The dropout who went from billionaire to jail

Elizabeth Holmes' incredible story

Elizabeth Holmes, the founder of the disgraced company Theranos, was sentenced to over 11 years in jail in 2022. She went from billionaire and magazine cover star to prison via a remarkable series of events that have since been documented in books and TV series.

Read on for the full incredible story of the company, and its founder, that fooled the world. All dollar amounts in US dollars.

An entrepreneur is born

Once considered "the next Steve Jobs", Elizabeth Holmes' shocking fall from grace has taken her from magazine covers to the courtroom. But where did it all go wrong?

Holmes was born on 3 February 1984 in Washington DC. Her mother Noel was a Congressional committee staffer, while her father Christian was the vice president at energy company Enron. He later joined various government agencies, including the United States Agency for International Development (USAID) and the Environmental Protection Agency (EPA).

A competitive spirit

Holmes had big aspirations from a young age. While many nine-year-olds might want to be an astronaut or actor, Holmes told her family she wanted to be a billionaire. This determination made her a very competitive child. Reports claim that when she played Monopoly with her family she would storm off in anger if she didn't win.

According to Holmes, she wrote her father a letter at nine years old, saying that what she wanted out of life "is to discover something new, something that mankind didn't know was possible to do".

A taste for making money

When she wasn't studying, Holmes was developing her first business. In high school, she began selling software that translated C++ computer code to Chinese schools and started learning Mandarin.

After attending a summer Mandarin programme at Stanford University, Holmes joined the university as a chemical engineering student in 2002. She has since said she was initially interested in pursuing a career in medicine, as her great-great-grandfather had been a surgeon. However, a lifelong fear of needles made this ambition impossible.

Stanford dropout

While at Stanford, Holmes decided she couldn't wait any longer and told one of her professors, Channing Robertson, that she wanted to start a company. In 2003, she filed a patent for a wearable medical device that could administer medications and monitor the wearer's blood.

Holmes also launched Real-Time Cures, the company that would later become Theranos, before dropping out of Stanford in her sophomore year. The business name was initially, and perhaps prophetically, misspelt on early employee paycheques as "Real-Time Curses".

A star on the rise

Holmes chose the name Theranos as a portmanteau of "therapy" and "diagnostics". Her business model was based on the idea that Theranos could use its technology to detect medical conditions from a small blood sample, enabling patients to avoid invasive blood tests in favour of simply pricking their fingers.

Time to make some money

Holmes had a business model, but now she needed money. She began raising cash by seeking out investors, attracting high-profile names such as venture capitalist Tim Draper, media mogul Rupert Murdoch, and even the Walton family of Walmart fame.

According to the New Yorker, Holmes had raised $6 million (£4.36m) by December 2004. One of the conditions of investing was that Holmes would never have to reveal how her technology worked.

A secret relationship

During this time, Holmes began a secret relationship with Ramesh "Sunny" Balwani, a former Microsoft employee who joined Theranos in 2009 as its president and chief operating officer (COO). They first met when Holmes was 18 and Balwani was 37 and lived together from 2005 onwards. Neither told investors about their relationship.

Keeping secrets became a hard company line at Theranos. Outside of the business, very little was known about the technology it was developing. Holmes was so obsessed with keeping things in-house that she sued multiple ex-employees for "misusing" trade secrets. Another former employee also claimed that Holmes' distinctive baritone voice, which she used when giving interviews, was an act.

Backed by Walgreens

Before the company was publicly unveiled, Theranos – which was operating in stealth mode – brokered a deal with US pharmaceutical giant Walgreens. Holmes announced the partnership in 2013, bringing Theranos to the public's attention for the first time.

Walgreens opened Theranos testing centres in more than 40 stores across Phoenix, Arizona and Northern Carolina. According to the Chicago Tribune, the pharmacy chain had invested around $140 million (£102m) in the technology.

Rubbing shoulders with Bill Clinton

Despite the lack of information, Theranos was bringing in millions of dollars in funding and Holmes was quickly making a name for herself in the tech world. She became a celebrity of sorts, featuring on the cover of Forbes and appearing on panels with the likes of Alibaba founder Jack Ma and even Bill Clinton.

Many people noted that Holmes had begun to model herself on Steve Jobs, wearing a uniform of black turtleneck sweaters. An article in Vanity Fair claimed that Holmes kept the temperatures low in her Palo Alto office, enabling her to wear the turtlenecks all year round.

Tides beginning to turn

In 2015, Elizabeth Holmes was lauded as the world's youngest self-made female billionaire by Forbes. However, red flags were beginning to emerge. As her profile increased, people started asking questions, from investigative journalists to disillusioned Theranos employees. The company's chief scientist Ian Gibbons even reportedly warned Holmes that their much-touted technology wasn't ready for use yet.

