By Maryclaire M. Farrington
It’s a tale as old as time: the Ivy League dropout turned tech icon. Media’s maître d’ of tech, Elizabeth Holmes, was fawned by Forbes, Fortune, Time, and the New Yorker, to name a few. Nearly twenty years after founding Theranos Inc., her name flashes through the media again. However, this time, the headlines read “Theranos Founder Guilty of Fraud.”
At nineteen, Holmes sought to “revolutionize the blood-testing industry” by creating a device that would run a full blood workup using a vial of a few drops of the patient’s blood. In theory, Holmes’s device would run the traditional bloodwork exam with a fraction of the blood, in a fraction of the time, and at a fraction of the cost of the traditional method.
The company operated like a Silicon Valley tech startup that was shrouded in secret and made “big promises . . . with little proof.” Operating under the protection of secretive and complex technological promises, Holmes adopted a “fake it till you make it” attitude, making empty promises to investors that she would deliver on her blood testing machine. Holmes’s “fake it till you make it” attitude worked. With the help of $400 million from investors, Theranos was valued at $9 billion at its peak. But despite the company’s explosion of good press and high valuations, the science wasn’t working: the tests weren’t reliable, and the blood was actually being shipped and tested using traditional machines. Theranos denied the rumors, but dodged questions citing “trade secrets.”
In 2018, Holmes was charged with two counts of conspiracy to commit wire fraud and ten counts of wire fraud, including the accusation that Holmes defrauded both investors as well as patients. One of the conspiracy charges and several of the wire fraud charges alleged that Holmes defrauded investors. The other conspiracy charge and the remaining wire fraud charges alleged she defrauded patients and doctors. The jury found Holmes guilty of the investor conspiracy count and three counts of investor wire fraud, which included wire transfers above $140 million. Holmes was acquitted of the patient wire fraud count, three wire fraud counts, and one count of patient wire fraud was dismissed during trial.  The final three investor fraud counts resulted in a hung jury.  So how did the Silicon Valley business mogul turn criminal?
Special Agent in Charge Bennett said, “This conspiracy misled doctors and patients about the reliability of medical tests that endangered health and lives.” But, the jury did not find the Theranos founder guilty of the four total counts of fraud for misleading patients and the inaccuracy of the blood tests. This is likely explained by the fact that Holmes was directly involved in the investor fraud, while she was not so directly involved in defrauding patients and customers. The blurred lines between Holmes and doctors and patients made it much more difficult for the prosecution to prove those counts of fraud. Yet, some say that while the relationship is less clear, Holmes clearly “crossed a moral boundary,” and the not-guilty verdicts “represent an important missed opportunity for the legal system to restrain Silicon Valley’s dangerous embrace of ‘disruption’ at all costs by calling the intentional disregard for the public’s welfare a crime.”
In retrospect, Theranos was built on smoke and mirrors—big promises and bigger secrets. Indeed, Silicon Valley startup culture is often “hyperbolic” and based on “puffery,” and the trial court (and the jury) seemed to believe Holmes when she claimed she truly thought the Theranos technology would transform into what she advertised. Yet, Holmes’s technology wasn’t just another “typical start-up”—Holmes built medical devices, not apps. But confidence and ambition trumped science and reason, and even investors with knowledge in healthcare trusted the innovators and the process. Perhaps the Theranos trial is an opportunity for investors and the public to reconsider their trust in the Silicon Valley system and to demand results instead of promises.
Calls for change to Silicon Valley have already begun. Jina Choi, director of the SEC’s San Francisco Regional Office, said, “The Theranos story is an important lesson for Silicon Valley . . . . Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.” Alternatively, in order to keep corporations and their officers accountable, some propose that federal agencies such as the Food and Drug Administration should be given greater resources to properly investigate and review bourgeoning startups.
A 2019 New York Times article nearly predicted the exact outcome of the Theranos trial: “The challenge with charging corporate executives is that they are often insulated from the decisions that violate the law. That can make it difficult, if not impossible, for prosecutors to prove they have the requisite intent.” In 2019, some politicians and legal experts, including Elizabeth Warren, suggested that the requirement of criminal intent for fraud should be replaced with a negligence standard. Warren’s proposed 2019 “Corporate Executive Accountability Act” would hold executives liable if they “negligently permit or fail to prevent a violation of law.” Such a law would undoubtably change Silicon Valley—but morally for the better.
Though it is promising that Holmes was investigated and eventually held responsible for investor conspiracy and wire fraud, it is imperative to recall Holmes’s ability to captivate investors and the general public alike. Furthermore, the reasoning for her acquittal on the charges regarding patients was the lack of direct involvement with patients, yet her strategies were the same. If courts were to hold executives to a negligence standard, then Holmes’s trial would likely have a different outcome and find Holmes guilty of patient-related fraud.  Change is necessary in Silicon Valley, and holding executives accountable is the ultimate mechanism to promote justice.
