Disgraced Theranos founder and CEO Elizabeth Holmes to blame ‘mental illness’ in her trial defense for defrauding investors out of more than $700 million
Theranos was a privately-held health technology startup company that is now arguably the largest biomedical fraud in U.S. history. The Silicon Valley-based startup was founded in 2003. Initially, Theranos was touted as a breakthrough technology company, with claims of having devised blood tests that required only very small amounts of blood and could be performed very rapidly using its newly developed blood testing technology.
Then in March 2018, its founder, the 36-year old Elizabeth Holmes, was convicted of investor fraud after a series of Wall Street Journal (WSJ) articles revealed the tests Theranos claimed to be doing were actually being carried out by traditional machines purchased from other companies.
Holmes dropped out of Stanford University in 2003 to start Theranos. She later used her parents’education trust to found the company that would later be called Theranos. The company’s name was derived from a combination of the words “therapy” and “diagnosis.” The company’s original name was “Real-Time Cures,” which she later changed after deciding that too many people were dubious about the word “cure.” At its peak, Theranos was valued at $10 billion and made Holmes a Silicon Valley star at the age of 19.
On March 15, we wrote about Theranos after the Securities and Exchange Commission (SEC) accused Theranos founder Elizabeth Holmes and former Theranos President Ramesh “Sunny” Balwani of defrauding investors of more than $700 million through false claims about its technology. In a separate report, the SEC also said Elizabeth Holmes exaggerated the company’s revenue by 1,000 times to investors, says SEC.
Holmes and Balwani pleaded not guilty to charges they defrauded investors, doctors, and patients by falsely claiming Theranos could revolutionize medical lab testing with technology that could enable a wide array of tests with a few drops of blood.
More than two years after the SEC announcement, Elizabeth Holmes appeared before the US District Court judge in San Diego. According to her lawyers, the disgraced Theranos founder Elizabeth Holmes plans to blame ‘mental illness’ in her trial defense when she defrauded investors out of more than $700 million with her fake blood-testing technology in 2018. Holmes’ mental state had been previously discussed in sealed court documents and a closed July 8 hearing.
In a decision late Wednesday, Edward Davila, a federal judge at the US District Court in San Diego ordered Elizabeth Holmes to be examined by U.S. government experts after lawyers defending her against criminal fraud charges said they may offer evidence she suffered from a mental disease or defect. Judge Davila also overruled defense objections to letting a psychologist and psychiatrist chosen by the government examine the 36-year-old Holmes for 14 hours over two days, and having the examinations recorded on video.
Holmes’ lawyers said they intended to introduce expert evidence from a clinical psychologist “relating to a mental disease or defect or any other mental condition of the defendant bearing on the issue of guilt.” Holmes is facing a series of charges for defrauding investors out of millions with Theranos’ fake blood-testing technology.