The beginning of the end

In a 2015 interview with the Wall Street Journal, Holmes claimed that Theranos was regulated by "everybody", specifically the American Centers for Medicare and Medicaid Services (CMS) and the US Food and Drug Administration (FDA).

The beginning of the end came in October of that year, when Wall Street Journal reporter John Carreyrou published a damning investigation into Theranos' inadequate technology. He found the company was aware of its problems and had been running patient samples through third-party testing facilities.

'Major inaccuracies'

Despite claiming they were already FDA-approved, Holmes and Theranos caught the attention of the FDA again after the publication of Carreyrou's article. The regulator swiftly launched its own investigation into the company. It concluded there were "major inaccuracies" in the company's testing across the country.

According to later reports, the tests gave false medical results to thousands, including one man who was told he had prostate cancer, two people who received HIV diagnoses, and a pregnant woman who was warned she had miscarried.

Damage control

Holmes began the process of damage control, and made numerous media appearances rejecting the Wall Street Journal's claims.

In one televised interview, Holmes said: "This is what happens when you work to change things. First, they think you're crazy, then they fight you, and then all of a sudden you change the world." However, by the end of the year, numerous regulators had launched investigations into Theranos' activities.

Bans start to come in

In July 2016, Holmes was banned from the lab-testing industry for two years, and Theranos was forced to close its testing laboratories and clinics. In March 2018, the Securities and Exchange Commission (SEC) charged Holmes and Balwani with "raising more than $700 million [£508m] from investors through an elaborate, years-long fraud". Holmes was forced to give up voting on the board and financial control of her company, return her Theranos shares, and pay a $500,000 (£363,000) fine.

Holmes steps down as CEO

In June 2018, Holmes and Balwani were indicted by a federal grand jury on two counts of conspiracy and nine counts of wire fraud. They were found to have "engaged in a multi-million dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients". Holmes stepped down as CEO of Theranos but remained on the company's board.

Closing Theranos down

After months of failing to find a buyer, Holmes and Balwani informed Theranos investors that the company was shutting down for good in September 2018. They laid off all their employees (around 700 of them, according to the New Yorker) and any equity investments in the once-formidable tech giant were rendered worthless. Forbes, which had previously listed Holmes' net worth as $4.5 billion (£3.3bn), quickly changed the valuation to $0.

A public exposé

In March 2019, a tell-all documentary called The Inventor: Out For Blood In Silicon Valley was released by HBO. The documentary claimed that Holmes built Theranos on a lie and all her talk of changing the world was "smoke and mirrors".

Holmes finally goes to trial

Holmes and Balwani's cases were separated. Her federal trial began in September 2021, having been rescheduled twice, first due to the COVID-19 pandemic, and then because Holmes was pregnant with her first child with her husband Billy Evans, the heir to the Evans hotel empire.

Allegations

Before the trial began, unsealed court documents from 2020 alleged that Holmes' judgement was impaired during a decade of "emotional and sexual abuse" at the hands of her ex-boyfriend.

The unsealed documents claimed that Balwani controlled what Holmes ate, when she slept and how she dressed, threw sharp objects at her, and monitored her text messages and emails throughout their relationship. Balwani has denied all of the abuse allegations made against him.

The trial continues

At the start of the rescheduled trial, proceedings were disrupted again after a juror was potentially exposed to COVID-19. Later, one of the jurors was dismissed after she admitted that her Buddhist principles would make it difficult for her to send Holmes to prison, meaning a replacement juror had to be found.

Adam Rosendorff testifies

Former Theranos lab director Adam Rosendorff (pictured), who resigned in 2014, testified for a lengthy six days. Considered a key witness, he claimed that he was under "tremendous pressure" to show the technology worked and that Holmes rolled out testing devices despite being told there were problems.

But not all of the evidence was straightforward. Holmes' attorneys confronted Rosendorff with a series of emails written by Holmes, which show her discussing issues that the director claimed she ignored.

Holmes' defence

Holmes finished her testimony after a week on the stand. As the unsealed court documents suggested, she publicly accused Balwani of abusing her during their relationship. She also claimed she didn't tell investors that Theranos used third-party machines because she wanted to protect the "trade secrets" of the company.

During her cross-examination, attorneys noted that Holmes appeared to have a "selective memory" of events at Theranos and was keen to pass the blame, even though responsibility ultimately lay with her as the CEO, a claim that Holmes didn't deny.

Guilty on four counts

On 3 January 2022, jurors found Holmes guilty of conspiracy to commit fraud against investors and three counts of wire fraud. She was found guilty on four of 11 counts of fraud, while the jury couldn't reach a verdict on three other charges.

Sunny Balwani's trial begins

Sunny Balwani's trial began on 22 March 2022, just a few weeks after the TV series The Dropout started airing on Hulu. The series, which stars Amanda Seyfried as Holmes and follows "the unbelievable true story" of Theranos, portrays Balwani as a manipulative partner who pushes Holmes into deceiving her investors. Two members of the jury were dismissed for watching The Dropout, which they believed had made it difficult for them to be unbiased.

