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Disgraced Theranos Founder Elizabeth Holmes to Serve 11 Years, Three Months in Prison, Ending the Latest Chapter in the Story of the Failed Clinical Laboratory Company

Judge will decide the restitution Holmes must pay to defrauded Theranos investors at future court date; Ex-COO Ramesh “Sunny” Balwani to be sentenced next month

Clinical laboratory leaders and anatomic pathologists who closely followed the fraud trial of Elizabeth Holmes may have wondered how the Theranos founder and ex-CEO would be punished for her crimes. Now we know.

On Friday, a federal court judge sentenced Holmes to 135 months—11.25 years—in prison in the culmination of her conviction on three felony counts of wire fraud and one count of conspiracy, according to NBC Bay Area News.

Late into the four-hour sentencing hearing, Holmes tearfully spoke, according to a twitter post by NBC reporter Scott Budman, who was in the courtroom. “I am devastated by my failings,” Holmes said. “I have felt deep pain for what people went through because I have failed them … To investors, patients, I am sorry.”

Davila ordered Holmes to surrender to authorities on April 27 to begin her time behind bars. She is free until that time. Her upcoming prison term caps off one of the biggest downfalls ever of an American entrepreneur.

[We first published this article in our Dark Daily E-Briefings newsletter. Sign up for free here to stay informed on the lab industry’s most important news and events.]

Elizabeth Holmes

Elizabeth Holmes (above), founder and former CEO of Theranos, the now defunct clinical laboratory company, as she enters the federal courthouse in San Jose, Calif., prior to her sentencing on Friday. In January, Holmes was convicted on three counts of wire fraud and one count of conspiracy. Last summer, Theranos’ former CLIA laboratory director, pathologist Adam Rosendorff, MD, expressed remorse over his testimony which led to Holmes’ defense team requesting a new trial. The judge denied that request and allowed the sentencing of Holmes to proceed as scheduled. (Photo copyright: Jim Wilson/The New York Times.)

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Defense Lawyers Plan to Appeal

Dean Johnson, JD, a California criminal defense lawyer, told NBC Bay Area News during live coverage of the hearing on Friday that Holmes’ defense team will appeal her conviction.

“I have no doubt there will be an appeal in this case,” Johnson said.

Judge Edward Davila, who oversaw Holmes’ trial and sentencing hearing in US District Court in San Jose, Calif., estimated that the total loss for Theranos investors was $121 million. Investors had committed funds to support the company’s flawed Edison blood testing technology. A separate restitution hearing for Holmes will be scheduled for a later date.

Beyond the sentencing, Holmes, 38, will be saddled by infamy for the rest of her life, with her past reputation as a charismatic innovator ruined.

In “Theranos Ex-CEO Elizabeth Holmes Convicted on Three Counts of Wire Fraud and One Count of Conspiracy to Commit Fraud after Seven Days of Jury Deliberations,” we covered how a jury convicted Holmes in January on four charges of investor and wire fraud after a four-month trial. She faced up to 20 years in prison on each of those counts.

Another Theranos executive, former Chief Operating Officer and President Ramesh “Sunny” Balwani, faces sentencing on Dec. 7. A jury found Balwani guilty of two counts of conspiracy and 10 counts of wire fraud in July.

“The judge [said] evidence shows Elizabeth Holmes was leader of the company, but not necessarily the leader of the criminal acts,” Budman tweeted. Those words clearly pointed to Balwani, who Holmes’ defense team had painted as exerting control over her and the company.

Prosecutors Sought a Stiffer Sentence for Holmes

Prosecutors had asked Davila to sentence Holmes to 15 years in prison, arguing that her conviction represented “one of the most substantial white collar offenses Silicon Valley or any other district has seen,” according to NBC Bay Area News, which cited court documents. The government also wanted her to pay $803 million in restitution.

Holmes’ defense team, however, wished for no prison time at all, instead asking that Holmes serve time under house arrest. “If a period of confinement is necessary, the defense suggests that a term of 18 months or less, with a subsequent supervised release period that requires community service, will amply meet that charge,” her lawyers wrote in a court filing.

Prior to the sentencing, Davila received 130 letters supporting Holmes and asking for leniency, NPR reported. Among them was a note from William “Billy” Evans, Holmes’ partner.

