What’s going on with the Theranos founder after ‘The Inventor’

The federal government is taking Elizabeth Holmes to court.

As you probably know by now, she was the founder and CEO of Theranos, the blood-testing startup featured in the HBO doc The Inventor: Out for Blood in Silicon Valley (as well as a book, podcast, and, soon, starring Jennifer Lawrence). Also being charged is former Theranos president Ramesh “Sunny” Balwani. 

The pair has already been tried in the court of public opinion. Now they will face litigation for making misleading claims about their company’s ability to accurately test pinpricks of blood for a catalog of diseases. Here is what is going on with the trial. 

What are they charged with?

The government is charging Holmes and Balwani with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. 

The first conspiracy charge alleges that the two conspired to defraud investors, allegedly making “numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects,” according to the Justice Department.

The second conspiracy charge alleges that they schemed to mislead doctors and patients about the speed and accuracy of test results.

Most of the wire fraud charges concern six transactions. Investors transferred money to Theranos, which the prosecution says was based on fraudulent claims about what they were getting in return. Theranos also faces two counts for wiring test results to Walgreens patients in Arizona, and one for wiring money to a New York-based media firm in New York to buy ads for Theranos Wellness Centers in Arizona.

Why wire fraud?

While the claims Holmes and Balwani actually made to investors, doctors, and patients were allegedly fraudulent, it’s the actions associated with that fraud — receiving money, and sending money and test results — that the federal government prosecutes.

Additionally, charging Holmes and Balwani with wire fraud means Theranos’ actions fall under the jurisdiction of the federal government. Because the alleged fraud included interstate wire transfers, the federal government, as opposed to just California, is able to go after them. 

What is the evidence?

The material evidence that we know about are the wire transfers themselves. But the prosecution reportedly has more than 12 million pages of documents it plans to turn over to the defense. 

In October 2018, the prosecution also won a motion allowing them to review more than 200,000 pages of internal Theranos documents. The indictment also refers to multiple press releases and media appearances that Holmes made that the prosecution considers misleading.

What does the prosecution have to do to win?

While the meat of the case is laying out the story of Theranos — a multi-billion dollar business built on a scientifically impossible idea — the biggest hurdle the prosecution will have to overcome is proving that Holmes and Balwani both knew about the fraud, and intended to defraud investors and customers. They both pleaded not guilty. 

But in a deposition with the U.S. Securities and Exchange Commission for a previous civil case, Holmes admitted that she made false statements about Theranos involving its ability to run tests and its supposed deployment in the military.

How much jail time are they looking at?

Holmes and Balwani could each face up to 20 years in prison, and a fine of $250,000 for each count of wire fraud and for each conspiracy count — for a potential total of $2.25 million, plus any additional restitution to victims.

When do they go to court?

The pair has a status hearing on April 22 at the federal courthouse in San Jose. At that time, they might enter a plea bargain, or discuss logistical details of the case such as dates for different motions filed. It’s possible they may set a trial date during the status hearing.

Where are they now?

Both Balwani and Holmes are out on bail. Holmes is reportedly living her best life  — going to Burning Man and baseball games — alongside her fiancé, a hospitality industry heir and tech employee.

Have they faced any other legal action?

Yes. Earlier this March, Holmes settled a civil fraud case with the SEC. She will pay $500,000 to the SEC and agreed to not pursue business leadership roles for the next 10 years (although she is supposedly already pitching new ideas while out on bail). Balwani is pleading not guilty.

Walgreens also sued Theranos for $140 million, hoping to recoup some of its investments in the company in the wake of their disastrous partnership.

What’s next?

After the status hearing, there will likely be motion hearings to discuss evidence and procedural details for the trial.

Additionally, prosecutors have indicated that the Theranos case is even broader than it appears at the moment — so more charges may be coming for Holmes and Balwani, too.

This story is developing, and we’ll keep this page updated with more trial information as it’s released.