holmes began to embellish. She and her business partner Sunny Balwani told investors and the media that not only did the device require a single sample, but it could perform touchless examinations.
Despite having no numbers to back up her claims, Holmes told investors that their money was going directly into research and development and that there was nothing to worry about. However, despite her efforts, investors started to pull out.
Then came the killing blow. An investigation into the research facility found that the research teams used other blood testing machines to perform tests. They had known that Theranos was a failure less than two years into the business.
Naturally, investors were furious. They had been lied to, and Holmes was to blame. Finally, Elizabeth’s name was again in the headlines, but as a colossal failure instead of a revolutionary.
Elizabeth Holmes was charged with 11 counts of fraud and conspiracy to commit fraud. According to the law, fraud is the intentional or negligent misrepresentation of fact. The speaker intends for the person or group to rely on their word and act based on their information.
There are two types of fraud: intentional or negligible.
- Intentional fraud: The speaker misrepresents the truth on purpose to gain something in return, whether fame or money.
- Negligent fraud: The speaker misrepresents the truth as the result of incompetence.
When someone is intentionally fraudulent, they know the truth and how it may affect the other person but lie or misguide them to keep receiving a benefit (most often money). This type of fraud is closer to theft and relies heavily on criminal intent to convict.
On the other hand, negligent fraud means that the speaker either did not know the truth and lied unintentionally or believed that they were telling the truth but lacked evidence to prove their belief.
Negligent fraud is more or less what Holmes was accused of – she believed that Theranos would be successful but had no evidence to back up her claims. In addition to fraud, Holmes was charged with conspiracy to commit fraud. This means that she realized that her business had failed at some point but planned on lying to investors to keep the cash flow going.
Elizabeth Holmes was found guilty of four out of 11 counts of fraud. She has yet to receive her sentence, but she could face prison time.
Fraud Defense Attorneys
Fraud is a serious crime and rests in the sweet spot between federal jurisdiction and white-collar crimes. Proving innocence in court is complicated, and verifying intent is tedious, but you can pursue justice with the right legal counsel.
The Hester Law Group has over 150 years of combined legal experience. We understand the intricacies of the law and how it applies to your case. We leave no stone unturned in defense of our clients.
Contact our firm today and find out how we can fight for you.