“If you are to know Liz, it is to know that she is honest, humble, selfless, and kind beyond what most people have ever experienced,” Evans wrote, NPR reported. “Please let her be free.”

Holmes and Evans have a 16-month-old son together, and she is pregnant with the couple’s second child. Her first pregnancy caused her trial to be rescheduled. Prior to last week’s sentencing, some reporters covering the trial speculated that because Holmes was the mother of an infant—and now pregnant again—the judge might be more lenient in sentencing. The 11-year, four-month sentence indicates that the judge was not much influenced by that factor.

Last Minute Pitch for New Trial Failed

Holmes’ legal wranglings continued until the very end.

On Nov. 7, Davila denied her motion for a new trial. Holmes’ lawyers had argued that key prosecution witness Adam Rosendorff, MD—a pathologist who was former laboratory director at the company—expressed remorse about his own 2021 testimony during an attempt to visit Holmes’ residence on August 2022. Dark Daily covered this event in “Clinical Pathologist Once Again at the Center of a National News Story as Theranos Founder Elizabeth Holmes Seeks New Trial.”

However, Rosendorff later told the court that he stood by his testimony about problems with Theranos’ blood testing technology.

In denying the request for a new trial, Davila wrote, “The court finds Dr. Rosendorff’s statements under oath to be credible,” according to The Washington Post.

From Teen Founder to Disgraced Entrepreneur

Holmes founded Theranos in 2003 at age 19 while she was attending Stanford University as a chemical engineering major. She dropped out of Stanford as a sophomore to focus on her new company.

Theranos claimed its technology—known as Edison—could perform diagnostics tests using a finger prick and a micro-specimen vial instead of a needle and several Vacutainers of blood. The company said it could return results to patients and clinicians in four hours for about half of the cost of typical lab test fees.

However, the promise of this technology began to unravel in 2015 following an investigative article by The Wall Street Journal that revealed the company ran only a handful of tests using its technology, instead relying on traditional testing for most of its specimen work.

Following The Journal’s exposé, the Centers for Medicare and Medicaid Services (CMS) sanctioned Theranos and Holmes in 2016. Meanwhile, the US Securities and Exchange Commission (SEC) investigated Holmes for raising hundreds of millions from investors by exaggerating or making false statements about the company’s technology and financial performance.

In 2018, the US Department of Justice (DOJ) indicted Holmes and Balwani, and Theranos closed shortly after.

Convictions Validated Pathologists’, Hospital Lab Leaders’ Concerns

Fortunately, the Theranos saga has not stunted investment in healthcare technology startups. Spending was in the tens of billions in 2021, although that number has dropped this year as the COVID-19 pandemic has waned, according to TechCrunch. Nevertheless, it is safe to assume that healthcare tech investors are scrutinizing scientific data from startups more thoroughly because of the Theranos fraud case.

Meanwhile, the saga of Theranos continues to leave a bad taste in the mouths of many clinical laboratory managers and pathologists. That’s because, during the peak period of adulation and spectacular news coverage about Elizabeth Holmes and her plans to totally disrupt the clinical laboratory industry, hospital and health system CEOs believed that they would be able to downsize their in-house medical laboratories and obtain lab tests from Theranos at savings of 50% or more. Consequently, during the years 2013 through the end of 2015, some hospital lab leaders saw requests for capital investment in their labs denied or delayed.

One example of how hospital CEOs embraced news of Theranos’ blood testing technology took place at the Cleveland Clinic. Elizabeth Holmes did such a good job selling the benefits of the Edison technology, then-CEO, Toby Cosgrove, MD, placed Theranos at number three on its list of top ten medical innovations for 2015.

In later years, Cosgrove admitted that no one at Cleveland Clinic or its pathologists were allowed to examine the analyzers and evaluate the technology.

It was for these reasons that the demise of Theranos was welcomed by many hospital lab administrators and pathologists. The fact that two of Theranos’ senior executives have been convicted of fraud validates many of the serious concerns that medical laboratory professionals had at that time, but which most major news reporters and media ignored and failed to report to the public.

