Such a Positive Dream

Deborah Friedell

On Monday, twelve jurors in San Jose agreed, unanimously, that Elizabeth Holmes was guilty on four counts, including ‘conspiracy to commit wire fraud’ against investors in her company, Theranos. On the charges that she defrauded patients, she was found not guilty. On other charges, regarding particular investors, jurors were unable to reach a verdict. It was a win for the prosecution – Holmes will go to prison – though the mixed bill suggested it had been a near thing. One of the jurors (an actor with a Daytime Emmy for writing the Tiny Toon Adventures theme song) gave an interview to ABC News, reported more fully on The Dropout podcast. When it began deliberating, the jury was divided on ‘most everything’, he said. ‘It’s tough to convict somebody, especially somebody so likeable, with such a positive dream.’

Holmes’s invention was science fiction: her ‘Edison device’ was never capable of running hundreds of medical tests, concurrently, from a single drop of blood. Her defence was that she was very young (nineteen when she dropped out of Stanford to start Theranos), and her older, more experienced subordinates hadn’t told her – in non-technical language that she could understand – that she was deluded. If she hadn’t intended to deceive anyone then she was guilty of incompetence but not fraud. Her lawyers also suggested that her investors should have been more discerning: it wasn’t Holmes’s fault if they weren’t good at their jobs.

During her seven days on the stand, Holmes insisted that, to the best of her recollection, she’d spoken in the future tense to investors about what Theranos might one day be able to do for humanity, but they must have mistakenly thought that she was speaking in the present tense. Or (though she didn’t quite say this explicitly) they were sour about having lost so much money – collectively, $945 million – and were out for revenge.

It was true, Holmes admitted, that she had sometimes sent reports to investors festooned with the logos of pharmaceutical companies; she hadn’t meant anyone to think that Pfizer or Schering-Plough had written or authorised those reports, only that they had done some work together, and she wanted the other companies to get credit. She was sorry about this – she realised now how she must have given her investors the wrong impression. She also regretted that she had mishandled complaints from whistleblowers: it hadn’t been her intention to keep honest employees from going public about her faulty devices, but she had been so certain they were mistaken, and wanted to prevent them from spreading mistruths.

She regretted that she had relied too much on her deputy, Sunny Balwani, who was twenty years older than her, and had also secretly been her boyfriend. She said that Balwani had dictated almost every aspect of her life: how she had behaved as CEO, what she ate, how she spoke; she had slept with him even when she didn’t want to, rather than upset him. She said that she had come under Balwani’s control after she had been raped by another man: she hadn’t dropped out of Stanford in order to commit fraud, but because she had been traumatised, and perhaps still was. Balwani’s trial is due to begin next month.

Holmes reminded the jury that she had never sold any of her stock in Theranos: even when her shares were worth more than $1 billion she hadn’t cashed out, and when the company failed she had been left with nothing. She had been willing to go down with the ship.

Her trial lasted fifteen weeks; there were 32 witnesses and 931 exhibits, even after some evidence was excluded. Much of the material was dry and technical. Theranos had also deleted – they claimed it was an accident – a database that might have shown just how many of their blood tests were invalid. Two of the government’s witnesses were patients who had paid for faulty Theranos test results, but the prosecution wasn’t able to demonstrate that faulty tests were the norm.

The pundits were in agreement: the verdict would come down to whether you believed Holmes was the naif she now appeared to be – dressed in light colours, her blonde hair in soft curls – who often walked into court holding her mother’s hand (she’s now 37 years old). The trial wasn’t televised, but the spectators who would queue from 3 a.m. to get seats in the courtroom tweeted that she seemed sympathetic and controlled: if all you knew about Holmes was what you’d heard in court – if you hadn’t read John Carreyrou’s book Bad Blood or listened to The Dropout – you might well have thought her sincere, genuinely apologetic that she couldn’t answer the prosecutor’s questions to his satisfaction. Unwisely optimistic in her youth, she now hoped for some indulgence; she had recently given birth to her first child. Instead of the $30,000 handbags that she used to favour, she now touted – no less ostentatiously? – a diaper bag.

During its deliberations, the jury asked to review only one piece of evidence: an audio recording that an investor, Bryan Tolbert, had made of Holmes speaking on a conference call in 2013. Her tenses are shaky. I’m not sure where she is in time when she describes what her blood analysers will mean for the US military: ‘The ability to take a technology like this and put it in flight, specifically on a medevac, has the potential to change survival rates. And what it does is it makes it possible to begin transfusions and stabilisation in place.’ Holmes refers to her company’s ‘partnerships with pharmaceutical companies and our contracts with the military’. ‘We’ve also been doing a lot of work with Special Operations command,’ she says. There weren’t any partnerships; there was no work with Special Operations command. And her voice isn’t a little girl’s: she’s the founder and chief executive of a start-up that’s going to change the world. All she needs is for you to invest a few hundred million dollars, and get out of her way.


  • 5 January 2022 at 5:38pm
    Paul Most says:
    Once a con artist, always a con artist.

  • 5 January 2022 at 6:03pm
    Peter Lucey says:
    Thanks for this - I enjoyed "Bad Blood" - and kudos to Rupert Murdoch's Wall St Journal for busting this (and the 1MDB scandal).

    I noted: "Holmes reminded the jury that she had never sold any of her stock in Theranos: even when her shares were worth more than $1 billion she hadn’t cashed out, and when the company failed she had been left with nothing. She had been willing to go down with the ship".

    I thought Theranos had never gone public? How could Ms Holmes have sold any stock?

    • 6 January 2022 at 4:19pm
      Graucho says: @ Peter Lucey
      Rupert Murdoch was one of the investors.

    • 6 January 2022 at 5:27pm
      Peter Lucey says: @ Graucho
      Hi - yes he was, and lost money. (I understood Ms Holmes called Murdoch, asking him to kill the story, and he refused.)

    • 12 January 2022 at 7:13am
      Shubhang Shankar says: @ Peter Lucey
      It is possible to sell stock in private companies as well, as a secondary transaction, wherein an incoming investor could buy stock from existing investors / employees. It wouldn't have been possible for her to sell all her holdings but she could have definitely taken 10s if not 100s of millions from some late stage investors

  • 6 January 2022 at 3:38am
    Claude says:
    I’d like to see some comprehensible description of the ‘workings’ of the Theranos contraption. Was it plainly incapable of that one drop analysis of multiple conditions?

  • 6 January 2022 at 11:59am
    eeffock says:
    'they were sour about having lost so much money – collectively, $945 million – and were out for revenge'

    the point, exactly. 'they' excuse all sorts of bad behavior among their own, except this ...

  • 10 January 2022 at 1:49am
    stevemerlan says:
    Isn't it odd that there is so little reported about Holmes' early years as a student and then as a 19 year old CEO? Someone so deluded ( to be charitable ) or so intent on deluding others presumably gave some sign of a character disorder before she flew on corporate jets and had ex-secretaries of state as members of her board. Even a story as strange as this must have a beginning somewhere, rather than emerging from a Big Bang.

    Steve Merlan
    Santa Fe NM

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