Prosecutors rest their case

Although Balwani's trial was separated from Holmes', many of the same witnesses were called upon to testify, and some of the same evidence was used, including text messages sent between the couple during their relationship. Before resting their case, prosecutors also tried to link Balwani to Theranos' fraudulent use of the Pfizer logo when advertising their blood testing machines.

Unsurprisingly, Balwani pleaded "not guilty" to 12 wire fraud and conspiracy charges. But on 7 July, he was found guilty of all 12 charges, a conviction that carried a maximum jail sentence of up to 20 years and a fine of $250,000 (£205.5k). Balwani was sentenced to 12.9 years in jail and three years on probation.

An unexpected visitor

As for Holmes, her sentencing was originally due to take place on 17 October last year. However, it was pushed back after an extraordinary intervention from a key witness for the prosecution: former Theranos lab director Adam Rosendorff.

In a bizarre turn of events, Rosendorff turned up at the house Holmes shared with Evans on the evening of 8 August 2022. Rosendorff was intercepted by Evans, who rejected Rosendorff's request to speak with Holmes. Rosendorff left, but not before making a remarkable admission…

A remorseful witness

Before leaving, Rosendorff expressed his regret for his role in Holmes' conviction. According to Evans, Rosendorff told him that "he tried to answer the questions honestly but that the prosecutors tried to make everyone look bad" and that he felt as though "he had done something wrong".

Learning of Rosendorff’s regret, Holmes requested a fresh trial. A judge agreed to move Holmes' sentencing date to consider the request.

The end of the road?

Unfortunately for Holmes, any hope of a retrial quickly faded. Appearing in court in October last year, Rosendorff stuck by his original testimony, repeating his sworn declaration that he stood by his earlier claims "in every respect".

Under questioning from US district judge Edward Davila, Rosendorff said "he felt remorseful about the possibility that Holmes's young child with Evans would be without their mother if Holmes is sentenced to prison". He stressed he didn't want to recant his testimony, and even affirmed his belief that Holmes should "pay her debt to society".

Retrial ruled out

It was no surprise that Judge Davila ruled against a retrial for Holmes. Writing on 7 November last year, Davila stated that "Dr Rosendorff’s post-trial statements are too vague and general to imply that any specific testimony was actually false or misleading".

With no retrial on the agenda, federal prosecutors revealed they were seeking a 15-year jail sentence and restitution of $800 million (£687m), according to court documents filed on 11 November 2022. This is much less than the maximum jail sentence of 20 years per each count of fraud, but Holmes still campaigned to get her potential sentence reduced.

Holmes appeals for "leniency"

According to an 82-page filing seen by Bloomberg and The Associated Press, Holmes' lawyers appealed for "leniency" and asked for 18 months under house arrest and a subsequent course of community service. Then pregnant with her second child, Holmes was described as "no danger to the public" by her attorney, who claimed a prison sentence was unnecessary as the former entrepreneur had already been "mocked and vilified enough".

"Ms Holmes will never be able to seek another job or meet a new friend without the negative caricature acting as a barrier," her lawyers said.

"She has no criminal history, has a perfect pretrial services compliance record, and is described by the people who know her repeatedly as a gentle and loving person who tries to do the right thing."

Support from a senator

Alongside the filing, Holmes' lawyers also submitted over 130 letters that purportedly revealed "the real Elizabeth Holmes". These letters came from her family, friends, former employees, and even the Democratic New Jersey senator Cory Booker (pictured), who met Holmes at a conference in 2016 and wrote in September that he considers her a friend.

"In the years since [2016], I’ve always been struck by the way our conversations focused on her desires to make a positive impact on the world," Booker wrote. "I still believe that she holds on to the hope that she can make contributions to the lives of others, and that she can, despite mistakes, make the world a better place."

Holmes is sentenced to 11 years in jail

Despite high-profile support, Holmes was sentenced to 135 months – more than 11 years – in jail. Before she was handed her sentence, Holmes reportedly told the court that she was "devastated by her failings" and "felt deep pain for what people went through because [she] failed them".

Judge Davila claimed that Holmes' fraud had caused a total loss of $384 million (£325m) in investments and $121 million (£102.4m) in share value.

Holmes and Evans are pictured here arriving for her hearing on 18 November last year.

Jail sentence delayed

Although the couple never officially announced the birth of their second child, The Daily Mail obtained copies of the birth certificate. It revealed the child is a daughter named Invicta – perhaps significantly, the Latin word for 'undefeated' – who was born on 9 February this year.

The pair (pictured) married in 2019 and welcomed their first child William in 2021. Because of her second pregnancy, her attorneys asked for her 11-year jail sentence to be delayed until 27 April. The court agreed – but Holmes' lawyers wanted further leniencies.