Scott Wallask

Related Information:

Theranos Founder Elizabeth Holmes Sentenced to More than 11 Years in Prison

Elizabeth Holmes Is Sentenced to More than 11 Years for Fraud

Theranos Ex-CEO Elizabeth Holmes Convicted on Three Counts of Wire Fraud and One Count of Conspiracy to Commit Fraud after Seven Days of Jury Deliberations

Prosecutors Push 15-year Sentence for Theranos’ CEO Holmes

Elizabeth Holmes Sentenced to 11 Years in Prison for Theranos Fraud

Clinical Pathologist Once Again at the Center of a National News Story as Theranos Founder Elizabeth Holmes Seeks New Trial

Bid for New Trial Fails, Elizabeth Holmes Awaits Sentencing

Ramesh “Sunny” Balwani Convicted by a Jury on 12 Counts of Fraud in Theranos Trial

Hot Startup Theranos Has Struggled with Its Blood-Test Technology

Monkeypox Outbreak Subsides in US, Europe, But Public Health Concerns Remain

Experts cite high vaccination rates and behavioral changes among at-risk groups, but warn about complacency; clinical laboratories should remain vigilant

In July, Scott Gottlieb, MD, Commissioner of the US Food and Drug Administration (FDA) from May 2017 to April 2019, wrote an op-ed in The New York Times titled, “Monkeypox Is About to Become the Next Public Health Failure.” In it, he wrote, “Our country’s response to monkeypox has been plagued by the same shortcomings we had with COVID-19.” But has it improved? Clinical laboratory leaders and pathology group managers will find it informative to find out what has taken place since Gottlieb made his stark prediction.

The global monkeypox outbreak that emerged last spring appears to have subsided in the US and Europe, though it remains to be seen if the disease can be completely eradicated, according to multiple media reports. As of Oct. 26, 2022, the Centers for Disease Control and Prevention (CDC) reported a 7-day rolling average of 30 cases per day in the US, down from a peak of nearly 440/day in early August.

Cases are also down in cities that earlier reported heavy outbreaks. For example, the New York City Health Department reported a 7-day average of just two cases per day on Oct. 25, compared with 73/day on July 30.

And the San Francisco Department of Public Health announced on Oct. 20 that it would end the city’s public health emergency on monkeypox (MPX) effective on Oct. 31. “MPX cases have slowed to less than one case per day and more than 27,000 San Franciscans are now vaccinated against the virus,” the agency stated in a press release.

Tedros Adhanom Ghebreyesus, PhD

“Once again, we caution that a declining outbreak can be the most dangerous outbreak, because it can tempt us to think that the crisis is over and to let down our guard,” said World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus, PhD, in an Oct. 12 global press briefing. “That’s not what WHO is doing. We are continuing to work with countries around the world to increase their testing capacity, and to monitor trends in the outbreak.” Clinical laboratories should not assume the outbreak has passed but continue to be vigilant and prepared for increased demand in monkeypox testing. (Photo copyright: ITU Pictures.)

Changing Behavior Lowers Infection Rates

In addition to high vaccination rates, public health experts have attributed the decline to behavioral changes among at-risk groups. “There were really substantial changes among men who have sex [with] men,” infectious disease physician Shira Doron, MD, of Tufts Medical Center in Boston, told ABC News.

On September 2, the CDC published the results of a survey indicating that about half of men who have sex with men “reported reducing their number of sex partners, one-time sexual encounters, and use of dating apps because of the monkeypox outbreak.”

Another likely factor is the disease’s limited transmissibility. “Initially, there was a lot of concern that monkeypox could spread widely at daycares or in schools, but, overall, there has been very little spread among children,” NPR reported.  

But citing multiple studies, the NPR story noted “that often there isn’t very much virus in the upper respiratory tract,” where it might spread through talking or coughing. “Instead, the highest levels of virus occur on sores found on the skin and inside the anus.”

These studies, along with earlier research, “explain why monkeypox is spreading almost exclusively through contact during sex, especially anal and oral sex, during the current outbreak,” NPR reported.

Monkeypox Could Mutate, experts say

Despite the promising numbers, public health experts are warning that monkeypox could remain as a long-term threat to public health. According to an article in Nature, “At best, the outbreak might fizzle out over the next few months or years. At worst, the virus could become endemic outside Africa by reaching new animal reservoirs, making it nearly impossible to eradicate.”

In addition to the limited transmissibility of the virus, Nature noted that the outbreak stems from a relatively mild form of the pathogen and is rarely fatal. As of Oct. 28, the CDC reported a total of just six confirmed deaths in the US out of a total of 28,302 confirmed cases since the first infections were reported in May.

