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Press Release

Theranos Founder Elizabeth Holmes Found Guilty Of Investor Fraud

For Immediate Release
U.S. Attorney's Office, Northern District of California
Jury Concludes Holmes Perpetrated Scheme To Defraud Investors

SAN JOSE - A jury found Elizabeth A. Holmes guilty of one count of conspiracy and three counts of wire fraud in connection with a multi-million-dollar scheme to defraud investors in Theranos, Inc., announced United States Attorney Stephanie M. Hinds; Federal Bureau of Investigation (FBI) Special Agent in Charge Craig D. Fair; Food and Drug Administration (FDA) Acting Commissioner Janet Woodcock; and U.S. Postal Inspection Service (USPIS) Inspector in Charge Rafael Nuñez.  The verdicts follow a 15-week trial before the Honorable Edward J. Davila, United States District Judge.  

“The jurors in this 15-week trial navigated a complex case amid a pandemic and scheduling obstacles,” said U.S. Attorney Hinds.  “I thank the jurors for their thoughtful and determined service that ensured verdicts could be reached.  The guilty verdicts in this case reflect Elizabeth Holmes’ culpability in this large-scale investor fraud and she must now face sentencing for her crimes.”

“Elizabeth Holmes chose fraud over business failure.  A jury has determined, beyond a reasonable doubt, that she intentionally misled investors,” said Special Agent in Charge Craig Fair. “I want to thank the FBI San Francisco agents and analysts who spent years investigating allegations of fraud within Theranos to uncover the truth and ensure justice in this case.”

“The FDA’s Office of Criminal Investigations (OCI) will continue to investigate and help bring to justice individuals and companies responsible for putting the public health at risk,” said FDA Assistant Commissioner for Criminal Investigations Catherine A. Hermsen. “FDA-OCI is proud to have partnered with the United States Attorney’s Office and its law enforcement counterparts to bring this prosecution.” 

“The U.S. Postal Inspection Service is committed to protecting consumers and investors from fraud,” said USPIS Inspector in Charge Nuñez. “We are proud of the dedication shown by Postal Inspectors and our partners at the U.S. FDA and the FBI by seeing this case through to a verdict.” 

Holmes, 37, of Woodside, Calif., founded Theranos in 2003.  Theranos was a blood testing company based in Palo Alto and Newark, Calif.  Holmes used a combination of direct communications, marketing materials, statements to the media, financial statements, models, and other information to induce investments.  She claimed Theranos had developed an analyzer, variously referred to as, among other things, the Theranos Sample Processing Unit (TSPU), Edison, or minilab.  She claimed the analyzer was able to perform a full range of clinical tests using small blood samples drawn from a finger stick.  She also represented that the analyzer could produce results that were more accurate and reliable than those yielded by conventional methods—all at a faster speed than previously possible.  

The evidence submitted during the trial demonstrated Holmes knowingly made materially false representations to investors and potential investors about the analyzer.  For example, the evidence showed that Holmes knew the analyzer had accuracy and reliability problems, performed a limited number of tests, was slower than some competing devices, and, in some respects, could not compete with existing, more conventional machines.  Evidence also showed that Holmes resorted to using conventional machines bought from third parties to perform much of Theranos’s blood testing.

The trial included evidence that Holmes made numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects.  For example, the evidence showed that Holmes represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015 when, in truth, she knew Theranos would generate only negligible or modest revenues in 2014 and 2015.  

Further, the evidence showed that Holmes represented to investors that Theranos had a profitable and revenue-generating business relationship with the United States Department of Defense and that Theranos’s technology had deployed to the battlefield when, in truth, Theranos had limited revenue from military contracts and its technology was not deployed in the battlefield.  The evidence showed Holmes represented to investors that Theranos had been comprehensively validated by numerous major pharmaceutical companies and provided reports to investors with logos from pharmaceutical companies falsely suggesting the pharmaceutical companies endorsed Theranos.  In addition, the evidence showed that Holmes represented to investors that Theranos would soon dramatically increase the number of Wellness Centers within Walgreens stores even though Theranos’s retail Walgreens rollout had stalled because of several issues.

Holmes was initially charged on June 14, 2018.  On July 28, 2020, a federal grand jury returned a superseding indictment charging Holmes with two counts of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and ten counts of wire fraud, in violation of 18 U.S.C. § 1343.  One of the conspiracy counts alleged Holmes defrauded investors while the second count alleged Holmes defrauded patients who used Theranos services.  Similarly, the indictment charged Holmes with ten counts of wire fraud, several of the counts alleging investor fraud and several alleging Holmes defrauded patients who were induced to purchase Theranos services.  

The jury convicted Holmes of the investor wire fraud conspiracy count and three substantive wire fraud counts relating to the scheme to defraud investors, including wire transfers totaling more than $140 million.  The jury acquitted Holmes of the patient-related conspiracy wire fraud count and three additional wire fraud counts.  One count of wire fraud relating to a Theranos patient was dismissed during the trial.  The jury could not reach a unanimous verdict with respect to three investor fraud-related counts.

Holmes faces a maximum sentence of twenty (20) years in prison, and a fine of $250,000, plus restitution, for the conspiracy count and each count of wire fraud.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Judge Davila has not yet scheduled Holmes’s sentencing hearing.  She remains free on bond, pending further hearings.

Assistant U.S. Attorneys Robert S. Leach, Jeff Schenk, John C. Bostic, and Kelly Volkar are prosecuting the case with the assistance of Lakisha Holliman, Madeline Wachs, Elise Etter, Susan Kreider, and Leeya Kekona.  The prosecution is the result of an investigation by the FBI, USPIS, and FDA Office of Criminal Investigations.   

Updated January 4, 2022

Financial Fraud
Securities, Commodities, & Investment Fraud