Ongoing appeal

Citing her two young children as close family ties, Holmes' lawyers claimed their client was not a flight risk nor a danger to the community, and should be allowed to remain free while she appealed her conviction. Her first appeal, filed last December, argued that the prosecution was guilty of wrongdoing during the trial.

Flight risk?

Holmes' attorneys may have argued that she wasn't a flight risk, but the court aired concern. Earlier this year, it was revealed that the former billionaire had bought a one-way plane ticket to Mexico for 26 January 2022, just a few weeks after she was found guilty.

The development came to light after prosecutors made a new filing arguing that Holmes should begin her prison sentence sooner. Writing to Holmes' attorney, prosecutors said: "Ms. Holmes did not provide the government with notice of this travel, nor obtain approval from the Court. In light of her current bail conditions, we find this concerning. Separately, we are considering asking the Court to schedule a bail review hearing to discuss this issue."

Last-minute appeal

Holmes denied accusations of trying to flee the country, saying she booked the flight before her trial and didn't notify the court because she had no intention of using the ticket – which she allegedly bought to attend a wedding in Mexico – once she was found guilty.

A judge formally denied the request to stay her sentence. But Holmes' last efforts to avoid jail – if only temporarily – proved more successful. In a last-minute filing in April, the day before her sentence was due to start, Holmes' lawyers argued that the judge's refusal "reflects numerous, inexplicable errors", citing, in particular, the court's referral to her "patient fraud convictions" (she was acquitted on those charges during her trial).

Free on bail

Holmes' lawyers appealed the ruling not to delay her sentence, and according to court rules, this meant she could remain on bail until the court responded to the filing. Her legal team also requested a new trial or reduction in her jail stay, saying she was prevented from submitting "compelling evidence" that could have helped her defence.

Holmes' business partner and former lover Sunny Balwani (pictured left with his lawyer) used a similar tactic to delay his jail sentence by one month. However, his appeal was ultimately unsuccessful and on 20 April he reported to a low-security jail in California, where he's due to spend just under 13 years.

What's next for Elizabeth Holmes?

Before her incarceration, Elizabeth Holmes lived with her husband and children in San Diego, California. The family stayed in a $9 million (£7.2m) beachside mansion while Holmes appealed her case, with reports claiming that Evans, William, and Invicta would move to a $3 million (£2.4m) San Diego townhouse in a gated community when Holmes' jail sentence began 1,800 miles away.

In May, an appeals court rejected Holmes' bid to remain free while she appealed her conviction. In a later ruling on the same day, Judge Edward Davila ordered Holmes to pay restitution of $425 million (£342m) to her victims, including $125 million (£100.5m) to media magnate and former Theranos investor Rupert Murdoch, who described himself as "one of a bunch of old men taken in by a seemingly great young woman!"

Imprisoned in Bryan, Texas

On 30 May, Holmes began her sentence at the Federal Prison Camp in Bryan, Texas – a low-security prison that typically holds female prisoners guilty of non-violent crimes. The facility is almost 2,000 miles away from Holmes' husband and two children, who are reportedly living in San Diego, California.

Reporting to jail

At FPC Bryan, Holmes is expected to wake at 6am every day and dress in khaki pants and a khaki shirt. According to the BBC, inmates at the prison are "treated in a mature and responsible manner" and spend most of their day working basic jobs for between 12 cents (less than 10p) and $1.15 (90p) an hour. Quite the change in salary for a former billionaire...

Time off for good behaviour?

Holmes may not have spent long behind bars, but it appears she's made a positive impression. According to Federal Bureau of Prisons records, her sentence has already been reduced by almost two years, meaning her new release date is now 29 December 2032.

It's unclear why the sentence has been reduced from 11 years and three months to just over nine years, but several news outlets have suggested it could be a sign that Holmes has qualified for an earlier release based on her good behaviour so far.

Cashflow crisis

When she is eventually released she is supposed to pay restitution to 14 of her victims, including media mogul Rupert Murdoch, former US Secretary of Education Betsy DeVos, and the Safeway supermarket corporation. Despite her husband's wealth, Holmes' lawyers say she will be unable to afford the $250 (£197) a month minimum payments due to "limited financial means".

Rebranding to 'Liz'

A profile of her in The New York Times earlier this year found that Elizabeth Holmes with her baritone voice and wardrobe of black turtlenecks had gone; prior to her jailing, she had become Liz, a mother-of-two who loved spending time with her family at the zoo.

Writer Amy Chozick received backlash for the interview after its publication, but didn't shy away from the possibility that 'Liz' was just another character Holmes has created: "Ms. Holmes is unlike anyone I've ever met – modest but mesmerizing. If you are in her presence, it is impossible not to believe her, not to be taken with her and be taken in by her."

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