“Clinical laboratory leaders have watched with keen interest the federal criminal proceedings against disgraced Theranos founder and former CEO Elizabeth Holmes, whose blood-testing company lost nearly $1 billion of investors’ money before dissolving in 2018.
In a recent CNBC interview, John Carreyrou, the Wall Street Journal (WSJ) investigative journalist who first broke the Theranos story in 2015, contended that the once-high-flying Silicon Valley startup could have paid back investors on a pro-rata basis, but that the company opted to use its dwindling cash to challenge lawsuits.
“If you rewind to October 2015, when I finished, when I published my first investigative story on Theranos, the company still had $400 million in the bank and it could have called it quits then,” Carreyrou said in the interview. “And Elizabeth Holmes could have apologized to investors, to patients, to everyone she had misled and returned that money to shareholders on a pro-rata basis.”
Fast forward to now:
“Today, Holmes is preparing to stand trial on a dozen federal wire fraud and conspiracy to commit wire fraud charges at the US District Court in San Jose, Calif., where jury selection is slated to start on March 9, 2021, amid COVID-19 pandemic safety precautions.
According to the Mercury News, Holmes faces maximum penalties of 20 years in prison and a $2.75 million fine, plus possible restitution. Carreyrou does not expect Holmes to seek a plea deal.
“I think that the chances of that are pretty unlikely. From what I hear, she’s telling her friends and her entourage that she’s actually looking forward to her day in court and she thinks that the real story—her version of the story—will come out at trial,” he told CNBC. “And so, she’s actually putting on a cheerful face with people she knows, and people have seen her recently and are saying that she’s looking forward to see this go to a jury.”
While the final chapter of this story will be written by a federal court jury, clinical laboratory leaders likely will want Holmes to face maximum penalties if found guilty of all charges. The deceptive scientific and business practices Theranos allegedly engaged in caused many headaches for the clinical lab directors of hospitals and health networks as their CEOs asked why the “cheap and fast” Theranos testing system could not be used instead of traditional, more expensive testing methods.
Theranos also financially damaged investors who might otherwise have gained capital and continued to invest in more credible startups of diagnostic companies and clinical laboratories.”
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