It is possible that the virus could mutate into a more contagious form, but Nature noted that monkeypox is a DNA virus, and that they tend to mutate more slowly than RNA viruses such as SARS-CoV-2 and HIV. Nevertheless, University of Alabama at Birmingham School of Medicine bioinformatician Elliot Lefkowitz, PhD, warned that a “worrisome mutation” could arise if the outbreak continues for much longer.

Another expert, Jessica Justman, MD, infectious disease specialist, epidemiologist, and associate professor at Columbia University Mailman School of Public Health, cautioned that declining case numbers might not reflect the true prevalence of the disease.

“I have no confidence that all the people who need to be tested are being tested,” she told Nature. She expressed concerns that people could resume risky behavior if they think the danger has passed.

Another question is whether currently available vaccines offer long-lasting protection. And though reported case numbers are down in the US and Europe, they are rising in parts of Africa and South America, Nature noted.

Gottlieb’s Dire Prediction

The decline in new infections followed dire warnings last summer about the possible consequences of the outbreak. In his New York Times op-ed, former Gottlieb criticized the CDC for being slow to test for the virus. He wrote, “[I]f monkeypox gains a permanent foothold in the United States and becomes an endemic virus that joins our circulating repertoire of pathogens, it will be one of the worst public health failures in modern times not only because of the pain and peril of the disease but also because it was so avoidable.”

At the time of his writing, Gottlieb was right to be concerned. On July 29, the CDC reported a seven-day moving average of 390 reported cases per day. According to the federal agency, a reported case “Includes either the positive laboratory test report date, CDC call center reporting date, or case data entry date into CDC’s emergency response common operating platform, DCIPHER.”

Quashing the outbreak, Gottlieb estimated, would have required about 15,000 tests per week among people presenting symptoms resembling monkeypox. But between mid-May and the end of June, he noted, the CDC had tested only about 2,000 samples, according to the federal agency’s July 15 Morbidity and Mortality Weekly Report (MMWR).

As a remedy, Gottlieb called on the Biden administration to re-focus the CDC’s efforts more on disease control “by transferring some of its disease prevention work to other agencies,” including the FDA.

Perhaps his suggestions helped. Confirmed monkeypox case are way down. Nevertheless, clinical laboratory leaders should continue to be vigilant. Growing demand for monkeypox testing could indicate an increase in reported cases as we enter the 2022 influenza season, which is predicted to be worse than previous years. Dark Daily covered this impending threat in “Australia’s Severe Flu Season Could be a Harbinger of Increased Influenza Cases in US and Canada Straining Already Burdened Clinical Laboratories.”

Stephen Beale

Related Information:

Monkeypox Cases in the US Are Way Down—Can the Virus Be Eliminated?

What Does the Future Look Like for Monkeypox?

NYC Has Almost Eliminated Monkeypox. An NYU Biology Prof on What the City Needs to Reach Zero

New York and Nevada Announce First Monkeypox Deaths as Official CDC Tally Rises to Four

Monkeypox Update: FDA Takes Significant Action to Help Expand Access to Testing

Gottlieb Predicts Monkeypox Will Become Public Health Failure

Monkeypox Is About to Become the Next Public Health Failure

Australia’s Severe Flu Season Could be a Harbinger of Increased Influenza Cases in US and Canada Straining Already Burdened Clinical Laboratories

Balwani and Holmes’ Personal Relationship Takes Center Stage in Criminal Trial, Fueling Continued Public Interest in Theranos Fraud Saga

Even as Balwani’s trial moves ahead, Hulu’s miniseries ‘The Dropout’ chronicles the pair’s romance and the company’s downfall while providing controversial subject matter for various media outlets

Unlike Theranos founder Elizabeth Holmes’ criminal trial for fraud which generated daily headlines across the nation, the related fraud trial of ex-Theranos COO Ramesh “Sunny” Balwani is not getting the same news coverage. Therefore, media have shifted their reporting to Balwani’s personal relationship with the Holmes, which is clearly having its moment in the media spotlight.

The release of the Hulu miniseries “The Dropout”—which chronicles Holmes’ failed attempt to revolutionize the clinical laboratory industry by developing a device capable of performing multiple clinical blood tests using a finger-stick of blood—created the initial media and TV-viewer buzz.

Now a diverse range of media, including Fortune, The New York Post, and The Guardian, are turning their attention to the former Theranos executives’ private relationship during the time when they were in charge at the failed medical laboratory company.

