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  • Colin de Korsak

[The kings of scams] Elizabeth Holmes, who became a billionaire thanks to fake blood tests

Some entrepreneurs have made the headlines for their large-scale scams, and Elizabeth Holmes is one of them. The businesswoman fooled investors and the whole of Silicon Valley with her fake blood tests. Here's a look back at her story.

Born in 1984 in Washington, Elizabeth Holmes was ambitious from an early age. Inspired by her great-great-grandfather, Christian Holmes, a surgeon, she developed a passion for medicine. She entered Stanford University to study chemical engineering. However, her ambition led her to leave academia for entrepreneurship. At the age of 19, she left Stanford to found Theranos, a company that aimed to revolutionise the medical diagnostics sector.

Her project quickly attracted attention, not least from Channing Robertson, a Stanford dean who became one of the first members of the Theranos board of directors. With the aim of simplifying and democratising blood testing, Elizabeth Holmes attracted a number of investors. Theranos' promise was to provide faster, more affordable and less invasive diagnostics thanks to a revolutionary technology.

The meteoric rise of Theranos

Theranos, under the iron-fisted leadership of Elizabeth Holmes, is enjoying a meteoric rise. The company was valued at nearly $9 billion at its peak in 2014, and the CEO's personal fortune was estimated at over $3 billion, making Elizabeth Holmes the youngest female billionaire entrepreneur in the United States. She has become an iconic figure in Silicon Valley, embodying both innovation and success.

Theranos' promise attracted not only investors, but also partners and customers. The company has forged partnerships with major players in the industry, promising to shake up a healthcare sector that is already undergoing radical change. The charisma and determination of Elizabeth Holmes have created an upward momentum, capturing the imagination of investors and the public alike.

The revolution promised by Theranos lay in a device called "Edison", which the company claimed could perform a wide range of diagnostic tests with just a few drops of blood. The start-up claimed to be able to perform more than 200 tests, including diabetes and cholesterol. This promise, if realised, could have dramatically reduced the costs and timescales associated with traditional blood tests, paving the way for greater accessibility and faster patient care.

However, Theranos' promises turned out to be lies.

Discovering the lies of Elizabeth Holmes

Theranos and Elizabeth Holmes' previously stellar track record began to show signs of weakness in 2015, when the Wall Street Journal published an article exposing inaccuracies in the company's claims about its technology. This publication was the start of a series of investigations and revelations that quickly swept away Theranos' forward-thinking image.

Indeed, despite the revolutionary promises, the company's technology did not live up to the claims made by Elizabeth Holmes and her team. Theranos' devices proved unreliable and inaccurate, falling far short of the promise of performing multiple tests with a single drop of blood.

Following the Wall Street Journal article, investors, regulators and the general public began to question the validity of Theranos' technology and the integrity of its management. The following year, the start-up laid off half its workforce. Then, in 2018, the fraud was fully exposed when the US Securities and Exchange Commission brought civil fraud charges against Elizabeth Holmes and Theranos, accusing Holmes of misleading investors about the performance of Theranos' technology.

Prosecution and verdict

The legal consequences quickly followed the revelations. Elizabeth Holmes and Theranos COO Ramesh Balwani were charged with wire fraud and conspiracy. Holmes was also charged with destruction of evidence. Theranos also faced lawsuits from investors, customers and regulators, and agreed to withdraw from the blood testing business for at least two years as part of a settlement.

In addition, a jury found Elizabeth Holmes guilty of one count of conspiracy and three counts of wire fraud in connection with a multi-million dollar scheme to defraud Theranos investors. In 2023 after a four-month trial, she returned to prison in Texas, sentenced to more than 11 years for fraud, according to Le Parisien. For its part, the start-up ceased to exist, leaving its investors aggrieved.

The fallout from this case was significant and shook the Silicon Valley start-up community, highlighting the harmful pressures and incentives associated with a corporate culture focused on rapid growth and high valuation.

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