Elizabeth Holmes, the founder of Theranos, was sentenced to 11 years and three months for fraud and deceiving investors. The sentence will also include a fine of $100-400 for each count of fraud, with restitution to be set later. Holmes has been ordered to turn herself in on April 27, 2023.
Elizabeth Holmes started Theranos in 2003 when she was 19, after dropping out of Stanford University. Theranos was to be a company that could test you for diseases such as high cholesterol, diabetes, cancer, and many in between with only a few drops of blood from a finger stick instead of drawing vials of blood.
She raised 945 million dollars from investors, including Rupert Murdoch, and Larry Ellison, Walmart´s Walton family. At one point, Theranos was valued at 9 billion dollars.
The company began to fall apart in 2015 when the Wall Street Journal started an investigation. They noted that Theranos only performed a handful of the tests it offered, did not have the equipment she claimed, and used machines bought from Siemens AG.
Whereas many startups do fail and over-deliver, Holmes deceived her investors. Reports say that two ex-employers confronted her with issues. Henry Mosely, former CFO of Theranos, was fired after confronting her and accusing her of deceiving investors. He told her that the device needed to be prepared and was providing inaccurate results.
Another employer was forced to resign; Tyler Shultz, who oversaw the recording of blood testing results, also accused Holmes of fraud. He reportedly emailed Holmes that the testing accuracy was 65-85%, and the company reported a 95% success rate.
So is this a case of faking it until you make it go wrong? Did she get the sentence she deserved?