As “The Dropout” outlines, Holmes gained celebrity status after dropping out of Stanford University at age 19 and founding Theranos in 2003. Years later, when Theranos claimed its Edison blood-testing device could conduct hundreds of blood tests using a finger-prick of blood, the startup’s valuation soared to nearly $9 billion in 2014, making Holmes a billionaire based on her 50% stake in the company, Investopedia reported.

In “What Happened to Elizabeth Holmes and Sunny Balwani? Where the Shamed Theranos Execs are Today,” Fortune used the release of “The Dropout” to publish an update on Holmes and Balwani. The magazine notes Holmes’ family connections—she was a descendant of the founders of America’s first yeast company and the daughter of a former Enron executive and congressional aide—helped her early efforts at fundraising for Theranos.

Fortune also stated that Holmes’ “pedigreed background” enabled her to attract “luminaries” such as former Secretary of State Henry Kissinger and former CDC Director William Foege to the Theranos board and gained her access to high-profile investors.

Ramesh "Sunny" Balwani
In U.S. District Court Northern District of California, ex-Theranos president and COO Ramesh “Sunny” Balwani (above) faces charges for allegedly defrauding patients and investors about Theranos. His defense team has attempted to distance their client from the day-to-day decision-making in the clinical laboratory company, while prosecution witnesses are attempting to show Balwani not only invested money in the startup but orchestrated many of the company’s actions. Balwani has pleaded not guilty to all charges. (Photo copyright: David Paul Morris, Fortune.)

Theranos, Holmes Cloaked in Secrecy, according to Fortune

While Holmes sought the spotlight when promoting Theranos, Fortune maintains the company’s work culture and Holmes herself were clocked in secrecy. The article states Holmes hired bodyguards to serve as her chauffeurs, installed bulletproof glass in her office windows, and did not allow workers in separate departments to discuss projects with one another.

Balwani met Holmes in 2002 while both were studying in Beijing as part of a Mandarin language summer program. He was 37 and married at the time, while Holmes was an 18-year-old high school student. Balwani was attending an MBA program at the University of California, Berkeley, which he entered after selling his shares in software company Commerce One in 2000 for nearly $40 million.

While Balwani had no training in biological sciences or medical devices, Holmes named him president of Theranos in 2009. The pair dated for a dozen years, but they kept their relationship secret from Theranos workers and investors. During Holmes’ fraud trial, Dark Daily reported on their private text message exchanges and her claims against Balwani of “intimate partner abuse.” (See Dark Daily, “Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial.”)

Their relationship reportedly ended in 2016.

The New York Post reported Balwani sold the upscale Silicon Valley home he previously shared with Holmes for $15.8 million this past January. The 6,800-square-foot, five-bedroom, seven-bathroom house in Atherton, Calif., is a one-acre property, which The Post states was purchased by the couple for $9 million in 2013. Balwani bought out Holmes’ 50% stake in 2018.

Aron Solomon, a Chief Legal Analyst for legal marketing firm Esquire Digital, is not surprised by the interest in all things Theranos-related.

“We are seeing a ton of interest following the Holmes trial, and I don’t think it’s going to go away,” he told The Guardian.

Potential Reason for Delay in Holmes’ Sentencing

Holmes was convicted in January on four counts of fraud, but she is not expected to be sentenced until September. Amanda Kramer, JD, a partner in the White Collar Defense and Investigations practice at Covington and Burling, LLP, and a former federal prosecutor, suggests that Holmes’ sentencing date may have been delayed until after Balwani’s trial due to the potential for new information to come to light.

“It’s not typical for a case to be sentenced eight months out, but this is not a typical case in many senses,” Kramer told NPR. “And some facts established in Balwani’s trial might prove to be relevant in Holmes’ sentencing.”

So, it appears clinical laboratory directors and pathologists may find more interesting insights about the problems at Theranos emerging from court testimony when it is time for Holmes to be sentenced and during the remaining days of Balwani’s trial. Stay tuned. Dark Daily will continue to bring you the relevant facts of the case.

