Ethics is not a dirty word – Episode # 4: What Happened to the Biotech Sweetheart (Dirty Dozen Revisited)

Elizabeth Holmes and Theranos’ story captured the attention of the biotech world for over five years following her conviction by the SEC in March 2018 of massive fraud amounting to over $700 million (over AUD$1 billion). Where is Elizabeth Holmes now, you ask?…  Read on.

Hello again, and so glad you came back for another dose of ethics.   Thanks for staying subscribed

The Dirty Dozen

A few years back, I produced a series of articles titled ‘The Dirty Dozen’ for the company I was working for. This collection shed light on some of the most egregious examples of unethical practices at the time.  As part of our ongoing commitment to ethical awareness, under the ‘Ethics is not a dirty word’ category, we will revisit (and update) some of these cases, and introduce some new ones. This series aims to keep you informed and engaged in the evolving landscape of ethical standards.

The Theranos Deception

Several documentaries and films, such as the Hulu/ Disney mini-series ‘The Dropout’, and the Netflix feature, ‘The Inventor: Out for Blood in Silicon Valley, have been made about the Theranos affair, based on John Carreyrou’s book Bad Blood: Secrets and Lies in a Silicon Valley Startup. During her trial, Holmes admitted to many of the practices the prosecution argued were used to mislead investors, partners, and patients.  Theranos became a landmark case and a stark reminder of the penalties for unethical behavior in the tech start-up world, especially those associated with fraud. Its impact on the biotech industry was profound.

The company raised over $750 million (AUD$1.2 billion) from people better known for their roles in politics, business, and global finance than their interest in MedTech start-ups, including the Walton family (heirs of the Walmart founder), Betsy DeVos (President Trump’s education secretary) and her family invested $100 million (AUD$150 million) , as did the media moguls the Cox family. Even big-name investors such as Rupert Murdoch fell to the charms of Elizabeth Holmes.  By April 2015, the company had a valuation of $9 billion (AUD$14 billion) , and had made its founder and CEO Elizabeth Holmes, the richest self-made woman in America at the time. Her 50% share of the company was worth $4.5 billion (AUD$7 billion).

Holmes and her lover/ business partner, Ramesh ‘Sunny’ Balwani, were invincible; they had fooled the world!

Was the rise and fall of Elizabeth Holmes and Theranos a classic story of a manipulative CEO engaged in nothing more than a classic fraud, or was she just a misunderstood dreamer?

Everybody loves a medical breakthrough especially when it is backed by a story of compassion and true dedication to a cause.  Every company has a promise of patient well-being somewhere in its values.  Spinning a heart-wrenching story based on a dead relative and an acute fear of needles, Holmes managed to tug at the heartstrings of investors and media alike. Enamored with the next big tech icon – a female one at that – they wave their money wands and fill her coffers.

At the peak of fundraising, the ‘wheels fell off’ and the company was forced to reveal that it could only use its machines to perform a handful of the more than 200 tests on offer, and even then, their results were unreliable.  By October 2016, Theranos was forced to shut down its blood-testing lab and the 40 testing centers and fired 340 staff. In November 2016, Walgreens sued for breach of contract, asking for at least $140 million (AUD$216.5 million) in damages. The drug store chain blood testing centers based on the Theranos technology didn’t work. 

In March 2018, the US Securities and Exchange Commission (SEC) charged Holmes and Balwani with “massive fraud,” and the rest is history, as they say.

Where is Elizabeth Holmes now?

Despite multiple attempts to postpone the start of her 135-month prison sentence after being found guilty on four counts of defrauding investors in the blood-testing startup Theranos, Elizabeth Holmes surrendered to custody on May 2023 and is now in a Federal Prison Camp in Bryan, Texas.  Her expected release date is December 2032, but with good conduct time, she could be released from prison two years early.

During her time in prison, Holmes will be required to perform menial labour tasks such as food preparation and factory work.  In her ‘spare time,’ she can participate in continuing education courses, but Holmes has indicated she will continue to develop new health-related innovations.

In November 2023, after a four-month trial, she was sentenced to 11 years in jail on 4 of the 12 counts of felony fraud, despite the prosecution’s requests for a 15-year sentence. Her partner in crime and former boyfriend, Balwani, was sentenced to 13 years in prison in San Pedro, California.

Holmes married 30-year-old hospitality heir Billy Evans, with whom she now has two children.The couple met just as Theranos was collapsing (2017) and were married in a secret ceremony in 2019. Their first child together was born in 2021. Her second child was born early last year, before her sentencing, which some sources speculate was a ploy to gain some leniency or at least a deferral of her prison time.

Villain or Victim?

Lawyers for Elizabeth Holmes’ lawyers have revealed she will be unable to pay back her victims upon her release.  Despite once having a net worth of USD $4.5 billion (AUD $6.6 billion), Holmes has “limited financial resources” and therefore cannot afford to pay the $250 (AUD $368) monthly payments to the victims of Theranos fraud. In total, she’s required to pay $452m (AUD $665 million) as restitution (reimbursement) to 14 investors.  Her co-defendant and former business partner, Balwani is also liable for the payments and will pay $1,000 (AUD $1471) per month.

Several reports claimed that Holmes was residing in a mega-mansion worth USD $135 million (AUD $180 million) in Silicon Valley, California, courtesy of her husband.  Restitution in the US has become largely symbolic, meaning Holmes’ investors – and many less wealthy victims of fraud – are unlikely to get most of the money they are owed.  She will have to pay back those she defrauded, while in prison and on release, but will not be able to purchase any large assets, including a home, without intervention from the federal government.  She won’t need to, though, because of her husband’s wealth, which is out-of-bounds to the government.

I have put on my ethical hat many times while reading about Holmes and Theranos.   She is, at the very least, a narcissist, possibly a sociopath. Her manipulative tactics were far from ethical, but those that she fooled were also starry-eyed with the prospect of making large amounts of money.

She believes that she is entitled and she now deserves the ‘life of Riley’ with her billionaire and her babies, and probably has no or little remorse for her actions, the deaths her lies caused, the billions lost, and the suffering to all her employees. Her narrative from “dropout” to “self-made billionaire” was driven by her eccentric beliefs focused on putting a square peg in a round hole.

As the queen of ‘fake it till you make it,’ don’t be surprised if this is not the last we see of Elizabeth Holmes, even if she is plotting and scheming in the shadows.

What do you think:

 – Was Elizabeth Holmes the mistress of deception and fraud or misunderstood?

– Do you think she was sentenced fairly, and should she be allowed to start up another biotech venture?

– Is she a worthy member of the Dirty Dozen?

Hope to see you back next time. Don’t miss out. Stay subscribed and add your thoughts or any comments you have (especially if you have something nice to say!) on the social media links (Linked In or Facebook) under the article.

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Till next time,


[Copyright The Compliance Concierge  2024]

2 thoughts on “Ethics is not a dirty word – Episode # 4: What Happened to the Biotech Sweetheart (Dirty Dozen Revisited)”

  1. Should be in jail for life, and all her assets seized. No involvement permitted in business activity. She set out to wilfully commit fraud.

    1. Calvin London

      Thanks so much for your comments Ian. I think the majority of people feel the same way. What do others think?

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Calvin London

Calvin runs a boutique consulting company. He is an established author of over 50 publications but started this site to explore the lighter side of life and all the curious things it has to offer. He is developing a career as a freelance writer.