United States: We explain the Theranos trial, a scientific fraud case that rocked Silicon Valley

His meteoric rise came to an abrupt end. The trial of Elizabeth Holmes, founder of Theranos, begins Tuesday, September 7, in court in San José (California), a week after the selection of the jurors. Having become a billionaire at age 30, thanks to her company that promised to transform the blood testing market, often compared to Steve Jobs, the American is now on trial for fraud and criminal conspiracy (Ramesh “Sunny” Balwani, his former chief of operations and ex-partner, will be judged separately). Eleven charges are filed against Elizabeth Holmes, who faces up to twenty years in prison and severe fines. Explanations.

A company that should revolutionize blood testing

Elizabeth Holmes creates Theranos in 2003, from a word portmanteau born from the contraction of English words therapy (therapy) and diagnosis (diagnosis). She was 19 at the time and still a student at Stanford University. With Theranos, the young woman plans to simplify blood tests in the laboratory. The company intends to produce diagnostic tools on a large scale, faster and cheaper than traditional laboratories, using new technologies.

The businessman promises that a very small amount of blood will allow up to 200 tests to be carried out at the same time and will interest investors very quickly. In 2014, the Theranos company is valued at $9 billion. Elizabeth Holmes then becomes the youngest billionaire who has not inherited her fortune, valued at $3.6 billion by the magazine. forbes. In 2015, the magazine Time the class among the 100 most influential people in the world.

A scam revealed in 2015

In October 2015, journalist John Carreyrou published several articles about the start-up on Wall Street Journal and sows doubts about the company’s reliability. Elizabeth Holmes is suspected of having lied about the performance of the machine that was supposed to revolutionize blood testing, deceiving her investors. The US Department of Health is seizing the case. Nothing to worry about Elizabeth Holmes, who then explained to American television channel CNBC that “That’s what happens when you work to change things. First they think you’re crazy, then they fight you until you change the world.”.

In March 2018, the gendarme of the American Stock Exchange, the SEC, accused him of fraud. He is accused of raising $700 million from lies, such as using false drug reports and false financial statements. Her company’s results were inflated: estimated at $100 million, Theranos’ turnover reached $100,000 in 2014. After an out-of-court settlement with the SEC, Elizabeth Holmes agrees to pay a fine of $500,000 as well as ceding control of your business. The SEC banned him from running any other publicly traded company for ten years. This settlement cleans up the financial side of the case but not the criminal process.

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Hundreds of patients have paid for blood tests for Theranos, who have “issued test results that were inaccurate”, explains the American justice, which adds that most of the tests were carried out thanks to other systems available on the market. Thus, victims of defective analysis could be called to the bar to tell how they had a bad diagnosis of cancer, AIDS or pregnancy.

Famous names can be found among potential witnesses, such as former Secretary of State Henry Kissinger and former Defense Minister James Mattis, who served on Theranos’ board of directors. Rupert Murdoch, media mogul and owner of Wall Street Journal whoever revealed the case, could also be called, having invested in Theranos.

A warning for Silicon Valley

The Theranos case has gradually turned into a lawsuit in Silicon Valley, accused of betting on companies that all present themselves as revolutionary. In 2018, the director of the SEC’s San Francisco office, Jina Choi, said the case “is an important lesson for Silicon Valley”. she also calls “innovators seeking to revolutionize and disrupt an industry” tell “to investors, the truth about what their technologies are capable of today, not what they hope they will one day be able to do”.

At the same time, Northern California Attorney Alex Tse promises to prosecute everyone “those who don’t respect the rules that make Silicon Valley work”.

After several postponements due to the Covid-19 pandemic and the accused’s pregnancy, the first hearings for the Theranos trial will begin on Tuesday, September 7 and will last for four months. This Hollywood film-worthy story will be brought to the screen in 2022 with the feature film Bad blood, in which Jennifer Lawrence will take on the role of Elizabeth Holmes.

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