Andrea Downing Peck

Related Information:

What Happened to Elizabeth Holmes and Sunny Balwani? Where the Shamed Theranos Execs Are Today

Theranos Merchandise on eBay Sparks Bloodlust Among Elizabeth Holmes Fans

Theranos: A Fallen Unicorn

Ex-Theranos Boss Sells California Home He Shared with Elizabeth Holmes

Former Theranos CEO Elizabeth Holmes to Be Sentenced on Sept. 26

Text Messages Between Theranos Founder Elizabeth Holmes and Ex-Boyfriend Ramesh “Sunny” Balwani Grab Headlines in Early Days of Fraud Trial

Ex-Theranos CEO Elizabeth Holmes Will Be Free on Bail Until September 26 Sentencing Hearing for Criminal Fraud Conviction

Start of ex-Theranos president and COO Sunny Balwani’s federal trial will be pushed to mid-March due to COVID-19 spike in California

Just when most clinical laboratory managers and pathologists thought the guilty verdict in the Elizabeth Holmes fraud case would bring an end to the saga, we learn her chapter in the Theranos story will instead extend another eight months to September when the former Silicon Valley CEO will be sentenced. However, a brand-new chapter will begin in March when the fraud trial of ex-Theranos president and COO Ramesh “Sunny” Balwani begins.

Holmes’ fraud trial concluded on January 3 with the jury convicting her on one count of conspiracy to defraud investors and three counts of wire fraud after seven days of deliberation and nearly four months of trial proceedings.

Holmes remains free on a $500,000 bond while awaiting sentencing.

Elizabeth Holmes

Elizabeth Holmes is seen above arriving at the US District courthouse in San Jose, Calif. On January 3, the former Theranos CEO was convicted on three counts of wire fraud and one count of conspiracy to defraud investors. US District Judge Edward Davila set Holmes’ sentencing date for September 26. Clinical laboratory directors and pathologists who have closely followed the trial will have to wait eight months for the conclusion of this chapter in the Theranos saga. (Photo copyright: The Guardian.)

“I would be utterly shocked if she wasn’t sentenced to some term of imprisonment,” Amanda Kramer, JD, a former federal prosecutor who is now a partner with New York-based Covington & Burling LLP, told NPR.

“What is the sentence that will deter others who have a failing business from making the choice to commit fraud, rather than owning up to the failings and losing their dream?” she added.

Holmes, 37, faces a possible prison sentence of 20 years in prison as well as a $250,000 fine and possible restitution. But some legal experts expect a much shorter prison sentence for the disgraced CEO, who has no prior criminal history and is a first-time mother of a son born last July.

While sentencing typically takes place within a few months of a verdict being reached in a federal criminal trial, US District Judge Edward Davila set 1:30 p.m. September 26, 2022, as the date for Holmes’ sentencing hearing, according to his order dated January 12.

The Mercury News reported the lengthy delay in sentencing may be due to the start of Balwani’s upcoming trial on identical fraud charges. The delay in Holmes’ sentencing will allow for Balwani’s trial to begin in mid-March after being pushed back one month due to a spike in COVID-19 cases in California, The Mercury News reported.

Judge Davila will preside over Balwani’s trial as well.

Jury Acquits Holmes on Patient-related Charges

Holmes was acquitted of conspiracy to defraud patients of the now-defunct blood-testing laboratory and the jury failed to reach a unanimous decision on three other wire fraud charges.

University of Michigan Law Professor Barbara McQuade, a former US Attorney and an NBC News Legal Analyst, told CNBC she expects prosecutors to rethink their strategy in the Balwani trial based on the jury’s acquittal of Holmes on conspiracy and fraud charges involving Theranos patients.

“Knowing that this jury acquitted on all of the patient counts, I think that strategically, they should look to find a more direct way to explain why that is part of the fraud, that they necessarily knew that ultimately patients would be defrauded. And that although they didn’t know these individual patients by name, they knew that they existed in concept,” McQuade said.

One of the jurors in the Holmes’ trial, Wayne Kaatz, told ABC News he and other jurors were dismayed by their inability to come to a unanimous consensus on the three of the charges. A mistrial was declared on those three counts.

“We were very saddened,” Kaatz said. “We thought we had failed.”

Did Holmes Charm the Jury?

When Holmes dropped out of Stanford at age 19 to form Theranos, her goal, she claimed during testimony, was to transform healthcare by creating a blood-testing device capable of performing hundreds of clinical laboratory tests using a finger-stick of blood. She became a Silicon Valley sensation because of her charisma and charm, which she used to sell her dream to big money investors such as Oracle co-founder Larry Ellison and former US Secretary of State George Shultz.