 See, e.g., Raqeebah, Theranos and the Continuing Allure of the Ivy League Dropout, Medium (Sept. 10, 2020), https://medium.com/swlh/theranos-and-the-continuing-allure-of-the-ivy-league-dropout-a8e8e8f97113; see also, e.g., Noah Kulwin, Theranos CEO Elizabeth Holmes’s Five Best Cover Story Appearances, Ranked, Vox: Recode (Oct. 26, 2015, 4:04 PM), https://www.vox.com/2015/10/26/11620036/theranos-ceo-elizabeth-holmess-five-best-cover-story-appearances.
 Kulwin, supra note 1.
 Zaw Thiha Tun, Theranos: A Fallen Unicorn, Investopedia https://www.investopedia.com/articles/investing/020116/theranos-fallen-unicorn.asp (Jan. 4, 2022).
 See, e.g., Kulwin, supra note 1.
 See, e.g., James Clayton, Elizabeth Holmes: Theranos Founder Convicted of Fraud, BBC News (Jan. 4, 2022), https://www.bbc.com/news/world-us-canada-59734254; Michael Liedtke, Theranos Founder Elizabeth Holmes Convicted of Fraud and Conspiracy, Time, https://time.com/6132636/elizabeth-holmes-guilty/ (Jan. 4, 2022, 2:38 AM).
 Tun, supra note 3; Ken Auletta, Blood, Simpler, The New Yorker: Annals of Innovation (Dec. 8, 2014), https://www.newyorker.com/magazine/2014/12/15/blood-simpler.
 Auletta, supra note 6.
 Kari Paul, Elizabeth Holmes Trial: Silicon Valley Watches Next Steps in High-Profile Case, The Guardian (Jan. 4, 2022, 2:30 PM), https://www.theguardian.com/technology/2022/jan/04/elizabeth-holmes-conviction-silicon-valley.
 Timothy B. Lee, How a Culture of Secrecy Set Theranos up for Failure, Vox (Oct. 23, 2015, 12:50 PM), https://www.vox.com/2015/10/23/9603442/theranos-elizabeth-holmes-secrecy.
 John Carreyrou, Hot Startup Theranos Has Struggled with Its Blood-Test Technology, Wall St. J. https://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901 (Oct. 16, 2015, 3:20 PM).
 Press Release, U.S. Dep’t of Just., Theranos Founder Elizabeth Holmes Found Guilty of Investor Fraud (Jan. 4, 2022), https://www.justice.gov/usao-ndca/pr/theranos-founder-elizabeth-holmes-found-guilty-investor-fraud.
 Press Release, U.S. Dep’t of Just., Theranos Founder and Former Chief Operating Officer Charged in Alleged Wire Fraud Schemes (June 15, 2018), https://www.justice.gov/usao-ndca/pr/theranos-founder-and-former-chief-operating-officer-charged-alleged-wire-fraud-schemes.
 Noam Cohen, The Elizabeth Holmes Verdict and the Legal Loophole for ‘Disruption’, Wired (Jan. 5, 2022, 3:57 PM), https://www.wired.com/story/holmes-theranos-legal-loophole-disruption/.
 Brandon Kim, Legal Experts Divided Over Elizabeth Holmes Verdict’s Accuracy, Significance of Case, The Stanford Daily (Jan. 6, 2022, 8:21 PM), https://stanforddaily.com/2022/01/06/legal-experts-divided-over-elizabeth-holmes-verdicts-accuracy-significance-of-case/.
 Cohen, supra note 22.
 Kim, supra note 24.
 Erin Woo, What Elizabeth Holmes’s Trial Means for Silicon Valley, N.Y. Times (Nov. 23, 2021), https://www.nytimes.com/2021/11/23/technology/elizabeth-holmess-trial-silicon-valley.html.
 Erin Griffith, Theranos and Silicon Valley’s ‘Fake It Till You Make It’ Culture, Wired (Mar. 14, 2018, 3:12 PM), https://www.wired.com/story/theranos-and-silicon-valleys-fake-it-till-you-make-it-culture/.
 Clayton, supra note 29.
 Peter J. Henning, Elizabeth Warren Wants to Make It Easier to Prosecute Executives, N.Y. Times (Apr. 22, 2019), https://www.nytimes.com/2019/04/22/business/dealbook/elizabeth-warren-finance-executives.html.
 Press Release, U.S. Dep’t of Just., supra note 14.
 See, e.g., Carreyrou, supra note 11.
 See Cohen, supra note 22.
 See Henning, supra note 32.