Before FTX in cryptocurrencies and Nikola in electric vehicles, there was Theranos. One of the biggest scams to shake Silicon Valley and Wall Street, perhaps the mother of all contemporary scandals between hi-tech and finance, has reached its final chapter. Elizabeth Holmes, founder and top executive of the startup that in promising a drastic revolution in blood tests had flown to a valuation of 9 billion dollars, will serve 11 years and three months in prison – 135 months. The sentence handed down by the San Diego court judge in charge of the case was less than the maximum possible and what the prosecution had asked for, but much heavier than the defense had hoped. The judge announced a further hearing to decide on damages and compensation. Holmes, who is due to begin serving his sentence on April 27, has announced plans to appeal.
From dropout to hi-tech star
Holmes is 38 today and he was 19 when he gave birth to his company in the most classic of traditions, leaving Stanford University as a dropout and using the funds from his tuition otherwise, that is, to launch his startup. She also became one of the rare women to break through in American hi-tech, still often dominated by men. She has now heard the judge’s decision after being found guilty last January, at the end of a months-long trial, of four counts of defrauding investors, because her innovative technology did not actually exist.
The epic of Theranos
The Theranos saga, which went bankrupt in 2018, has become a symbol of the risks of excess, manipulation and fraud in the world of hi-tech, with the continuous hunt for the next genius and the innovation of the future to make a fortune accompanied by inadequate controls and checks by both the authorities and sometimes sophisticated financiers. The deception in the story was exposed by investigative reports by the Wall Street Journal and has since spawned books, films and television dramas.
Analyzes with a drop
Theranos had raised 945 million from investors and obtained agreements and partnerships with prestigious pharmacy chains, such as Walgreens, claiming the success of an invention that would have allowed extensive analyzes using very few, simple drops of blood from a finger prick. In reality, the company relied on traditional technologies at best, because its mysterious innovation had never worked as advertised.
An exemplary sentence?
Judge Edward Davila’s decision, in addition to the merits of the case, was complicated by the public significance of the scandal. From pressures to send a message of prevention and deterrence of similar scams. Holmes risked up to 20 years in prison, with the public prosecution having asked for 15 years behind bars and 800 million in damages, accusing the entrepreneur of having also put patients’ health at risk by lying about the effectiveness of her she. The defense had instead proposed no more than 18 months in prison, possibly only house arrest and community service. In support of Holmes, who apologized to a court over the scandal, she also cited dozens of letters from supporters who still portray her above all as an idealistic businesswoman. In the end, the sentence imposed seemed in line with observers’ predictions: on average, according to studies cited by the Wall Street Journal, women convicted of similar crimes receive eleven years in prison, compared to sentences closer to 20 years for men.
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Theranos scam, Elizabeth Holmes sentenced to over 11 years in prison
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