Kaatz acknowledged Holmes’ personality also impacted the jury.

“It’s tough to convict somebody, especially somebody so likable, with such a positive dream,” Kaatz explained to ABC News, noting, however, that he voted guilty on the three counts on which the jury could not agree. “[We] respected Elizabeth’s belief in her technology, in her dream. [We thought], ‘She still believes in it, and we still believe she believes in it.’”

In the light of Holmes’ conviction, McQuade suggested it would not be shocking to see Balwani consider a plea deal in exchange for a lighter sentence.

“Could we perhaps, enter a guilty plea and get a reduction for acceptance of responsibility?” she said. “It’s certainly something that you have to look at.”

And so, the saga continues. Clinical laboratory directors and pathologists who followed Holmes’ trial with rapt interest should prepare for a new set of twists and turns as Ramesh Balwani prepares to face his own day in court.

Andrea Downing Peck

Related Information:

Exclusive: Jury Speaks Out After Convicting Elizabeth Holmes

Elizabeth Holmes: Theranos Fraudster to Avoid Sentencing for at Least Eight Months

Theranos Ex-President’s Fraud Trial Delayed by COVID Surge

United States v. Elizabeth Holmes, et al.: 18-CR-00258-EJD

Former Theranos CEO Elizabeth Holmes to be Sentenced on Sept. 26

Elizabeth Holmes Verdict Complicates Upcoming Trial of Her Ex-Boyfriend and Former Theranos COO Sunny Balwani

Two Important Aspects for Clinical Laboratories to Consider Following Elizabeth Holmes’ Conviction

Theranos Ex-CEO Elizabeth Holmes Convicted on Three Counts of Wire Fraud and One Count of Conspiracy to Commit Fraud after Seven Days of Jury Deliberations

Theranos Whistleblower Tyler Shultz Celebrates Former CEO Elizabeth Holmes’ Guilty Verdict by Popping Champagne with Family Members

Theranos Whistleblower Tyler Shultz Celebrates Former CEO Elizabeth Holmes’ Guilty Verdict by Popping Champagne with Family Members

As a Theranos insider and whistleblower, Tyler Schultz was able to provide information about the ongoing failures in medical laboratory testing at the once-high-flying Theranos to regulators and at least one journalist

What’s it like to be a whistleblower in a high-profile clinical laboratory? Few clinical laboratory workers will ever know. But former Theranos employee Tyler Shultz does know, after helping to expose the Silicon Valley blood-testing startup’s deceptions.

The 31-year-old Shultz reportedly celebrated the news of former Theranos CEO Elizabeth Holmes’ conviction on four charges of defrauding investors with champagne, joy, and a healthy dose of vindication, according to NPR.

Tyler Shultz


“This story has been unfolding for pretty much my entire adult life,” Tyler Shultz (above), whistleblower in the Elizabeth Holmes fraud trial, told NPR from his parents’ home in Silicon Valley. “All of a sudden, it was just a weight was lifted. It’s over. I can’t believe it’s over,” he added. A former employee of now defunct clinical laboratory company Theranos, Shultz is CEO at Flux Biosciences, a company he co-founded. (Photo copyright: Deanne Fitzmaurice/NPR.)

Shultz Interns Briefly at Theranos

In 2011, Shultz was a biology major at Stanford University—where Elizabeth Holmes herself briefly attended—when his grandfather, former US Secretary of State George Shultz, a Theranos board member, introduced him to Holmes.

According to NPR, the younger Shultz was so impressed by the charismatic Holmes that he asked her if he could intern with Theranos after his junior year. Following his internship, he accepted a full-time position as a research engineer with Theranos, a stint that lasted only eight months. Shultz quit Theranos the day after he emailed Holmes in 2014 to alert her to failed quality-control checks and other troubling practices within the company’s clinical laboratory.

According a 2016 profile of Shultz in The Wall Street Journal (WSJ), his email to Holmes resulted in a “blistering” reply from then-Theranos President and COO Ramesh “Sunny” Balwani, who “belittled Shultz’s grasp of basic mathematics and his knowledge of laboratory science.”

Yet, Shultz told NPR, “It was clear that there was an open secret within Theranos that this technology simply didn’t exist.”

After leaving Theranos, Shultz became a key source for the WSJ’s 2015 exposé of Theranos. Using an alias, he also contacted state regulators in New York about the Theranos Edison blood-testing device’s shortcomings. In response, Theranos responded with threats of lawsuits and intimidation, the WSJ reported.

In an interview with CBS News, Shultz said, “I am happy that she was found guilty of these crimes and I feel like I got my vindication from that, and I feel good about that.”

Whistleblowers Were Critical to WSJ’s Investigation

Former WSJ reporter John Carreyrou, who authored the newspaper’s investigative series into Theranos, credits the Theranos whistleblowers for blowing the cover on the clinical lab company’s deceptions.

“I would not have been able to break this story without Rosendorff, Tyler, and Erika,” Carreyrou told NPR, referring to Shultz and two additional Theranos whistleblowers: one-time Theranos Laboratory Director Adam Rosendorff and laboratory associate Erika Cheung. “Tyler and Erika were corroborating sources, and that was absolutely critical.”

Dark Daily reported on trial testimony given by four former Theranos clinical laboratory directors in “Another Former Theranos Clinical Laboratory Director Testifies in Holmes’ Fraud Trial about Irregularities with Proprietary Edison Blood-Testing Technology.”

In the interview with CBS News, Tyler described the damage his role as a Theranos whistleblower caused to his relationship with his grandfather, former Secretary of State and Theranos board member George Shultz. Tyler said the elder Shultz did not believe his claims about Theranos’ regulatory deficiencies and the Edison device’s shortcomings until he neared the end of his life.

“That was extremely tough. This whole saga has taken a financial, emotional, and social toll on my relationships. The toll it took on my grandfather’s relationship was probably the worst. It is tough to explain. I had a few very honest conversations with him,” Shultz told CBS News.

While the elder Shultz never apologized to his grandson, Tyler said his grandfather ultimately acknowledged he was right.

“In one of my last conversations with him he told me a story about how he got Elizabeth invited during fleet week in San Francisco to go give a speech to United States Navy sailors. He said with tears in her eyes, she told the room about how she was so honored and humbled that her life’s work would be saving the lives of United States servicemen and women,” Shultz recalled in the CBS News interview.

“He said he could not believe that anybody could get in front of these men and women who are willing to put their lives in front of our country and lie directly to their face as convincingly as she lied,” he added.

George Shultz died in February 2021.

Jury’s Ruling on Defrauding Patients

In an interview with CNBC, Shultz said his one disappointment with the verdict was that Holmes was not found guilty of defrauding patients. Calling the patients “the real victims,” Shultz said, “I did what I did. I stuck my neck out to protect those patients, not to protect Betsy DeVos’ $100 million investment.” (The jury voted Holmes guilty on three counts of wire fraud and one count of conspiracy to commit fraud against Theranos’ investors, but not guilty on conspiracy to defraud and commit wire fraud against Theranos patients.)

Tyler Shultz was listed as a potential witness in the Holmes trial but was not called to take the stand. He—along with many clinical laboratory directors and pathologists who have closely followed the Holmes trial—will now await news of Holmes’ sentencing. Holmes could face up to 20 years in prison for each guilty verdict, but she’s likely to receive a lighter sentence.

The trail of Ramesh Balwani is expected to begin sometime in March. That trial can be expected to produce additional revelations about the problems of Theranos and how and why management is alleged to have knowingly reported inaccurate clinical laboratory test results to thousands of patients.

—Andrea Downing Peck

Related Information:

Theranos Whistleblower Celebrated Elizabeth Holmes Verdict by ‘Popping Champagne’

Theranos Whistleblower Says He’s ‘Happy’ Elizabeth Holmes Was Found Guilty

I am Proud I Blew Whistle on Theranos, Says Tyler Shultz

‘I Feel Like I Got My Vindication’: Theranos Whistleblower Reacts to Elizabeth Holmes’ Conviction

Prosecutor in Theranos Case Closes by Telling Jury that Elizabeth Holmes ‘Chose Fraud Over Business Failure’

Another Former Theranos Clinical Laboratory Director Testifies in Holmes’ Fraud Trial about Irregularities with Proprietary Edison Blood-Testing Technology

Former Theranos Lab Director and Staff Testify in Ongoing Elizabeth Holmes Fraud Trial That They Voiced Concerns about Reliability and Accuracy of Edison Blood-Testing Device

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